Should Facebook (or Your Company) Go into China?

Last Updated May 17, 2011 10:50 AM EDT

An excellent Bloomberg Businesseek cover story on Facebook COO Sheryl Sandberg reveals that she is split with her boss, Mark Zuckerberg, over whether Facebook should open a division in China.

Sandberg, who came to FB from Google, probably still has burn marks from that company's confrontation with the Chinese government over privacy and other issues. The article suggests that she believes too many compromises would have to be made to do business there. Zuckerberg thinks the company needs to be in China and pictures his company as a driver of social change, much as it was in Egypt and Tunisia.

That's the kind of fundamental argument that should be happening. Because at the end of the day, the decision on whether to enter China should not be just about pursuing growth opportunities.

Harvard Business School professor Tarun Khanna, who heads Harvard University's South Asia Initiative, says any company looking to enter China first has to have a conversation within its walls asking, why are we in business? Why are we successful? Do we have a chance to duplicate our success in a new country such as China where, although capitalism is practiced, it is within a framework of a still strong central government?

Khanna tells the Business Standard (but not speaking on the Facebook situation):

"When a company is successful in its original conception -- its business and geographic origin -- it has to take stock of why it is successful. It is often difficult because everything is business as usual; they are doing a hundred different things to get the product out the door, to sell it and service it.... When expanding in a new geography or business, the new context will put a different pressure on the business. The model will have to change and rapidly it will become complicated. So, early on, there needs to be experimentation and dialogue to figure out what are the things that needs to be changed."

So back to Facebook. It's mission statement reads, "Facebook's mission is to give people the power to share and make the world more open and connected." This statement has evolved over time; for most of its life, the mission was about helping friends stay connected. From "friends" to "the world" is a big, intentional leap.

If Facebook is true to its mission, it must be in China, where a fifth of the "world" resides. But the real question is, when? Can the company duplicate its success there today? Does "open and connected" sound like a happy fit with China's current governmental philosophy and censorship of the Internet? What must those same officials think even as they read Zuckerberg wants Facebook to be a positive catalyst for political change?

In or out? If you were in the upper echelons at Facebook, what would your argument be?

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(Photo by smemon87, CC 2.0)
  • Sean Silverthorne

    Sean Silverthorne is the editor of HBS Working Knowledge, which provides a first look at the research and ideas of Harvard Business School faculty. Working Knowledge, which won a Webby award in 2007, currently records 4 million unique visitors a year. He has been with HBS since 2001.

    Silverthorne has 28 years experience in print and online journalism. Before arriving at HBS, he was a senior editor at CNET and executive editor of ZDNET News. While at At Ziff-Davis, Silverthorne also worked on the daily technology TV show The Site, and was a senior editor at PC Week Inside, which chronicled the business of the technology industry. He has held several reporting and editing roles on a variety of newspapers, and was Investor Business Daily's first journalist based in Silicon Valley.