Meta’s Trade War Windfall: Chinese Advertisers Drive 10%+ of Revenue
Chinese brands account for approximately 10% of Meta’s total revenue—around $13.3 billion out of +$133 billion. This sizable contribution stems primarily from advertising, particularly by Chinese e-commerce giants such as Temu and Shein, which use Meta’s platforms (Facebook, Instagram, WhatsApp) to target international audiences.
Despite Facebook and Instagram being banned within China, Chinese advertisers are allowed to run campaigns abroad. These campaigns are not directed at Chinese consumers but at overseas markets, especially the United States.
A significant portion of this $13.3 billion is driven by direct-to-consumer (DTC) online commerce. Meta’s Chief Financial Officer has highlighted online commerce as one of the platform’s strongest ad verticals (globalization), further supporting the idea that trade-related advertising represents a substantial share of revenue from Chinese advertisers. These ads are data-driven, highly targeted, and optimized to generate conversions, particularly in Western markets.
How Chinese Companies Legally Advertise on Meta
Chinese firms can legally advertise on Meta platforms because they are promoting exports and engaging in global commerce—activities encouraged by the Chinese government. Since these campaigns do not target domestic Chinese users, they do not violate China’s restrictions on foreign internet platforms. Instead of circumventing the Great Firewall with VPNs, advertisers use Meta’s Business Suite, which allows them to manage campaigns without personal Facebook accounts.
In addition to commercial advertisers, Chinese state-controlled media and government-affiliated organizations have also leveraged Meta’s ad infrastructure to distribute messages globally—another example of how China uses Western platforms for international outreach, even while restricting their domestic presence.
Focus on U.S. Consumers
Both Temu and Shein spend the majority of their ad budgets on reaching U.S. consumers, the most lucrative market for both companies.
Temu: In 2023, Temu spent approximately $2 billion on advertising through Meta. Estimates suggest that over 50–60% of that ad spend was targeted at U.S. users. Temu’s aggressive campaign strategy—including flash sales, influencer partnerships, and deep discounts—was aimed at rapidly gaining U.S. market share after its launch.
Shein: While specific Meta ad targeting percentages aren’t public, the U.S. accounts for 28.2% of Shein’s total sales as of 2023. This suggests a similarly large allocation of advertising resources toward American consumers. Shein uses retargeting, personalized recommendations, and viral social media campaigns to maintain dominance in the fast-fashion segment.
The DTC Strategy
Temu and Shein exemplify the direct-to-consumer model, bypassing traditional retail intermediaries to sell directly to global customers. Meta’s precision ad-targeting and massive user base make it the ideal vehicle for this strategy. These brands optimize ads using real-time performance data, localized creatives, and conversion tracking to drive return on ad spend (ROAS).
Their spending not only fuels Meta’s ad revenue but also underscores the platform's growing dependence on international e-commerce, particularly from China-based firms, even as regulatory scrutiny increases.
The issue is that a tech company doesn’t necessarily need to grow that way.
Meta’s Non-Horizontal Growth Engines: Offsetting Chinese Advertiser Reliance with Vertical Innovation
While Meta is often viewed through the lens of horizontal scale—expanding user bases and advertiser counts—it also commands powerful vertical (0 to 1) progression opportunities, especially across AI, immersive tech, and enterprise infrastructure. These vertical innovations not only strengthen Meta’s moat but also diversify revenue away from Chinese advertisers.
1. AI-Powered Advertising Infrastructure (Vertical)
Meta’s next-gen ad stack, led by the Andromeda AI ranking system and Advantage+ Shopping campaigns, is redefining how performance marketing works.
Advantage+ has already hit a $20B annual run rate, with 4M+ advertisers onboarded.
These tools drive measurable increases in ROAS (Return on Ad Spend), making this a high-leverage vertical play that enhances platform utility without depending on new users.
2. E-Commerce Advertising Expansion (Horizontal + Vertical Blend)
E-commerce ads, particularly on Instagram and Facebook, have become a dominant driver of ad growth.
While this segment involves horizontal expansion into more advertisers and regions, the underlying engine—dynamic product ads and AI-driven conversion tools—is a vertical innovation stream.
Importantly, this growth comes from non-China regions, including the U.S., Latin America, and Southeast Asia.
3. Reality Labs & XR Technologies (Vertical - Long Horizon)
Meta’s XR division (Reality Labs) represents a pure vertical bet: creating new computing platforms from scratch.
Oculus headsets, Ray-Ban Meta smart glasses, and the broader Metaverse vision are not just new revenue lines—they are attempts at category creation.
While losses remain significant in the near term, the upside potential is transformative.
4. AI Business Services (Llama + Meta AI) (Vertical Infrastructure Buildout)
Meta’s open-source Llama models and Meta AI chatbot are stepping into the AI-as-a-service space, targeting use cases like:
Customer support
Knowledge retrieval
Developer APIs
This is a new B2B monetization path, independent of the core ad model—a true vertical innovation track.
5. North America: Deepening Core Market Penetration (Horizontal Sustainment)
The U.S. and Canada still account for 44% of total revenue.
While this is largely a mature market (horizontal growth), further wallet-share expansion per advertiser through enhanced tools and services strengthens Meta’s base against geopolitical ad volatility.
Meta’s future growth will be shaped not just by scaling reach (1 to n), but by building entirely new capabilities and infrastructure (0 to 1). The most promising vertical plays—AI-driven ad tech, XR platforms, and Llama-powered business services—offer Meta defensible and scalable revenue streams that are agnostic to Chinese advertiser and trade war influence.