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Facebook creates new China subsidiary despite ban and censorship

28 July 2018

A Facebook spokesman said the USA tech giant was setting up an "innovation hub" in Zhejiang, eastern China, to allow it to "support Chinese developers, innovators and start ups". Facebook told the Post only that it is "interested in setting up an innovation hub in Zhejiang", which would follow similar efforts in France, Brazil, India and Korea.

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

On Tuesday, a screenshot purporting to be a filing for the entity on China's National Enterprise Credit Information Publicity System website went viral on WeChat and Weibo, before the news crossed over into the English-language realm and was eventually confirmed by a Facebook spokesperson.

Facebook will be opening an "innovation hub" in Hangzhou, according to a company spokeswoman. The news came shortly after Google doodled its way further back into mainland China, where its search and mail operations have also been blocked for nearly a decade. But in last week, it looked like changes in the country.

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Looking ahead, Facebook, which hasn't commented publicly about the China reversal, could still try to open the hub.

Shares of Facebook fell as much as 24 percent in after-hours trading on Wednesday after the company reported slowing revenue growth amid larger expenses to address concerns over privacy and security of user data.

A company representative clarified that by establishing a company-owned unit in a blocked zone did not reflect that Facebook was modifying its approach towards China. In January, Facebook signed an agreement with Chinese hardware company Xiaomi produce a virtual reality headset only for the Chinese market.

China strictly censors foreign news outlets, search engines and social media including content from Twitter Inc (TWTR.N) and Alphabet Inc's Google (GOOGL.O). "Right now, there isn't an intersection". Zhang is listed as the "legal person" for Facebook's subsidiary in China. Last October Zuckerberg met Chinese President Xi Jingping at Tsinghua University business school where both Zuckerberg and Apple CEO Tim Cook are on the advisory board.

Facebook creates new China subsidiary despite ban and censorship