Is China the next destination for Facebook?

Social networking site Facebook lost a significant number of its users in the US in May, raising fears over the site’s user base reaching saturation levels in the country, according to reports.

Recently, research firm Inside Facebook reported that Facebook had registered a fall in its number of users by nearly 6 million to 149.4 million in the US in May, recording its first decline in the country. It also said Facebook witnessed a drop in users in Canada, where it fell by 1.52 million to 16.6 million users.

By the time Facebook reaches around 50 percent of the total population in a given country – plus or minus, depending on Internet access in that country – growth generally slows to a halt,” the research firm said.

The firm also noted that the social networking site’s overall growth was lower than normal for the second consecutive month in May. The site gained 11.8 million users in May compared with 13.9 million in April.

However, Facebook has been able to make up for the losses by expanding into vastly populated countries like Mexico, Brazil, India and Indonesia. Overall, the number of Facebook users stood at 687 million by the end of May.

Mark Zuckerberg, CEO of Facebook, has set an ambitious target of reaching one billion active users a month. But to reach one-billion mark, Facebook needs to penetrate into the vast Chinese market, which is regarded as problematic, given the strict regulations imposed by its government for western companies.

It's going to be difficult for western groups to get in there. The biggest issue for them is the problem Google had in China. The Chinese market is controlled,” The Independent said, quoting Andy Beal, a manager of the Henderson TR Pacific investment trust.

“Western companies can partner with local providers but they'd have to compromise. There is a risk that they will be asked to sign up to measures that are inconsistent with their own values Beal said.

Besides, companies entering the Chinese market have to face stiff competition from local social networking sites.

If the social networking site wants to expand its user base in China, it needs to compromise on its principles, which could see the site losing its momentum in other countries.

“China could give access to hundreds of millions of users and compromise its reputation in the US and many other countries around the world,” Inside Facebook said.