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Xiaonei, the company that likes to call itself the “Facebook of China” has raised a whopping $430 million from financial backers, VentureBeat has learned from the company’s investors.

The backing gives it a larger financial warchest than Facebook itself, and sets the scene for a showdown with the American company. Facebook has just started to get serious about entering the huge, fast-growing Chinese market.

The backing of Xiaonei could be a statement that the company intends to fend off China from Facebook’s advances. Xiaonei’s site sports the soothing blue border colors almost identical to Facebook’s; its thus not entirely surprising that Xiaonei would also copy Facebook’s ambitious fundraising strategy.

Recently, Facebook took $100 million (in two tranches) from Hong Kong business mogul Li Ka-Shing, in what is widely considered a strategic move to get help to enter that market. Facebook hasn’t entered China yet. But Ka-Shing’s company, Hutchison Whampoa Ltd, runs everything from major port facilities to mobile, location-based 3G services in China and other countries — all of which could be attractive to Facebook in China’s vibrant mobile market.

Xiaonei is owned by Oak Pacific Interactive (OPI), a holding company with a number of online communities.

The lead investor in this latest round is SOFTBANK Corp.

The huge investment in OPI translates into about 35 percent of the company, according to its investors, meaning the overall company is now worth more than $1 billion on paper. But that’s still far less than Facebook’s value — which is $15 billion, at least based on the value Microsoft gave it when the giant backed Facebook last year.

Facebook has raised $378 million in total over several rounds, including from venture firm Accel Partners, which has also invested in OPI.

The investment will be focused mainly on helping expand Xiaonei.com, which is China’s largest social-networking site. Two other groups, SBI and JOHO Capital, participated in the funding.

Xiaonei.com’s features include include multiplayer gaming and wireless services for mobile users. In the college market, Xiaonei.com claims a dominant market share, but hasn’t released any specific user data. It’s true, though, that in China, there are few Facebook-like sites. Most social sites are like MySpace, where people are freer to use false identities. OPI also owns and operates Mop.com, the largest entertainment portal, and Donews.com, one of the leading IT blogging services in China.

Oak Pacific also announced that Masayoshi Son, chief executive of SOFTBANK Corp. will join the board.

Existing investors of OPI include General Atlantic, DCM, Technology Crossover Ventures, and Legend Capital.

Update: I just talked with David Chao, a partner at venture firm DCM and early investor in OPI, and one of its six board members. When I asked him about the Facebook clone-like blue color, Chao said he thinks the blue “looks like IBM to me.” He added that most sites these days are either blue, green or orange.

Chao was on the board two years ago when it decided to acquire Xiaonei, at the time a small startup. OPI invested heavily into the company, to make it a Facebook-like site. When combined with the traffic of OPI’s other property, Mop (which is more like a MySpace), it makesup China’s fourth most visited site in China.

Notably, Chao said the company is cash flow-positive, meaning it didn’t really need to raise money. But Chao said that, after some debate, the company decided to “put the pedal to the metal, and really dominate the market,” he said.

As for Facebook, Chao said he doesn’t see the companies competing closely short-term, because Facebook isn’t even