Facebook may be making global headlines for its upcoming mega IPO, but the social networking giant is making much quieter headlines in China as well, where local media are saying it has been meeting with potential joint venture partners in its long-stated pursuit of entering the market. (English article) All this comes amid a broader opening up of China’s tightly controlled media space, which is also seeing the website of the People’s Daily, the official newspaper of the Communist Party, roaring towards a landmark IPO that, not surprisingly, is seeing huge investor demand. Let’s look at the latest Facebook talk first, which has media saying founder Mark Zuckerberg has made a number of low-key recent trips to China to meet with potential joint venture partners. There’s no reason to believe the reports aren’t true, as Zuckerberg has been very open about wanting to enter China and has made a number of trips to the country. Those include an official visit in late 2010 where he reportedly met with a number of partners including search leader Baidu (Nasdaq: BIDU), and another lower-profile visit just last month where he was spotted shopping in Shanghai in what was described as a personal visit. (previous post) My sources told me last year that Beijing had laid down a number of conditions that would make it difficult for Facebook to come to China, including requiring it to self-censor any China site it operated and also to make any information on the site available to the central government. (previous post) While such conditions looked like a deal killer at that time, Zuckerberg’s determination to enter the market, which includes a recent campaign to hire local Chinese engineers (previous post), seem to indicate he is willing to play by Chinese rules. I admire his determination, but should also point out that if and when Facebook ever does come to China, it will receive the same scrutiny, criticism and negative publicity that western organizations gave to Internet giants like Google (Nasdaq: GOOG) and Yahoo (Nasdaq: YHOO) when they entered the market. Facebook will also face stiff competition from established players Renren (NYSE: RENN) and Kaixin, which dominate the market but are having more difficulty finding profits there. Given Zuckerberg’s determination, I would say that China will be one of his top priorities after the IPO, and I could see the company entering the market as soon as late this year. Meantime, the People’s Daily has put out its own self-congratulatory statement in the run-up to its domestic IPO, saying it has tripled the size of the original offering due to strong demand and will sell shares that value the company at an 18 percent premium to its peers. (English article) As I’ve said before, I expect this IPO to be a huge success due to strong support from cash-rich party members and their associates. The stock could also do well in the longer term due to its party connections, but I wouldn’t look for anything too exciting in terms of growth or business initiatives due to the company’s political nature.
Bottom line: The latest reports on Facebook’s China plans indicate the company is aggressively aiming to enter the market, with a potential new joint venture possible by the end of this year.
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