Facebook IPO filing: How does the social network feel about China?

February 1, 2012

The continued success of Facebook depends heavily on the company’s ability to continue expanding internationally. But the firm acknowledges in IPO documents filed Wednesday that there’s at least one critical market in which it faces major roadblocks: China.

The document says, “China is a large potential market for Facebook, but users are generally restricted from accessing Facebook from China. 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.”

Furthermore, Facebook acknowledges that even if it were to eventually break in to the massive Chinese market, it would face steep competition from more entrenched Chinese competitors including Renren, Sina and Tencent.

In addition to these hurdles specific to doing business in China, Facebook outlines a host of host of risks that come along with doing any international business, including “political, social, or economic instability;” political or social unrest, “burdens of complying with a variety of foreign laws;” and “difficulties in staffing and managing global operations and the increased travel, infrastructure, and legal compliance costs associated with multiple international locations.”

Despite the fact that the firm hasn’t made inroads in China, the IPO filing shows that the company has had great success infiltrating other global markets. In nations including Chile, Turkey and Venezuela, the firm says it estimates its pentration rate exceeds 80 percent. On its home turf, the United States, as well as the United Kingdom, the penetration rate is estimated to be 60 percent. The figure is somewhat lower for countries such as Germany, Brazil and India, where Facebook estimates its penetration rates are between 20 percent and 30 percent.

More from The Washington Post:

Facebook files for IPO

Facebook warns investors more federal probes may come

Could Silicon Valley see a ‘Facebook effect’?

Facebook ramps up Washington presence

Sarah Halzack is The Washington Post's national retail reporter. She has previously covered the local job market and the business of talent and hiring. She has also served as a Web producer for business and economics news.
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