Tuesday, 24 July 2018

The Washington Post/Elizabeth Dwoskin and Emily Rauhala: Facebook opens subsidiary in China after being locked out of the country for years

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Facebook opens subsidiary in China after being locked out of the country for years

REUTERS/Eric Gaillard (Eric Gaillard/Reuters)
by Elizabeth Dwoskin and Emily Rauhala July 24 at 12:08 PM Email the author

SAN FRANCISCO -- Facebook has obtained a license to set up an office in China – a first for the company, which has been shut of China’s lucrative market for years despite many attempts to break in.

The $30 million subsidiary, which will open in the southern city of Hangzhou, would be set up as a startup incubator, making minor investments and advising small businesses, according to a person familiar with the company’s thinking and a Chinese business filing.

Facebook is currently blocked in China. Chief executive Mark Zuckerberg made personal appeals to the Chinese Communist Party’s top brass, including learning Mandarin and taking a “smog jog” through Tiananmen Square — braving toxic air pollution for a photo op in 2016.

“We are interested in setting up an innovation hub in Zhejiang to support Chinese developers, innovators and start-ups,” the company said in a statement. “We have done this in several parts of the world -- France, Brazil, India, Korea — and our efforts would be focused on training and workshops that help these developers and entrepreneurs to innovate and grow.”

A notice published on China’s National Enterprise Credit Information Publicity System listed the company as Facebook Technology (Hangzhou) Co., Ltd and noted that it is wholly owned by Facebook Hong Kong Limited. It has registered capital of $30 million.

The filing, which is no longer accessible, provided few details about what the subsidiary will—or won’t—do. It stated the “business scope” included technology development, technical services and investment consulting, among long list of other things.

Facebook had quietly launched a photo-sharing app called “Colorful Balloons” for the Chinese market last year. It was released by a company called Youge Internet Technology.

Youge’s executive director is a woman named Zhang Jingmei, who has been pictured visiting Shanghai officials with the woman who was then Facebook’s top representative in China, Wang-Li Moser. Zhang is listed as the “legal person” for Facebook’s subsidiary in China.

Facebook has a sales office in Hong Kong, and for years has sought to open an office in mainland China. But China has a robust economy of social media companies, and the government has favored local competitors.

Facebook’s efforts have been marked by fits and starts. The company scouted for space in Shanghai last year and obtained a permit to open an office in Beijing in 2015. Neither materialized.

Oculus, Facebook’s virtual reality company, has a Shanghai office, and the company is interested in China for its growing hardware ambitions.

— Amber Wang and Luna Lin contributed from Beijing
Elizabeth Dwoskin
Elizabeth Dwoskin has been reporting from Silicon Valley since 2013. She was the Wall Street Journal's first full-time beat reporter covering big data and artificial intelligence. In 2016, she joined The Washington Post as Silicon Valley correspondent, becoming the paper's eyes and ears in the region and in the wider world of tech. Follow
Emily Rauhala
Emily Rauhala is China correspondent for The Washington Post. She was previously a Beijing-based correspondent for Time and an editor at the magazine's Hong Kong office. In 2017, she shared an Overseas Press Club award for a series about the Internet in China. Follow
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Last Updated:12:19 PM 07/24/2018

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