Facebook’s Prospects in Asia

Benjamin Joffe @benjaminjoffe is the CEO of the Asia-based digital research & strategy firm +8* (Plus Eight Star), a speaker in 100+ conferences including TEDx, SXSW, LeWeb and Stanford GSB. He is also a founding partner of Cmune (@cmune), the Beijing-based makers of Facebook’s largest first-person shooter Uberstrike (@uberstrike), who just announced its first funding from Atomico.

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Facebook’s IPO story is a lot about mobile, international growth, and Asia.

I am not Asian by birth but have been living there for a dozen years and researching key Asian markets since before Facebook was created. Here are my views on Facebook’s prospects.

From Facebook’s S1 filing:

In countries such as Japan, Russia, and South Korea we estimate that we have penetration rates of less than 15 percent; and in China, where Facebook access is restricted, we have near 0 percent penetration

While that sounds like a lot of room for growth, let’s look at the reality of it.

First, there is no Asia…

With its variety of languages, religions, GDP, population sizes, web and mobile infrastructures, regulations and incumbent players, ‘Asia’ as a word is little but the remain of a Western concept. The only realistic way to look at Asia is by looking at countries on by one. Let’s get started.

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China

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Why China first? It is the elephant in the room and still growing fast.

Facebook has been blocked there for years, and there is simply no way around the local definition of what constitutes objectionable content. Any web or mobile company who does not self-censor faces shut down if it local, and blocking if not.

While I heard local entrepreneurs say it is not worse than dealing with Sarbanes-Oxley [1], the enforcement is roughly equivalent to how other governments might deal with terrorists, drug dealers, pedophiles, and organized crime (the “four horsemen of internet apocalypse”), or how mass media deals with touchy topics that could upset the powers that be, or their advertisers. For foreign companies that offer content – published either by themselves or by users – it is a pretty big headache, compounded by the double set of constraints they have to deal with: those at home and those in China.

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