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Facebook States Mission to Connect World… Except China

In its much-anticipatedIPO filing, Facebook states that its mission is “to make the world more open and connected.” But apparently the efforts to extend that mission to China are at a standstill.

Facebook founder and CEO Mark Zuckerberg
Getty Images
Facebook founder and CEO Mark Zuckerberg

“China is a large potential market for Facebook, but users are generally restricted from accessing Facebook from China,” states the filing. “We do not know if we will be able to find an approach to managing content and information that will be acceptable to us and to the Chinese government.”

Failure to enter the mainland Chinese market could raise questions about the growth potential of the social network juggernaut. Two years ago, Google closed down its China site because of censorship by government authorities. Shares of the search engine took a hit in January 2010 after the announcement and the company has taken steps recently to regain a footing in the country.

Under the Risk Factors section of the filing on Wednesday, Facebook states:

“It is possible that governments of one or more countries may seek to censor content available on Facebook in their country, restrict access to Facebook from their country entirely, or impose other restrictions that may affect the accessibility of Facebook in their country for an extended period of time or indefinitely. For example, access to Facebook has been or is currently restricted in whole or in part in China, Iran, North Korea, and Syria.

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In addition, governments in other countries may seek to restrict access to Facebook if they consider us to be in violation of their laws. In the event that access to Facebook is restricted, in whole or in part, in one or more countries or our competitors are able to successfully penetrate geographic markets that we cannot access, our ability to retain or increase our user base and user engagement may be adversely affected, we may not be able to maintain or grow our revenue as anticipated, and our financial results could be adversely affected.”

The signal of this standstill with China may be one reason why shares of Renren and Sina , current operators of social networks there, jumped in after hours trading following the filing. Sina’s offering is called Weibo.

“We believe there is significant value left for Sina Weibo as we continue to believe it could function as the Facebook of China,” wrote PiperJaffray’s Gene Munster, who recommends buying shares of Sina, in a note Wednesday. “We believe the Facebook IPO suggests there should be $25 billion in social market cap in China, a significant part of which we believe will ultimately belong to Sina Weibo.”

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