Facebook a social pariah in Asia?

Just when it was all geared up to approach the Asian surfers with all its might,the networking giant is...

Written by Agencies | Shanghai | Published: July 19, 2010 3:14:32 pm

Just when it was all geared up to approach the Asian surfers with all its might,the networking giant is suddenly facing what looks like insurmountable problems.

As Facebook gears up for a major push in Asia,the social networking giant may learn that good friends are hard to find as it faces privacy concerns in Japan and Korea and heavy-handed censors in China.

Mark Zuckerberg,chief executive of the freewheeling Facebook,expects his company to use a more localised approach for its forays into Asia’s top three Internet markets. But even so,it could find itself butting heads with well-established names such as Mixi in Japan and Qzone in China.

Facebook is already an Internet juggernaut with nearly 500 million registered users worldwide. Now it is turning to Asia — where it is still under represented — for user growth as its core Western and developing markets start to slow.

Asia is absolutely important for Facebook,said Atul Bagga,a social networking analyst with ThinkEquity based in San Francisco. China is number one in terms of users and Japan is the highest in terms of monetization.

Facebook currently has one million users in Japan and South Korea,while it is blocked in China. By comparison,Mixi has 15 million users,South Korean leader Cyworld,a unit of SK Communications,has more than 25 million,and China’s Qzone,a unit of Tencent,has 350 million.

Facebook,which has found itself at the centre of several privacy protection controversies in recent months,could be looking at an uphill climb for acceptance in both Korea and Japan,where Web surfers jealously guard their privacy.

Facebook was not available to comment.

Analysts said both Mixi and Cyworld are largely closed to foreigners,because they require either local cellphone numbers or identity card numbers to register,reflecting more conservative cultures of Japan and South Korea. Both sites also have a heavier emphasis on community circles.

Complaints against Facebook have also been rising in Korea,especially that the service is not localized and made appealing to Korean users,said Hong Jong-gil,senior analyst at Korea Investment & Securities Co.

MySpace,the popular social networking site operated by News Corp shut down its Korean office last year,within months of its launch after poor uptake from users.


In China,home to the world’s biggest Internet market with 420 million users,privacy concerns play a distant second fiddle to Beijing’s obsession with information control.

Frustration with China’s stiff self-censorship rules led Google to shutter its China-based search service earlier this year.

Twitter,YouTube and Facebook are all blocked in China,and local social networking and search sites exercise strict self censorship in line with guidelines from Beijing.

And yet the market potential is huge: Tencent is expected to make $871 million in revenue this year from Internet value-added services — up 49 percent year-on-year — with most of that coming from Qzone,according to analyst reports.

A government survey last year found nearly one-third of all Internet users were active social networkers and each social networker had an average of 2.8 accounts.

China is a really big market obviously,but to play in it there are the regulations you need to follow,said Credit Suisse analyst Wallace Cheung.

Even if it agreed to play by China’s rules,Facebook could face issues similar to other foreign firms such as eBay and Yahoo,which all retreated from China in the face of stiff competition from homegrown players with a better understanding of local tastes.

People like to blame regulations for the failure of foreign business in China,but the truth is it’s more the American corporate culture that is the reason,said J.P. Gan,a partner at Qiming Ventures,which counts Chinese social networking site Kaixin001 among its investments.

At the end of the day,Facebook’s best chances for success in Asia may come through teaming up with local partners,either through joint ventures or acquisitions,analysts said.

In markets like those,given Facebook’s value,it’s probably better to buy than build,said ThinkEquity’s Bagga. ($1=1201.5 Won)

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