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TheStreet Open House

Facebook on China Road

NEW YORK ( TheStreet) --  Facebook (FB) may be opening an advertising office in China, even as the company's Web site remains censored in the country.

The social-media giant could lease space in Beijing's Fortune Financial Center within a year, according to Bloomberg. Facebook, however, hasn't decided if it will hire contractors or full-time employees for the office, Bloomberg said.

"Today, our sales team in Hong Kong is supporting these Chinese businesses, but because of the rapid growth these businesses are achieving by using Facebook, we are of course exploring ways that we can provide even more support locally and may consider having a sales office in China in the future," Facebook Vice President Vaughan Smith told Bloomberg in an email.

China is considered one of the last untapped frontiers for U.S. social-media companies such as Facebook and Twitter (TWTR).


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Twitter was banned from China in June 2009, reportedly because of its ability to deliver real-time messages to a large number of followers. That provided a way for Chinese to publish first-hand news accounts that were unscreened and uncensored.

In July of that same year, Facebook was banned after riots occurred in Urumqi, the capital city of Xinjiang, a province in western China.

China worried that the site's ability to mobilize large numbers of people, as seen in Urumqi, would pose further threats in the future.

The absence of U.S. social-media sites in China has resulted in a boom of copycat firms that fill the void of Facebook and Twitter. Weibo (WB), a Chinese service that works like Twitter, has more than 129 million monthly active users and went public in the U.S. last month. The company has a market capitalization of over $4 billion, suggesting there's market share to be gained in China if the government lifts its ban on Facebook and Twitter. 

In its IPO prospectus in 2012, Facebook said that "substantial legal and regulatory complexities" prevented its entry into China, which is home to the world's largest number of Internet users.

An approved sales office in Beijing could be the first step to repairing the relationship between Facebook and China's government. If Facebook gains an early foothold in the country, it may result in revenue growth and share price appreciation unmatched by any of its social-media peers.

>>Read More: The Real Reason Behind an Apple, Beats Deal

>>Read More: Why Twitter Has More Upside Than Facebook

At the time of publication, the author had no position in any of the funds mentioned.

Follow @macroinsights

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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