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Sunday, September 30, 2012

Facebook, Twitter Growth in China Has Lots of Caveats By Bruce Einhorn on September 28, 2012

An internet cafe in Wuhan, central China's Hubei province
An internet cafe in Wuhan, central China's Hubei province

A new report shows just how porous China’s infamous Great Firewall might be for local Internet users determined to access banned websites. The country’s censors have deemed Facebook (FB) and Twitter unfit for local viewing, but that hasn’t stopped millions of Chinese from using the social-networking services, according to London-based researcher GlobalWebIndex. There are 63.5 million Facebook users in China, up from 7.9 million two years ago, even though Facebook is officially banned there. Twitter has equally impressive numbers, with 35.5 million users in China, triple the amount from 2009.

The new numbers might seem to represent a big win for the U.S. companies. All of a sudden, we no longer should think of China as a big miss for the social-media players. Indeed, the GlobalWebIndex numbers mean that China is Facebook’s third-largest market, behind the U.S. and almost tied with No. 2, Brazil, according to social media research company Socialbakers.

A victory for Chinese net users? Perhaps. GlobalWebIndex acknowledges that there are skeptics who don’t accept its conclusions: “We routinely come across the argument that these sites are blocked in China, and therefore, our figures cannot possibly be correct. However, it only takes a little bit of desk research to discover that what is called the ‘Great Firewall’ is actually much more porous than the Chinese government would like to admit. On closer inspection, Chinese users are using VPNs (Virtual Private Networks), VCN (Virtual Cloud Networks) or connections at work that may be routed internationally. Crucially, this means that users won’t be picked up in analytics and will not register as being in a Chinese location at all!”

Jon Russell, Asia Editor of The Next Web, doesn’t buy GlobalWebIndex’s numbers. He questions the reliability of the London firm’s conclusions because the data come from a survey of 8,000 web users over three years. “Information about Facebook and Twitter are often open to sizeable degrees of error and interpretation, especially when related to China’s murky Internet with VPN connections and censorship,” he writes. “With that in mind, we’d suggest that you treat the GlobalWebIndex figures with more than a healthy dose of skepticism … oh and pour on a tonne of salt for good measure.”

Point—and salt—taken. Even if GlobalWebIndex’s figures are accurate, though, the American social-media companies would be hard-pressed to benefit from the Great Firewall’s failure. Facebook might have 63.5 million users today in China, but would-be advertisers need to be wary about how long the country’s cybercops might allow such an egregious breach in the Great Firewall.

China’s censors are notoriously fickle: Sometimes they ease up and sometimes they crack down, often based on the state of Sino-U.S. relations or other political factors. Over 63 million Chinese are getting around the Great Firewall, according to GlobalWebIndex, but what happens if the censors turn things up a notch to retaliate against an American snub? Or suppose they get embarrassed by the attention the GlobalWebIndex report receives and decide to take action against censorship dodgers? That 63.5-million market could shrink fast.

Yes, I understand that these Facebook users have also demonstrated they can quickly adapt to measures taken by the Great Firewall. Still, the cat-and-mouse game is not likely to appeal to advertisers. Moreover, if Chinese are getting around the Great Firewall via connections that make it seem they are somewhere other than China, censors probably aren’t the only ones that end up confused.

Advertisers might have difficulty targeting ads for them, since it’s unclear where the Internet users really are. Social-media companies that want to take advantage of the world’s largest Internet market can’t build a China business based on breaches in the Great Firewall.

Einhorn is Asia regional editor in Bloomberg Businessweek's Hong Kong bureau.

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