Tuesday, April 7, 2020

Facebook Continues To Rake In Profits from China Despite Ban

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Once again, Facebook has proven not to be a company that can be easily intimidated by a ban. According to reports, the social media company earned a revenue of $5 billion from China even though the country banned it since 2009. This goes to show that Facebook’s influence is global.

China Is Facebook’s Fifth Biggest Market

Reports indicate that Facebook earned profits between $5 billion to $7 billion from Chinese advertisers, which makes up about 10% of the revenue Facebook made in 2018.

The revenue originated from resellers who are representatives of advertisers based in China. Facebook can navigate the Chinese market with the help of a Chinese company called Meet Social. Through the company, Facebook can run an unofficial office in China. Reports have it that Meet Social, through its software platform, places 20,000 adverts each day on Facebook.

china flag

The United States is Facebook’s biggest market while Russia follows closely behind as its second biggest market. Next are Turkey and Canada.

Facebook Yet To Capture 700 million Users In China

Mark Zuckerberg, Facebook CEO, has a lot to contend with at the moment with issues of data and privacy scandals constantly surfacing against the platform. However, efforts have been made by him in the past to re-establish the company in the Chinese market after it was banned in 2009. In 2015, Zuckerberg said:

“Obviously you can’t have a mission of wanting to connect everyone in the world and leave out the biggest country.”

It appears that Facebook has found a way to continue earning from the lucrative Chinese market. The country’s social media market is presently controlled by Tencent, a company in charge of QQ and WeChat, which accounts for lots of social media users in China.

Pivotal’s Brian Wieser believes that the advertising revenue currently enjoyed by Facebook could be short-lived if China experiences a further economic downturn or future regulation.

The many challenges of Facebook didn’t stop it from having a good year in 2018. Results from the company’s fourth quarter showed great progress and this year, the company’s stock is already up by 25%.

So far, Facebook’s efforts to re-establish the social network for Chinese users have proved abortive. Reports have it that Tencent plans to conduct a funding round for Reddit, another social network, this week which will see its global reach grow stronger.

Tencent is also a major stakeholder in Epic Games, the makers of Fortnite, and so far has yet to tap into its massive revenue potential. The approval of games in China has been sped up by the government for the Chinese gaming market, but for some undisclosed reasons, Tencent’s Fortnite is yet to be authorized.

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