China said to quickly pull approval for new Facebook venture

Paul Mozur
Facebook founder and CEO Mark Zuckerberg meets Founder and Executive Chairman of Alibaba Group Jack Ma (not pictured), at the China Development Forum in Beijing, China, March 19, 2016. 
Shu Zhang | Reuters

For Facebook, success in China was brief. Very brief.

For several hours, a Chinese government database showed that Facebook had gained approval to open a subsidiary in the eastern province of Zhejiang. Facebook said it would use the company to set up an innovation hub there.

Then the registration disappeared and references to the subsidiary were partially censored in Chinese media.

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Now the approval has been withdrawn, according to a person familiar with the matter who declined to be named because they were not authorized to speak on the record.

While the about-face does not definitively end Facebook’s chances of establishing the company, it makes success very unlikely, the person said. The decision to take down the approval, the person added, came after a disagreement between officials in Zhejiang and the national internet regulator, the Cyberspace Administration of China, which was angry that it had not been consulted more closely.

A Facebook spokeswoman declined to respond to a request for comment. The Cyberspace Administration of China, the Zhejiang provincial government and the municipal government in Hangzhou, Zhejiang’s provincial capital, did not respond to requests for comment.

The strange incident underscores how much of a challenge it has become for the globe-spanning social network to get into China — even just to open an innovation center.

Its main platform has been blocked in China for almost a decade. Its other services, such as Instagram, were once popular in China, but have since also fallen behind the government’s filters. While Facebook had hoped to dip a toe in the market and work with Chinese developers, its very presence appears to have become a large, and incendiary, political question here.

Google, which has also long had its services blocked in China, has recently made progress there, opening an artificial-intelligence center and releasing a game in the market. Last month Google said it would invest $550 million in the Chinese e-commerce company Other American tech companies, like LinkedIn, have maintained a presence by censoring content at Beijing’s request.

The kerfuffle also illustrates how complicated China’s bureaucracy can be. Foreign companies seeking to expand here must navigate a vast and decentralized government in which provinces, cities and ministries all vie for influence and power. While one part of the government may be happy to support a foreign company like Facebook, that could ruffle feathers elsewhere. Facebook seems to have fallen victim to such a scenario.

The government turnaround is only the latest incident in the long, strange history of relations between the world’s largest social network and its largest internet market.

Over the years, Facebook’s founder, Mark Zuckerberg, has tried myriad ways to court China. He asked Chinese president Xi Jinping to suggest a Chinese name for his child during a state visit, held a Mandarin-language question-and-answer session with students that was widely shared, and even posted photos from a smog-filled jog through Tiananmen Square.

Facebook has experimented with a censorship tool and ran a photo-sharing application in China, called Colorful Balloons, without putting its name to the product. The product was eventually taken down and also did not seem to have any official approval from the Cyberspace Administration.

For Facebook, angering officials at China’s internet regulator could make progress particularly difficult, especially as new personnel have just taken over managing the relationship with the Chinese government.

At the end of last year, Facebook’s former head of government relations, Wang-Li Moser, left the company. Ms. Moser, who had been brought in from Intel to help Facebook court China’s leadership, had become a sign of the company’s ambitions, though she struggled to make headway.

Stepping in to replace her has been Zhang Jingmei, who created the company that ran the anonymous Colorful Balloons app, and William Shuai, who was once a low-level Chinese official. Both were listed on the board of the newly created, and quickly disappeared, subsidiary in Zhejiang.