Twitter opens Hong Kong office with eye on China's ad dollars
China's growing middle class and relatively strong business climate present an opportunity for the social network, despite the service still being banned there.
Twitter may be banned in China, but that won't stop the company from trying to do business there.
The social-networking service has opened an office in Hong Kong with an aim to expand its advertising revenue through partnerships with Chinese companies, Twitter confirmed to the South China Morning Post on Tuesday. Twitter's Peter Greenberger will head up the new office.
Twitter has been banned in China since 2009, joining several prominent sites like Facebook and YouTube, among others, as part of the government's ongoing crackdown on free speech. Twitter's service, which allows users to share thoughts in 140 characters or less, has been a major concern for China's government censors who see it as a threat to the ruling party and a potential instigator for unrest.
Twitter has said it would not change its offering to appeal to Chinese regulators, and thus has had little success getting the ban lifted. Last year, Twitter CEO Dick Costolo visited China to meet with government officials, but did not ask them to end the ban. Instead, Costolo said that he wanted to "learn more about Chinese culture." Analysts, however, viewed the move as Twitter's attempt to find new revenue opportunities in a market that's ripe for growth.
Twitter has been hemorrhaging cash for years, and things have not gotten better for the company. In 2014, Twitter lost $577.8 million, down slightly from the $645 million it lost in 2013. While revenue was up to $1.4 billion from $665 million in 2013, shareholders have run from the company, as the stock has fallen 14 percent, to $46.25, in the last year.
Twitter has made clear that it must increase its international revenue to change its course. More than three-quarters of the company's user base lives outside the US, but two-thirds of its revenue is generated domestically. China is viewed as a way to balance that scale.
China's growing middle class and relatively strong business climate present an opportunity for Twitter. Last year, Shailesh Rao, Twitter's vice president of Asia Pacific, the Americas, and emerging markets, said that the company would open an office in Hong Kong with an eye solely on selling advertising to companies in China, Hong Kong and Taiwan.
In a statement to the South China Morning Post on Tuesday, Rao said that the new office will include a "sales team to work directly with advertisers across the Greater China market" and help the company in its "next phase of growth in Asia."
More specifically, Rao said that its offering in China will attempt to connect people in that country and in surrounding areas with Twitter users across the globe. There are currently no plans to try to work with Chinese officials to bring the service to China.
Twitter declined to comment beyond saying the report is true: it has opened a Hong Kong office.