VC7

Section 12.5: #11

List the pros, cons, and unknowns if Facebook were to seek a way for the Chinese government to allow its expansion into China. What are the risks if the firm remains out of the country? What do you think the firm should do?

Beginning with the pros (Expanding the business to a new market, potential increase in profits, strengthening of foreign affairs relationships, etc. ), cons (possible surrender of control/information/privacy to foreign powers/influence) and unknowns of our situation, it is hard to say what the risks and rewards of expanding the market of Facebook into China would be. It would require striking a difficult balance of conducting business according to the law local to the area Facebook wishes to operate in while not changing the form, function, or brand that comes with an authentic "Facebook" experience. A large risk for Facebook to consider if they were to wish to operate from overseas would be concerning the data they are allowed to collect and keep according to Chinese social media policies, similar to the issues TikTok faced recently while expanding into the United States.

I believe Facebook would be faced with three options moving forward if put in this position. Option one and two would both be similar and ultimately unfavorable. On one hand Facebook could completely surrender control by creating a sister firm (think similar to SAPamerica, but perhaps something along the lines of FacebookChina) that could operate as close to autonomous as possible away from a parent USA based HQ, or on the other hand simply pull away from the Chinese market altogether. In the end, these both would either warp the Facebook experience and brand into something completely different and unrecognizable, or simply not penetrate the market at all leaving billions on the table. In my opinion, the only option is "behind door number three". Meaning that because this would be a complicated and delicate undertaking, there would need to be great effort and focus (perhaps in the form of a new team or division within the USA base of operation) set aside to navigate if this is possible in the first place and if so, what the final product would look like, and given the project were to make it that far, to then do extensive risk/benefit analysis on the proposed undertaking. If all were to go well, the "carrot at the end of the stick" would be finally bringing great consumer value to a foreign market in exchange for a very significant domestic profit, which to me sounds like the best option by far.