Digital boom in China – how to seize the opportunity in the largest app market

appLeap from analogue to digital

Many of us know that China is the most populous country in the world (1.3 billion).  Therefore it is not surprising that Asia Pacific has the largest share of mobile data traffic. (Ericsson Mobility Report November 2016).

However the rapid transition from analogue to digital in China might have not been appreciated by some. Accordingly to reliable sources, China has just surpassed the US as the largest money-maker for Apple’s App Store. Only in Q3 The Great Wall country generated $1.7 billion making it the largest ever quarterly iOS App Store revenue.
But are the Western app publishers aware and ready? Do they know and have the tools to  to venture into this booming app market?

Global digital giant

With our international partners across the world, including in China, we have been gaining lots of valuable learnings and insights. We have also been discovering technical and infrastructure curiosities every Western business, who wants to bring mobile solutions behind the Great firewall, needs to be aware of.

  • The number of Chinese users connected to the Internet in 2016 is expected to reach way beyond 700M (comparing with 318M in the US) – Globaldots
  • Mobile subscriptions are growing at around 3 percent year-on-year globally and  and will reach +14 million in China totalling 1.2 billion users (93% of Chinese population)  – Ericsson
  • The Chinese – e-commerce sector is booming – it has achieved $672Bn in sales in 2016 (42% increase compared to 2014) – Globaldots
  • Apple is currently the most popular smartphone brand in China, holding roughly a third of the market – Telegraph
  • Chinese digital publishing industry increased by 30% between 2014 and 2015
  • Mobile publishing and online gaming are the main revenue drivers in digital publishing industry. With leisure and entertainment products second in terms of proportion of products published in digital form.

Country behind the firewall

However seizing the opportunity in China isn’t straightforward. Here is why:

  • Digital content is considered as ‘sensitive’ resulting in blocking many tech leaders from the fields of: e-commerce, internet search, news and social media. Many might be aware of The Golden Shield Project also known as the Great Firewall of China, created by the state. It is in fact the world’s most sophisticated surveillance structure running a system that blocks large amounts of data from foreign countries. Any content not locally hosted in China is very slow and complicated to access for local users. Globaldots
  • Due to this unique situation, the Chinese companies have been somehow constrained to effectively develop and duplicate international services. Instead they created their own various digital equivalents, in many cases largely bypassing their international counterparts when it comes to adoption, functionalities and usage – The New York Times
  • One of the examples is the largest app store in the world – Google Play  – not available in China. Unlike in the Western world, there is not yet one powerful Android store market standard, but an enormous variety of smaller players, alternative Android app portals controlled and run by major local tech companies – TechinAsia
  • Majority of social media channels and other internet giants as we know in the Western Hemisphere don’t exist. They are replaced by own Chinese portals such as: WeChat, Qzone, Sina Weibo, Baidu Tieba, Alibaba etc.
  • And the size and scale of majority of them is truly impressive. For example, WeChat (a social messaging app) is very quickly catching up with Messenger and WhatsApp, racing to reach 1 billion monthly active users. And at the same time, it’s trying to reach beyond The Great Wall country, trying to gain users in other emerging markets, such as India, South East Asia, and Latin America – Business Insider.
  • Interestingly, as a response, Western portals are trying various tactics. It has been reported that Facebook is working on a tool which will allow a third-party to suppress certain posts in the News Feed in order to crack China – The New York Times
  • To enter behind the Great Firewall it is necessary to set up a specific and complex tech infrastructure. For example to build mobile apps for Chinese workforce it is necessary to clone infrastructure, (apps, content and back office) inside China. It has to be managed locally, under Chinese management, Chinese law and in Chinese language.

Seizing the opportunities

But despite the challenges, it is too tempting not to tap into the ‘sea’ of opportunities.

  • It only makes sense to offer digital tools to the Chinese investor community as it is the second largest in the world, investing more than 143 billion USD in foreign ventures last year.
  • Chinese shoppers account for nearly half of the global luxury market! Which brings heaps of business ideas when it comes to digital tools designed to communicating and sharing information between the retail chain (distributors, wholesalers, importers and sales reps) directly inside China.

In the words of our Chinese partner Ellen Yao from ipub360  success in China relies on local partnership “Because of the particularity of Chinese culture, it is a good way to find a suitable partner to expand the market. Find good design team and design office, establish cooperation.”

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