Facebook’s long-running effort to go into China got a boost this week after the U.S. company was handed a license to set up a subsidiary in the country. But quickly after news broke, the license was seemingly revoked.
The incident started when Reuters spotted a filing approved on China’s National Enterprise Credit Information Publicity System for a Facebook subsidiary that is registered in Hangzhou, the location of e-commerce giant Alibaba’s HQ. Records show the subsidiary is financed by $30 million in capital, with Facebook Hong Kong listed as the sole shareholder.
As word of the filing began to spread following the Reuters report, references to the news were blocked on some social media platforms in China were blocked and the filing itself from removed from the system, as The New York Times reported.
Facebook itself said in a statement that it intends to launch an innovation in Zhejiang, the province that counts Hangzhou as its capital, but the language used by the company suggests it hasn’t yet made progress on that plan.
“We are interested in setting up an innovation hub in Zhejiang to support Chinese developers, innovators and start-ups. 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 Facebook representative told sources.
So what happened?
It’s hard to know with the Chinese government — and it certainly looks like Facebook is following developments as much as anyone else is.
It’s well reported that CEO Mark Zuckerberg has a long-standing interest in entering China in some form — he has famously learned Mandarin and appeared at university events among other things — but exactly what that details has never been clear.
Facebook the service remains blocked in China. The company experimented by introducing a stealth app last year, while Zuckerberg has spent time with Chinese ministers, including the country’s internet minister and head of propaganda, but this filing is the most concrete developing for Facebook in China to date. And even that remains uncertain.
It stands to reason that as a late entrant to the country’s already-advanced social media space, and of course an overseas player, Facebook’s first task is to identify a local partner that it can lean on. That’s fairly common for most Western tech companies and it often sees them create local identities which are supported and funded by local investment firms, as has been the case for the likes of Uber, LinkedIn and Evernote.
Facebook previously held talks with Baidu a number of years ago, but an alliance wasn’t forthcoming. The filing in Hangzhou hints at a possible link with Alibaba given the ties that the e-commerce giant has with local authorities in its home province.
Among its many initiatives, Alibaba deployed City Brain — its data surveillance service for governments — in Hangzhou, and it has worked with visiting companies, such as 500 Startups, to help raise awareness of the location for startups and bring overseas visitors in. Outside of China, Alibaba has also invested heavily in startups, most notable Snap, to grow its networks and knowledge.
The link to Facebook is a small one, it could be circumstantial, but it certainly raises the question over whether a partnership might be brewing.
Both Facebook and Alibaba declined to comment when asked about their relationship with each other.
Like Facebook’s own future in China, it looks like time will tell whether there is anything of substance here.
While Facebook’s China journey may have taken one step forward but another ten back, rival Google has been testing out experiments as it figures out how to tackle China going forward. The search giant has opene an AI lab in Beijing, made investments in Chinese startups and released apps on third-party app stores in the country.
Just last week, it began dabbling on WeChat, China’s most popular messaging app, with the launch of its first mini program for the platform.
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