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Facebook's IPO unveils plans to invade China

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Not content with almost total domination in Western markets, social networking behemoth Facebook could be planning an assault on China if it can just do a deal with the authorities there, its latest regulatory filing has revealed.

The firm’s IPO filing with the SEC last week provided commentators with a wealth of interesting information, from its plan to raise $5bn to its belief in following the Hacker Way as a kind of corporate management mantra.

It also made several notable mentions of China and the opportunities its vast but as-yet-untapped market could offer.

“We may enter new international markets where we have limited or no experience in marketing, selling, and deploying our products. For example, we continue to evaluate entering China,” it said.

“However, this market has substantial legal and regulatory complexities that have prevented our entry into China to date. If we fail to deploy or manage our operations in international markets successfully, our business may suffer.”

The filing also notes that any expansion into the region would see Facebook come up against fierce local competition, with social networking sites Renren, Sina and Tencent mentioned by name.

Of those, Sina has probably garnered the most column inches outside of China thanks to its insanely popular Weibo (microblogging) service.

With an online population which has just exceeded 500 million, it’s no wonder that Facebook and its Silicon Valley chums are eager to get their claws into China, but strict web censorship laws and other rules restricting foreign companies make cracking the market incredibly difficult.

It certainly became too much for Google to bear, after the web giant famously pulled its search operation from China and relocated its servers to Hong Kong, although the firm now seems set on ramping up its activities in the region once again.

In November 2011, China’s biggest tech companies including Baidu, Lenovo and China Telecom agreed to tighter internet censorship in order to reduce the spread of rumours, online fraud and pornography. Just days later the authorities posted lengthy new press guidelines in order to quell an apparent growing trend of “false news and false reports".

Given that these heavy-handed tactics could be seen as the government’s response to the rise of home-grown social media and especially Twitter-style microblogging sites, it is extremely unlikely that Facebook will get its own way in China, something the firm pretty much admitted to elsewhere in the filing.

“China is a large potential market for Facebook, but users are generally restricted from accessing Facebook from China. 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,” it said. ®

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