Twitter’s Appointment Of New China Chief Won’t Mean Much

Jace Dorsey, chief executive officer of Twitter, announced via a tweet that the company has appointed Kathy Chen as Twitter's Greater China managing director.

Dorsey said in the tweet that "A big welcome to Twitter, @KathyChen2016! She joins us as our MD for China!"

According to her Twitter profile, Chen is based in Hong Kong. She said that she would create more value for Chinese enterprises, creators, partners, and developers.

Though Twitter is blocked and filtered in China, the company has been selling advertising space to Chinese companies that want to develop overseas markets. Twitter has over 300 million users around the world.

The placement of the China MD in Hong Kong showcases a few things about Twitter's business. First, most likely the company is not willing to risk placing Chen in mainland China on a longterm basis. In the past, executives from American companies like Google, Microsoft, Vocus, and Dun & Bradstreet, have been detained or questioned by Chinese authorities because of their respective company's operations. Because Twitter publishes tweets and content that would be considered illegal or subversive content in China, Chen herself faces the likelihood of having to face the authorities if they wish to pressure Twitter to curtail content. As the fiduciary for Twitter in China, she should be well-ready and insured to handle these types of situations.

Next, Twitter can not obtain a full Chinese Internet Content Provider license in China because it is not a Chinese company. While most foreign or domestic companies in China can obtain low-level ICP licenses that are little more than "registrations", only domestic Chinese companies can receive full ICP licenses that allow them to carry out Internet-related businesses in China.

Furthermore, Twitter cannot easily receive an advertising license in China, and most likely currently lacks one. Therefore, it must sell its ads via a network of online advertising agents who resell Twitter's services to Chinese business. Most importantly, these local businesses issue local receipts, or "fapiao", that are more easily accepted by Chinese enterprises than wiring money outside of China. So Twitter will ultimately need to rely on this network of agents in China tif it wishes to scratch the surface on creating revenue streams in China.

Finally, many Chinese government organs, such as the Xinhua News Agency, already have active Twitter accounts. It is ironic that while Twitter is not available inside China, these Chinese government organs use the platform to spread propaganda outside the Great Firewall. And Chen could be tasked with enlarging the presence of these government agencies on the platform in a bid to attract more China-focused eyeballs to China-related content on Twitter.

Ultimately, Chen's appointment will not mean Twitter will become unblocked in China. The only way this could happen is if Twitter self-censored its content. And the likelihood of this happening is less than zero.