In its quest to dominate the social media industry worldwide, Facebook (FB) has long hankered after China, where the company been been banned since 2009. Facebook may have just gained a foothold to help it infiltrate the Chinese market: the appointment of Chief Executive Officer Mark Zuckerberg to the board of one of China’s top business schools, the Tsinghua University School of Economics and Management.
Tsinghua University announced Zuckerberg’s appointment on Monday to the school’s board, a meeting ground of sorts for Western corporate higher-ups and Chinese officials. In addition to Zuckerberg and top brass from IBM (IBM) , Anheuser-Busch InBev (BUD), and other multinationals, it includes Chinese government officials and entrepreneurs tasked with advising Tsinghua SEM’s development.
To the business school, Zuckerberg is an impressive name to add to a cadre of corporate superpowers. To Zuckerberg, who will fly to Beijing this week to attend the school’s annual board meeting, the appointment could provide an additional way for Facebook to make its case for reentering China, analysts say.
“This is just one more data point to me that confirms [that] the potential for Facebook entering China is likely to happen over the next couple of years,” says Victor Anthony, managing director and equity analyst at Topeka Capital Markets. “I don’t know the exact timing, but this is a matter of ‘when,’ not ‘if.’”
It’s too early to know whether the Tsinghua appointment gives Zuckerberg the increased clout he needs to push for the un-blocking of Facebook in China. The social-media site has been blocked since 2009. President Xi Jinping seems even more intent than his predecessor, Hu Jintao, on controlling the Internet. This week, China’s top leaders are meeting in Beijing for a four-day plenum focused on “rule of law.” Few outside observers, however, expect meaningful steps toward creating an independent judiciary or giving freer rein to the media – or unfiltered online discussion.
The list of foreign news sites and social media platforms blocked in China keeps growing longer. In addition to long-standing blocks on The New York Times, Bloomberg, Bloomberg Businessweek, YouTube, Twitter, and Facebook, among others, Beijing recently blocked the BBC and Instagram–perhaps to slow news from the Hong Kong protests from reaching the mainland. If anything, China’s Great Firewall only seems to be getting higher.
When asked what Zuckerberg hopes to accomplish while on Tsinghua SEM’s board and if he would be addressing company hopes to enter the Chinese market while in Beijing, a Facebook spokesperson referred Bloomberg Businessweek to Tsinghua’s press release. A second spokesperson told Reuters earlier on Monday that Zuckerberg will meet with advertising partners and “China experts” to learn about the market.
Indeed, Facebook has been tapping into Chinese university students as part of broader efforts to better understand the Chinese market, Anthony says.
“They’ve been hiring Chinese university students and offering them positions in the U.S., and I think part of the goal of that was trying to bring them in-house to understand China better,” Anthony says, referring to job postings that appeared earlier in the year calling for U.S.-based language specialists fluent in simplified Chinese.
“Another part of that is hiring engineers from Chinese Internet companies to learn details about data centers and co-location centers.”
The company has also inked a three-year lease for space in the heart of Beijing’s business district in preparation to open a China office, people familiar with the matter told Bloomberg News.
What no one can deny is that Facebook has enormous financial incentives to penetrate the Chinese market. As of April, China had about 618 million Internet users—roughly double the U.S. population, according to a memo from Topeka Capital Markets. Should a ban on Facebook be lifted, allowing it to reach 30 percent of China’s Internet users (compared to the 70 percent of Internet users it reaches in the U.S.), the company could tack an additional $3 to $4 onto its share price, the memo says.
