Facebook Inc (FB) And The China Problem

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Facebook Inc (NASDAQ:FB) has around 1.2 billion monthly active users, more than any other social network on the planet, but that doesn’t mean it has dominated the world. There are more than 7 billion people on the planet, and Facebook aims to reach them all. Many of them are in China, locked away from Facebook’s grasp. That might be changing.

Facebook Inc (FB) And The China Problem

A new report from Stifel takes a look at the opportunity for Facebook Inc (NASDAQ:FB) to get into business with China. According to a report from Chinese media, the government of the country is considering putting a free Internet zone into place in Shanghai. That means that foreign websites would be allowed to operate in parts of the city, despite their illegality in the rest of China.

Facebook China operations

China is the biggest source of untapped potential for Facebook Inc (NASDAQ:FB) on planet earth and any sign that the government of the country is considering relaxing restrictions on the website’s operation would be great indication for the future of the social network. This test is not exactly a massive indication that China is ready for a national roll-out, however.

The Shanghai experiment means that the Facebook Inc (NASDAQ:FB) social network will be accessible for 11 square miles of real estate inside a Shanghai free trade industrial zone. The entirety of Shanghai measures 2,445 square miles. That is just one of China’s many extremely large cities.

The Stifel analysts do not expect China to institute any kind of libertarian Internet regime any time soon. They believe that the country will continue to heavily censor and regulate the information its citizens have access to. Facebook Inc (NASDAQ:FB)’s self generated content makes that very difficult to control.

Facebook growth

Facebook Inc (NASDAQ:FB) has control of just shy of 20 percent of the population of the planet and the company’s user base is growing every day, even if the rate is slowing. The company can no longer rely on increasing user numbers in order to increase earnings and revenue. It needs to increase monetization.

That’s the area that most Facebook Inc (NASDAQ:FB) analysts are focusing on. The company has made strides in improving its advertising offerings in recent months, and it’s extended its grip on mobile by an impressive degree. China is a pipe dream for Facebook. If it is ever achieved, it will be a great day for the firm, but it can’t be relied on for strategy.

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