Facebook Says Chinese Want Its Site as Regulator Says No

Facebook Inc., operator of the world’s largest social-networking site, said China consumers routinely ask about accessing its services even as a regulator indicated there’s little chance a ban will be lifted.

“When I’m in China, I often get asked,” Facebook Vice President Vaughan Smith told a conference sponsored by the World Economic Forum in Tianjin, China, yesterday. “They all come to me and say, ‘Hey, when is Facebook going to come to China?’”

Since 2009, Facebook has only been accessible in China through so-called proxy services that sidestep government censors. Without an accessible site, the company is limited to selling marketing services to exporters. Lu Wei, minister of China’s Cyberspace Administration, told state-run media at the forum that Facebook “cannot” win access any time soon.

Facebook said before its 2012 listing that substantial legal and regulatory complexities prevented its entry into China, home to the world’s largest number of Internet users.

After his speech yesterday, Smith declined to comment on when Facebook would be able to enter China. Smith said he was unaware of Lu’s remarks as reported by the China Business News.

China controls the Internet by blocking sites that contain pornography, gambling and content critical of the ruling Communist Party.

YouTube, Twitter

Other U.S.-based social-network sites, including Google Inc.’s YouTube and that of Twitter Inc., are also blocked. That leaves LinkedIn Corp., which set up a Mandarin-language professional networking site in February, as the biggest U.S. social media company active in China.

LinkedIn has hit some hurdles in following China’s censorship policy, underscoring the difficulty of doing business in the country. LinkedIn has said it may have gone too far in blocking Chinese users’ posts around the world, and was reviewing its policy as of Sept. 2.

The bans have helped domestic social media sites, particularly Sina Corp.’s Weibo, flourish. Those sites face the same content restrictions.

Lu didn’t mention Facebook during a forum speech earlier this week. He said any Internet company seeking to operate in China had to follow local rules, respect national sovereignty and refrain from harming China’s national interests.

“What we won’t allow is that you have the market in China, you make money in China, and you are hurting China in the meantime,” Lu said. “If you are hurting China’s interests, China’s security or you are hurting the interests of Chinese consumers, we won’t allow this to exist.”

Asia Growth

In May, Smith said Facebook’s business aiding China’s exporters in reaching global markets was seeing fast growth.

Asia is a huge potential growth market for Facebook, with the company’s user base rising faster there than in the U.S. and Canada. Some Chinese users find ways around the country’s firewall to access the network.

Asian users increased 26 percent to 228 million in June from a year earlier, compared with a 7 percent increase for North American users to 152 million, according to a company filing with the U.S. Securities and Exchange Commission that same month. Still, Asia lags as a moneymaker -- North America brings in about three times as much in revenue.

Menlo Park, California-based Facebook leased space in downtown Beijing as the social network prepares to open a China office, people familiar with the matter said in July. The company signed a three-year contract in May to lease more than 800 square meters (8,600 square feet) of office space in the central business district, the people said.

Chief Operating Officer Sheryl Sandberg last September met with the government agency that regulates the Internet. Sandberg and Cai Mingzhao, head of China’s State Council Information Office, discussed issues including the “important role” Facebook plays in helping Chinese companies expand overseas, according to a statement posted to the agency’s website at the time.

— With assistance by Edmond Lococo

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