Facebook appears to have decided on acquisition as its preferred method of entering the booming Chinese market, after months of speculation about how the social networking website would tap the country’s rapid growth and avoid the pitfalls that have slowed earlier overseas venturers.

Facebook is reported to have offered $85 million (£41 million) to buy Zhanzuo.com, its largest Chinese counterpart, which has an estimated seven million active users and a popular base among students.

It would give Facebook a ready-made entry point to the largest internet market outside the United States.

A spokeswoman told The Times that Jack Zhang, Zhanzuo’s chief executive, and Mark Zuckerberg, the Facebook founder, were acquainted but this did not mean that they intended to reach a deal – for the moment.

She added, however, that “there could be more information by the end of the month”.

Facebook already boasts more than 100,000 users of its English-language network in China and rumours of its local-language entry were fuelled with the company’s recent registration in China of the domain facebook.cn.

Entering the Chinese market carries risks for foreign companies.

The publicity that surrounded Yahoo!’s decision to comply with Chinese police demands to provide details of the e-mails of Shi Tao, a journalist later sentenced to ten years in jail on charges of leaking state secrets, has served as a warning to outside players.

Moreover, censorship and state monitoring of the internet provide a potential quagmire for would-be internet entrants.

Any attempt to search for the three T’s of Tibet, Taiwan and Tiananmen Square sets off alarm bells among China’s vigilant cyberspace police, likewise an attempt to find reference to the banned Falun Gong quasi-religious movement.

Most servers have barriers in place that tell a user to try another term in these cases.

Rebecca Mackinnon, an expert in new media at the University of Hong Kong’s Journalism and Media Studies Centre, said that foreign firms may prefer to use a local partner who is more aware of where the line is drawn and how to avoid crossing it.

Ms MacKinnon said: “If the authorities see people organising a group with political aims not consistent with the Communist Party, then they will shut it down.

"The nightmare would be if someone organised a Falun Gong cell on their watch and the officials come in and close down your business.”

Tangos Chan, an internet analyst, thought that the entry of Facebook was only a question of time, but said: “There has been no successful foreign acquisition in China.”

It was too early, he added, to tell if the April launch of a Chinese-language Myspace had been a success.

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