phranque - 11:35 am on Oct 24, 2012 (gmt 0)
There are issues. I would opt for this only if I am a big brand; and if I could generate content specific to their region! Not everyone could make a subdomain to rank because it spreads the authority.
To me having a single domain with multiple subfolders to target each language would help in getting a single domain that can build authority.
the subdomain is useful for geotargeting, where you are essentially filtering all the content into a specific google.ccTLD index.
when you are geotargeting you are pretty much by definition "generating content specific to the region."
in this case it will be more difficult to build regional authority in a subdirectory hosted offshore than in a subdomain hosted on an in-country IP address.
language targeting is distinct from geotargeting, to the extent that there is no mechanism for language targeting at hostname or subdirectory level in google.