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Facebook Enters China

By
Scott Cendrowski
Scott Cendrowski
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By
Scott Cendrowski
Scott Cendrowski
Down Arrow Button Icon
May 13, 2014, 9:30 AM ET

FORTUNE — Facebook (FB) is finally coming to China. The social networking giant confirmed in reports that it’s looking for office space in Beijing, five years after the Chinese government banned its site in the country.

It’s not exactly a triumphal arrival. What would become Facebook’s first office in mainland China (it’s already in Hong Kong) is said to be a sales base to handle increasing demand from Chinese companies that want to advertise on the social network. After all, Facebook now gets 15% of revenues from Asia and all large Chinese companies are talking about expanding abroad.

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Anyone who knows Facebook’s history in China knows that the news isn’t likely to change its ban in the country. The Chinese government quashed Facebook in large part to give preference to homegrown companies, and the strategy has worked wonderfully. Tencent’s Facebook-like network called WeChat, released two years after Facebook was banned, now counts more than 350 million users and helped drive Tencent’s market cap above $150 billion earlier this year before a recent retreat.

It’s clear that Facebook CEO Mark Zuckerberg’s China problem has only grown over the past couple years. If there was ever a slim chance of Facebook’s service re-opening in China, that looks over. After reports surfaced last year that government officials might raise the bans on Facebook and Twitter (TWTR) within Shanghai’s new 30-square kilometer Free Trade Zone, officials quickly dismissed them, explaining that the U.S. Companies’ sites would conflict with China’s “network and information security.”

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When Facebook COO Sheryl Sandberg visited with senior China officials overseeing Internet controls last year, there was not much talk about its service being allowed in China, according to releases. Instead, the Chinese emphasized Facebook’s role in helping Chinese companies expand overseas. Thus, an upcoming Facebook ad sales office in Beijing.

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By Scott Cendrowski
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