Why Twitter Is Opening a Hong Kong Office Despite Being Blocked in China

Platform's New Location Is Set to Open Next Year

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Credit: David Paul Morris/Bloomberg
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Despite the fact that China's government prevents internet users from accessing Twitter, the social-media company is setting up an office in Hong Kong to tap into advertising demand from Chinese companies looking to reach a global audience.

Twitter plans to open the office in the first quarter of 2015. It will be headed by Peter Greenberger, the platform's Singapore-based director of sales for emerging markets.

The Wall Street Journal first reported the plans. A spokesman for Twitter confirmed that it was opening an office, but declined to provide further details, including the size of the sales staff there.

The social-media platforms used within China are not much help to companies looking to reach consumers elsewhere. That makes Twitter, Facebook and Google -- which are all blocked on the mainland -- attractive to Chinese companies expanding globally.

Many Chinese brands already have Twitter accounts, including computer giant Lenovo and China's No. 1 smartphone maker, Xiaomi. Even some state-owned companies such as Air China tweet, as do Chinese media that are considered to be mouthpieces of the Communist Party, including the People's Daily.

Twitter's new office is looking to court companies such as Alibaba, Lenovo and smartphone makers Xiaomi and Huawei, as well as media partnerships and mobile services.

Like Facebook, Twitter's brightest prospects for user growth lie abroad. Of its 284 million active users, 78% are outside the U.S. Internationally, users are joining at a faster clip, but they are less engaged than U.S. users and less lucrative -- during its most recently completely quarter, Twitter netted $4.28 in ad revenue for every one-thousand timeline views in the U.S., compared to $0.84 abroad.

Hong Kong is not affected by the massive firewall on mainland China. Elsewhere in Asia, Twitter has offices in Seoul, Tokyo and Singapore, and plans to open one in Jakarta.

While it lacks an official Chinese presence, Twitter has waded quietly into the country in other ways. MoPub, its mobile-ad exchange, is available to Chinese developers, along with Fabric, the software toolkit for services and ads Twitter introduced last month.

Other companies blocked by China's firewall do business with Chinese companies. For example, Google has ad-sales offices in mainland China, and Facebook is reportedly preparing to open an office in Beijing (not to mention, Mark Zuckerberg has learned Mandarin well enough to give a talk at a university in Beijing).

Twitter's Hong Kong office will "help make Twitter more top of mind now that there will be a representation available for meetings and conference calls," said Shann Biglione, head of strategy for ZenithOptimedia in China. "That being said, Twitter is not Facebook, its reach and popularity is less global, and its advertising platform is still limited in comparison, meaning there might not be as much appetite in the short term."

He added: "Certainly at this stage there is not much to lose for Twitter, the question is whether they will be able to offer something to gain to mainland Chinese brands."