How Facebook Earns Money from China?

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  According to the statistics from Chinese searching engine marketing (SEM) service provider adSage, there are about 3000 small- and medium-sized enterprises (SMEs) delivering advertisements on Facebook via adSage.
  For the global hottest social network Facebook, the biggest challenge lies in how to get into the Chinese market in the future.
  Facebook’s CEO Mark Zuckberg said that he and his friends founded Facebook not with the ambition of establishing a world-known company. This young genius was considered another trademark person of the Silicon Valley after Bill Gates, Jerry Yang and Steve Jobs. He puts forward an ideal vision beyond the commercial field: improve the interpersonal relations and make the world be more open and connected.
  Facebook has amazing power of connecting people. Right now it has 845 million registered users. But there is still a blank space in its business blueprint – the Chinese market.
   The Early Exploration
  Zuckberg, born in 1984, is facing such a challenge – he and his team are trying to get a foothold for Facebook in China which has 500 million netizens and the greatest potential in the Internet market.
  It is related with an ideal appeal as well as the sustainability of company’s high-speed growth. Therefore, entering China is a necessary step. “China is a potential big market for Facebook,”Facebook wrote on his IPO-related documents. “We will continue to review the Chinese market.”
  This is not the first time Facebook revealed its attitude towards the Chinese market. In 2010 Zuckberg once came to China and visited the bosses of Baidu, Sina, Alibaba and China Mobile, hoping to find an opportunity of cooperation. At that time Zuckberg said that he wanted to find a local partner and achieve success in China based on “our own operation principles”.
  At the beginning of 2011, Facebook established a sales office in Hong Kong, which is mainly in charge of the ads busi- ness in Hong Kong and Taiwan. This is the second sales office of Facebook in Asia.
  Actually, the young American company is making other attempts. The Chinese companies having business in overseas markets, and the foreign trade B2C websites are what Facebook could not miss. Facebook is going to produce more localized marketing methods for these potential customers.
  Facebook has no official agent in the world but makes some compromise in China. It recruited adSage, a giant in the SEM service provider in China. Though adSage is not officially named as an agent for Facebook, the Shanghai-headquartered company plays a similar role. As the only partner of advertisements of Facebook in the Asian-Pacific regions, adSage helped Chinese enterprises open ad accounts in Facebook. During the process, adSage is usually accompanied by workers from Facebook’s sales office in Hong Kong.
  According to the insiders of adSage, there are 3000 SMEs in China presenting their ads on the web page of Facebook with the help of adSage.
  People from adSage said that it was still talking about details of the cooperation with Facebook. This is only the start and Facebook just extends its sales arm into China.
   The Opponents in China
  Facebook is considering a compromising method to get into the Chinese market.
  Notable is the rare success of foreign Internet companies in China. Google’s experience in China is worth borrowing. Obviously, Facebook has already sensed this problem and knows that it could face the competition with Chinese local social network, such as Renren.net, if it joins in the Chinese market.
  Facebook has its own advantages – it is more matured compared with Chinese local social network service providers, in addition to its leading place in the social network industry and rich experiences in this field.
  In the fourth quarter of 2011, Facebook’s total revenue reached 1.131 billion U.S. dollars. The revenue from advertisements amounted to 943 million U.S. dollars, accounting for 83% of the total revenue. The paid services and games contrib- uted the income of 188 million U.S. dollars, taking 17% of the total income.
  But the famous Chinese portal website Tecent, which is famous for its instant communication tool QQ, only saw the ads business contribute to 8% of its total income in the third quarter of 2011, while 80% of its income comes from the online value-added services.
  The Chinese social network websites are still contending for the market share. Sina, Tecent, and Renren are still pursuing the number and loyalty of users. Sina Weibo, one of the most popular social network applications in China has already initiated the functions and services of “Weibi” (micro currency) and Mini Games to turn around its current status of suffering losses.
  Lu Benfu, a fellow from the Chinese Academy of Social Sciences said that there was no company in China sharing the same operation pattern with Facebook. The Chinese companies should learn the commercial pattern of delivering ads through SNS and integrated trade.
  But some experts thought that even though Facebook was more matured, it is hard to defeat the Chinese local companies in China. A marketing expert said that Facebook’s pattern of earning profits is based on a large number of users and localized marketing resources. In China, the local companies have more obvious advantages in these fields.
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