Snap opens new office in China to focus on R&D

The company currently manufactures its Spectacles in China, but Snapchat is banned

Financial trends and news by Steven Loeb
December 21, 2016
Short URL: http://vator.tv/n/48a9

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Snapchat, like Facebook and Twitter, is currently banned in China. Much like those other two companies, though, Snapchat can't simply sit back and ignore the country with the largest number of Internet users on the planet.

Snap, the parent company of Snapchat, may not be able to get its app to the Chinese people, but it does have operations in the country, and now it's going to have a new office there as wella Snapchat spokesperson has confirmed to VatorNews. Located in the city of Shenzhen, the office will focus on research and development.

The company already has a strong connection to China: Snapchat Spectacles, sunglasses with an integrated video camera that makes it easy to create Memories, are being assembled there, so it make some sense for the company to open an office in the country. First released in September, Spectacles are the company's first foray into hardware and, if nothing else, a new office allows it to keep a closer eye on production.

Currently, the office in China has less than 20 employees, while Snap Inc. has more than 1,500 employees around the world. The majority of its product design and engineering efforts will continue to be led out of its headquarters in Venice, California. While the office may be small, Snap is currently staffing up; a recruitment notice posted last week, was picked up by a Chinese tech blog.

Snapchat has another connection to China in the form of its investors. In March of last year, Alibaba invested $200 million into the company, followed by participation from Tencent in another round just two months later.

What exactly Snap’s end game in China looks like isn’t really clear, though it's not hard to see the company potentially wanting to have a similar relationship with China that Facebook does, where the service itself cannot operate, but it can still have relationships with Chinese businesses. Last year, Mark Zuckerberg said that China was still one of the company's biggest ad markets, due to businesses using it to sell products outside of their home country.

Right now, there doesn't seem to be an indication of movement toward Snapchat actually becoming available to Chinese Web users, as that is a path fought with peril due to strict censorship by the government.

Facebook found itself in some hot water last month when it was reported that it was developing a censorship tool that would stop posts from appearing based on the geographic location of the user. That would let a third-party, likely a Chinese company, would have full control and be able to decide which stories and topics users get to see. Combined with the scandals surrounding the company’s trending news, and the proliferation of fake news during the election cycle, did not help inspire confidence in Facebook's editorial stances.

If becoming unbanned in China is Snapchat's ultimate goal, it's going to have to tread very, very carefully when it comes to the issue of what will and won't be allowed by the government. 

One other aspect that could affect Snap's relationship with China going forward are President-elect Trump's policies around trade. One of his major talking points during the campaign was about China being a currency manipulator, and one of the things that Trump has proposed is to impose a 45 percent tariff on imports from the country. 

That could cause problems for American companies who are looking to sell goods in China. Soon after the election, an editorial in the Global Times, China’s state-run newspaper, threatened to halt iPhone sales if Trump goes through with this plan, while also expounding on a plan to begin importing goods from other countries. 

"China will take a tit-for-tat approach then. A batch of Boeing orders will be replaced by Airbus. US auto and iPhone sales in China will suffer a setback, and US soybean and maize imports will be halted," it wrote. There was also a threat of limiting the number of Chinese students studying in the U.S.

It would could also wind up driving up the price of Chinese-made goods, which have to be imported back into the United States, like the iPhone and Snap's Spectacles. 

The report of Snap's new office was first reported by CNN.

(Image source: us.makemefeed.com)

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