Facebook quietly sets up Chinese subsidiary

Facebook quietly sets up Chinese subsidiary

The Chinese government has withdrawn its approval for the California tech company's plan to launch a subsidiary in the eastern province of Zhejiang, The New York Times reported on Wednesday, citing a person familiar with the matter.

"We are interested in setting up an innovation hub in Zhejiang to support Chinese developers, innovators and start-ups", the company said in a statement.

Facebook's application for the subsidiary was approved on July 18, according to a filing seen by Reuters on 24 July, but it was not clear when the filing was published. Facebook said it wanted to use the subsidiary to coordinate with Chinese developers in the closely censored market.

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The Chinese internet regulator was not immediately available for comment.

Similarly, Emily Rauhala of the Washington Postwrites of her astonishment at the filing's sudden disappearance and wonders if this portends a quick end for Facebook's "innovation hub". Facebook has been banned in China for years with no hope of overcoming what has been called the Great Firewall of China. Before holding those positions, Shuai was briefly a low-level official in the Chinese government.

The moves indicated how complicated it remains for Facebook to navigate China, where it has been blocked for nearly 10 years.

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Of course, even if Facebook does manage to get its subsidiary, it's still barely any closer to getting its social media network re-launched in the Middle Kingdom.

Google, whose main services are also blocked in China, has likewise taken steps to expand its presence in China this year.

Instead, Chinese users can only access domestic social media sites such as Weibo, Renren and YouKu, which the government can monitor. It already has similar hubs in other markets such as India, South Korea, France, and Brazil.

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Last month, Facebook told a U.S. Senate Intelligence Committee that four of its 60 past data-sharing agreements were with Chinese hardware manufacturers.

Correction: An earlier version of this story said Facebook had opened an office in China after obtaining a permit. The company is due to report quarterly results after the closing bell.

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