I told you so: Facebook in China

Damn, this week has been good for my ego...

In my last post about Facebook I predicted that the world's largest social network would try to enter China through a joint venture with Baidu, the Chinese internet search giant. Two reasons for that stood out:

1- Facebook can't afford to ignore the Chinese market. As the company grows, prepares its IPO and needs to justify its sky high valuations; it can no longer accept to leave 500 million netizens outside of its reach. Furthermore, Facebook is putting mobile at the center of its strategy and China is THE country where mobile internet will be taken to an entirely new level (figures here). In my view, Facebook's vision is almost too advanced for western internet users. But in China, people will integrate social networks and mobile technologies into their daily life and consumption habits at an amazing speed, way faster than anywhere in the developed world. The Chinese market is thus an amazing playground for Facebook that wants to turn the social network into a platform for a myriad of services ranging from e-commerce to virtual currency and mobile payment.

The little red Facebook

2- Despite its status of superstar of the Chinese tech scene, Baidu does not have a strong position in social services (a problem is shares with Google). It is fighting against well established competitors with strong user bases such as RenRen, Pengyou and Kaixing101. A joint venture with Facebook may be its only chance to make up for the time lost and shake up the market.

As it happens, rumors have been surfacing this week that Facebook and Baidu may be going forwards with a project to create some kind of Chinese version of Facebook. What the end result will look like is still unclear at this point but we will surely know more in the weeks to come.

For now, neither Facebook nor Baidu have confirmed the rumors and there is some talk that the partner might not be Baidu but Sina (China's leading micro-blogging site). But I strongly believe that the deal will go through, which might frighten Kaixing and thwart its IPO plans. This is not really good news for RenRen either since it is essentially a Facebook copycat that might suffer from having the real deal now in its own backyard. Look ahead for an interesting couple of weeks in the SNS universe.