Facebook in Chinese Catch-22: VC

Article Link: Facebook in Chinese Catch-22: VC

Facebook may be hitting all the right notes in its efforts to tap the Chinese market, but the tech behemoth still faces a tough battle, David Chao, co-founder and general partner of DCM Ventures, said Monday.

“I think that Facebook’s in a Catch-22. On the one hand, they have been touted by the U.S. media and government that it’s a pro-democracy tool, like you’ve seen in the Arab Spring,” he told CNBC’s “Squawk Alley.”

“I think the more the U.S. media keeps making social media into the Trojan horse for democracy, I think it becomes really, really tough.”

Facebook CEO Mark Zuckerberg has made several trips to China in his years running the company. Most recently, he met with Liu Yunshan, China’s propaganda chief, who told him he hopes Facebook can share its experience with Chinese companies to help “Internet development better benefit the people of all countries,” China’s official Xinhua News Agency reported.

Facebook and other Western social media, including Twitter, are banned in China. Zuckerberg has long been courting China’s leaders in a so far futile attempt to access the country with the world’s largest number of Internet users — 668 million as of last year.

“On the other hand, historically, [Facebook’s] been much more flexible about working with other governments, unlike Google has been with China on its filtering issues,” Chao said.

In the same interview, GGV Managing Partner Jeff Richards said: “It’s not like social media isn’t happening in China; it’s just not happening in the way that it happens here in the U.S.”

He also noted that Chinese social media platforms, like WeChat, work closely with the government to make sure they abide by their rules and regulations. WeChat has over half a billion monthly active users.

— The Associated Press contributed to this report.

Source: CNN Investing