Twitter’s Costolo in China fact-finding visit; Mr Costolo will meet Shanghai government officials on his first trip to China, where the San Francisco-based messaging site has been banned since 2009

March 17, 2014 5:35 am

Twitter’s Costolo in China fact-finding visit

By Hannah Kuchler in San Francisco

One of Silicon Valley’s most prominent chief executives embarked on a pilgrimage to China on Monday, highlighting the increasing importance of the country’s large and vibrant internet sector.

While executives from across the business world flock to Silicon Valley to try to glean clues about their future, US technology leaders are looking to China for new ways of turning users into profits.

Wall Street is also getting excited about Chinese internet companies as Alibaba, the Chinese ecommerce group, and Weibo, a Twitter-like service, look set to be among the largest initial public offerings of the year.

Twitter’s chief executive Dick Costolo is making the trip to Shanghai after the group’s head of revenue told the Financial Times last week that it should learn from the business models of Asian internet companies such as chat apps WeChat and Line.

The companies charge users for products such as stickers and games rather than relying almost exclusively on advertising revenue like Twitter and Facebook. Mark Zuckerberg, Facebook chief executive, has visited the headquarters of Chinese internet companies.

“Dick is visiting China because he wants to learn more about the Chinese culture and the country’s thriving technology sector,” Twitter said. “We have no plans to change anything about our service in order to enter the market.”

Mr Costolo will meet Shanghai government officials on his first trip to China, where the San Francisco-based messaging site has been banned since 2009. Other major US internet companies Google and Facebook are also prohibited in China.

However, Twitter said it had no plans to enter the large and fast-growing Chinese internet market. Twitter prides itself on its commitment to free speech and has occasionally fought court battles on behalf of its users.

Mr Costolo will spend a few days in Shanghai, where he will also meet academics and students at Shanghai’s Fudan University, but will not visit Beijing.

Investors are also increasingly interested in Chinese internet companies that have often developed different business models from those in the west behind the shield of the so-called Great Firewall of China.

The visit comes as Alibaba, the Chinese ecommerce group, prepares to raise up to $15bn, while Sina is spinning off its Twitter-like service, Weibo, in a $500m to $700m IPO.

Alibaba, which announced its much-anticipated plans to list on Sunday, could be among the companies with the highest valuation ever at IPO and could earn bankers, lawyers and accountants in New York up to $1.1bn, according to estimates from research firm PrivCo.

Twitter, which has roughly three-quarters of its users outside the US, is used by some Chinese people over virtual private networks – among the most prominent is Ai Weiwei, the dissident Chinese artist.

The company hired its first full-time employee dedicated to managing its business in greater China, which includes Hong Kong and Taiwan, in the run-up to its IPO last autumn.

A job advert asked for a candidate who would work with celebrities and television networks to boost Twitter’s presence across greater China.