360° Coverage : Whatsapp: Facebook's Entree to China?

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Whatsapp: Facebook's Entree to China?

Feb 24 2014, 7:19am CST | by

I haven’t written about Facebook (Nasdaq: FB) in a while, mostly because the company hasn’t made any concrete moves into China lately despite previous assertions that it would like to enter the...

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22 weeks ago

Whatsapp: Facebook's Entree to China?

Feb 24 2014, 7:19am CST | by

I haven’t written about Facebook (Nasdaq: FB) in a while, mostly because the company hasn’t made any concrete moves into China lately despite previous assertions that it would like to enter the market. But the company’s newly announced plan to purchase the popularWhatsApp mobile messaging service for up to $19 billion looks like a good opportunity to revisit the topic, and what this deal might mean for Facebook in China. Facebook’s own site has been blocked in China since 2009, making it inaccessible to the vast majority of more than 600 million Chinese web surfers. But WhatsApp is widely available, even though it competes with the wildly popular rival WeChat service from local Internet giant Tencent. (HKEx: 700)

Let’s kick off this latest look at Facebook in China with a quick recap of its biggest acquisition to date, which will see it buy Whatsapp for $4 billion in cash, $12 billion in stock and $3 billion in restricted shares. (English article) The deal is the world’s largest tech acquisition since Time Warner’s (NYSE: TWX) $124 billion merger with AOL in 2001 at the height of the dot-com bubble of the late 1990s. The deal will give Facebook access to 450 million members of WhatsApp, which is popular in both North America and Europe.

Now that we’ve looked at the bigger deal, let’s zero in on the implications for China. As a user of both WhatsApp and WeChat, I can personally testify that the former is a relative non-player in China, while the latter has become an instant messaging giant in its home market over the last 2 years. I use WhatsApp to communicate with many of my friends outside China, and use WeChat to stay in touch with nearly all of my China-based friends.

In terms of functionality, I do think that WeChat is a bit better than WhatsApp. One of WeChat’s most popular features is a Facebook-like function that lets people share photos and links with their friends, and WeChat also has several GPS-linked features that WhatsApp lacks. In my view, WhatsApp’s biggest potential attraction for Chinese users is the fact that it’s not based in China, and therefore is less likely to raise suspicions that it monitors its users for politically sensitive content.

A number of non-Chinese friends have told me they’re reluctant to use WeChat because they think their conversations may be monitored. Many Chinese may feel the same way, meaning they might be tempted to try out WhatsApp or other non-Chinese products like Japan’s Line. That general suspicion about domestic products and services leads many Chinese to already prefer global e-mail services like Google’s (Nasdaq: GOOG) Gmail over homegrown products from companies like Sina (Nasdaq: SINA) and NetEase (Nasdaq: NTES).

Facebook co-founder Mark Zuckerberg has said several times that he wants his service to be a truly global product, and that China is an important part of that equation. He has made several trips to China to check out the market, and was even rumored at one point to be in talks about a joint venture with leading search engine Baidu (Nasdaq: BIDU). But tough conditions from Beijing have prevented any deal up until now, including a likely requirement that Facebook set up a separate China service and actively monitor the site for politically sensitive content.

So the new question becomes: How is the WhatsApp acquisition likely to change Facebook’s China approach? My guess is we won’t see any major moves on the China front this year, as Facebook will be more focused on integrating WhatsApp with its own operations. But we could see some quiet promotions by WhatsApp targeting Chinese users as soon as next year.

If Facebook takes that approach it will need to be careful, since Beijing can easily block access if it feels threatened by the service. I did a quick poll of a few of my friends who follow the space, and all agree that WhatsApp is unlikely to be blocked if it takes a careful approach and remains faithful to its core function of letting individuals communicate on a one-to-one basis. If WhatsApp can do that and steer clear of other politics, it might be able to find a limited but lucrative audience of Chinese white collar workers attracted by the app’s more international image and exposure.

Bottom line: Facebook could make a push into China next year using its newly acquired WhatsApp mobile platform, and could score modest success among more educated demographics.

Doug Young is a former China company news chief for Reuters who teaches financial journalism at Fudan University in Shanghai. To read more of his commentaries on China tech news, click on www.youngchinabiz.com.

Source: Forbes Business

 
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10

7 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan Rakyat was to ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

7 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was broken ...
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Update
8

7 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by ...
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Update
7

7 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, Datuk S ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

7 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the sout ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

7 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 million in compe ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

7 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister Datuk Seri Mustapa M ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
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3

8 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
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2

8 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Bazaa ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
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1

8 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara Damansara Sky ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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