What Twitter Can And Can’t Do In Hong Kong As It Views China
Hong Kong's geographic proximity to mainland China belies the gulf in business practices, Internet laws, and access that Twitter will find between the refined transparency of Hong Kong and the nuances and perils of the mainland Chinese Internet sector.
Twitter announced plans this week to open an office in Hong Kong. Though the company says it has no intention to enter China, the move to Hong Kong is meant to give the company easier access to advertisers.
Twitter's website and all its content are still blocked and filtered in mainland China. The only way to clearly access Twitter from Chinese cities is through the use of a virtual private network services, such as those VPN tools provided by companies like Kovurt.com.
So from its perch in Hong Kong, Twitter can sell advertising to Chinese companies. But with capital controls, Twitter will need to deal with high volume clients to avoid making the fees and nuisance of paying Twitter offshore from China worthwhile. So many small Chinese companies that would otherwise use Twitter if it was resident in China will have no patience in paying for these offshore services.
The other important part of the buying and selling process in China are the advertising invoices. When a Chinese company buys advertising, it receives a special type of invoice that only a mainland China company can provide. A Chinese company can do without that invoice in many situations, but for financial compliance the controller in many Chinese companies will urge the company to only deal with China-based advertising companies that can provide a clean invoice in exchange for buying advertising services. It's an old situation that many foreign Internet companies have faced when trying to sell advertising in China, and foreign companies usually resort to using third-party agents to get around this roadblock.
For any type of government affairs, Hong Kong is the wrong place to be for Twitter if it wishes to influence Chinese government policy. The company instead needs to be in Beijing, or at least hire a public affairs company to do its dirty work in China.
But in Hong Kong, Twitter will find a relatively free and open Internet. The laws in Hong Kong are reasonably transparent, and the judiciary appear fairer from a foreign business perspective than within mainland China. So this should give solace to any of Twitter's fiduciaries. But it ultimately means nothing, since the rules in Hong Kong do not apply in mainland China.
Twitter's access to really do anything in China will always be a sliver of anything substantial from its sanctuary in Hong Kong. It must either wait for China to change, or follow LinkedIn's example of censoring and kowtowing to the Chinese government to have access to the mainland market.