Facebook IPO filing reveals China plans | Asia Pacific

Facebook IPO filing reveals China plans

Facebook IPO filing reveals China plans

Updated 6 February 2012, 16:31 AEDT

Social networking titan Facebook has announced plans for an initial public offering and try to raise 5 billion dollars, in the largest flotation ever by an Internet company on Wall Street.

The paperwork filed for the initial public offering provided a glimpse of the future plans of the Web giant launched eight years ago by Mark Zuckerberg from his Harvard University dorm room.

It's also given some insights into whether Facebook will continue to pursue the massive market that has so far eluded it - China.

Presenter: Nasya Bahfen

Speaker: Futurist Ross Dawson

MALE AND FEMALE VOICES: We would also face competition from companies in China such as Renren, Sina and Ten Cent in the event that we are able to access the market in China in the future...We continue to evaluate entering China, however this market has substantial legal and regulatory complexities that have prevented our entry into China to date...We do not know if we will be able to find an approach to managing content and information that will be acceptable to us, and to the Chinese government...

BAHFEN: Some of the cryptic messages Facebook put in its initial public offering or IPO filing. The social media giant has an astonishing eight hundred and forty five million users around the world. But it's invisible in China - a market it wants to tap, but doesn't know how.

DAWSON: I'm Ross Dawson, a futurist and entrepeneur looking at the future of business and society.

BAHFEN: The question I put to Ross is...what do these excerpts from Facebook's IPO filing say about its intentions, with regard to China?

DAWSON: Facebook has global ambitions and the biggest potential market of all is China. So Facebook has been very keen to get into China for some time, yet it is blocked inside China. In fact Mike Zuckerberg has been learning Mandarin which seems to probably reflect his ambition to get Facebook into China. At the moment there seems to be no possible way in the short to medium term that China will open up to Facebook, but it is possible and it's certainly something which is high on the long term strategic agenda for Facebook.

BAHFEN: The filing also mentions competition from Mandarin language social media sites like Sina or Renren. Do you think those sites pose serious competion if Facebook were to somehow miraculously find a way to operate in China?

DAWSON: Absolutely. Renren is the closest equivalent to Facebook in China. In fact Renren mimicked everything about Facebook. It started in universities then opened out to the broader community. If you look at it, it has the same look and feel as Facebook and it has - I don't know the latest figures - but it has hundreds of millions of users. Most Chinese are in fact quite nationalistic. While Facebook would allow them to communicate with people around the world and would probably gain some traction, I think Renren and some of the other similar tools such as Sina Weibo (which is touted as a microblogging platform like Twitter) are ones where the Chinese are currently comfortable, where they're spending their time now, and I think it would be really difficult for Facebook to gain significant traction in China given the existing competition.

BAHFEN: So it appears Facebook has truly global ambitions, as the Social Network - the infamous movie about the site - explains.


"What are you doing?"

"Checking in to see how it's going in Bosnia."

"Bosnia? They don't have roads, but they have Facebook."

BAHFEN: The IPO aside, I ask futurist Ross Dawson if he thinks Facebook is likely to continue trying to get into the Chinese market in the future.

DAWSON: Absolutely, China is a very high strategic priority for Facebook over the long term. It seeks to be global and it cannot be global unless it is in China. At the moment of course they have other priorities such as the IPO. They will have a very large cash stockpile to make acquisitions which they will no doubt do. So they'll have a lot on their plate but there's do doubt they'll continue to do what they can to be able to tap the Chinese market.

BAHFEN: Earlier this week Twitter announced it would censor tweets by country if it was legally made to. Lubna Alam, a lecturer in information systems at the University of Canberra, told Connect Asia and Asia Pacific she thought it was all about the money.

ALAM: Twitter is probably doing this to broaden their market share and to get into countries where there's more restrictions like China, Saudi Arabia. So it's just a way of getting more money.

BAHFEN: With Twitter's announcement, and Facebook's comments in its IPO filing, are social media companies rethinking compromising, in order to get into the lucrative Chinese market? Futurist Ross Dawson's thoughts.

DAWSON: Twitter's move reflects legal realities. They do need to respond to countries' legislation in the countries in which they operate. In some cases they may choose to not operate in those countries if that goes against what they believe is right. But Twitter is saying we need to accommodate the legislation in the countries in which we're working and I suppose some would see it as compromise but it's a reality of doing business in the global world.


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