With over 430M mobile device users, China has become the second largest mobile market in the world, a data point that has app developers around the world salivating. However, due to a number of unique challenges – including ‘Shanzais’ (copycats) – foreign app developers have found that obtaining a return on investment to be elusive. In order to garner Chinese customer attention, there are a few insights that app developers should be aware of:
Credit & Debit Cards Remain Unproven. Beginning last November, Apple’s App Store added local payment functionality for credit and debit cards in cooperation with local payment platforms to make IAP-based apps more accessible to the Chinese public. This move broke the US or foreign credit card barrier, which had prevented the large majority of Chinese consumers from making in-app purchases. But it is not certain yet whether it has had any impact on Apple’s revenue as the App Store is still a walled-up garden serving foreign fruits that often do not cater to local tastes. Essentially, although payment is easier, there are two fundamental issues still at hand. First, app purchases can only be made through Apple’s store, which many consumers find inconvenient. Second, the lack of localized apps and operations, such as app descriptions and customer service, still plays a major role in Chinese customers’ unwillingness to purchase. App success mostly depends on promotional efforts and gimmicks by the developers to attract customers and improve exposure – a gamble that may or may not pay-off.
iOS Devices Considered Too Expensive. Another significant factor is that iOS devices are still mostly considered to be a premium platform for wealthy users, even though prices can be as low as 6 Yuan (~ $0.99 USDs) per app. The iPhone, however, has become very popular because it doubles as a smart phone and entertainment gadget. Due to its popularity, China has become Apple’s 2nd largest mobile device consumer market, but its Chinese App Store earnings are still negligible. For instance, more profit has been generated by selling iPhone protective cases than the App Store has in selling Apps. iPhone owners look for free apps when they turn to the App Store and freemium apps don’t always pay-off or attract users enough to pay for them.
The Android Gold Rush. What about Android market? That’s a good question. For some reason, Google Play is not available in any Android device officially sold in China. As a result, the Android marketplace has driven a gold rush movement for developers in China. It is estimated that there are more than 100 third-party Android App marketplaces in China and the top 20 capture ~80% of the Apps market share for Android. However, the large number of Android markets are beneficial to developers in terms of marketing as the Apps can be more easily discovered across App Stores. Some examples of the most well-known App marketplaces include gfan.com, hiapk.com, nduoa.com, HiMarket, AppChina, mumayi.com and etc. If an Android App is listed in a top chart or recommended by one or more of the 20 marketplaces, the App will definitely reach more than 1M downloads in a short time.
Consumers Try before Buying. In addition to iOS and Android App marketplaces, there a number of App sites that provide free, time-limited applications for consumers to try. As it is true that Chinese customers are not used to purchasing paid Apps, these kind of App sites target generate huge amounts of traffic. Some of the most popular limited-trial App sites are ewang.com, iapps.im, app111.com, Gao7.com and the like. Ewang alone has over 2M visits per day and its App recommendations are the main source of information for similar sites. Even the largest portals in China make use of their information to appeal to the public in their own sites. For iOS apps, these sites might be the best tool in App exposure and discoverability to attract users for Apps that are only available through Apple’s App Store.
Speed and Scale Trump Creativity. What about ‘Shanzais’ (copycats)? It’s true that shanzais present a big challenge for any developer in China, both foreign and local. But the key to success lies in having enough resources to effectively service a large scale of users. This means that local shanzai developers must act fast and create a good plan to grow their operations for the copycat to beat the original. One example is Tencent’s WeChat, a shanzai of kiki, which has become quite popular in China with a reported +1B users. How did a shanzai overpower an original? The key is Tencent’s insight into Chinese user behavior and its ability to fund and manage operations on a large scale. For original app developers and Shanzais alike, it’s a dog-eat-dog competition for consumers, and operational ability is the key for survival regardless of true origin. Very few developers have the ability to reach and service more than 10M users and thus the bottom line is having the necessary resources to fund your operation. If you don’t, expect to be eaten alive.
Overall, the nascent Chinese market is entering a period of aggressive growth stage and it will present a source of great opportunity for foreign and local developers alike. Position yourself for success by giving your apps exposure, knowing your customers, and leveraging competitive marketing opportunities.
