What You Need to Know about the Chinese App MarketNovember 22nd, 2011 | Posted by in App Trends | Industry News
This post was written by Julia Lipton, Quixey’s Director of Marketing and Communications.
A few weeks ago, I visited China with my family. I’ve always been fascinated by China, so I was eager to geek out in the tech world outside of Silicon Valley. While I was there, I stopped by TechCrunch Disrupt Beijing, spent some time with our Chinese VC (WI Harper – a truly incredible firm), chatted with hundreds of consumers and spoke with lots of VCs.
During my trip, it became blatantly clear that China is a market that developers should pay attention to. It’s the largest mobile market in the world, with the most apps and the most usage. Yet it’s still an emerging market with plenty of time left to get in the game.
But developers in China have to be careful. It isn’t always easy to develop apps there due to competition, copycatting and market fragmentation.
The Market Basics
- The sheer size of China’s mobile market makes it impossible to ignore. There are over 850 million mobile users in China. Moreover, mobile internet usage is surpassing PC internet usage.
- Android is currently the dominant mobile platform in China. But the majority of consumers say they their next device will be an iPhone, which is relatively new to China. And iOS developers are in high demand.
- The market for Android apps is highly fragmented. Unlike the US, where almost everyone uses Google’s Android Market, China has over 70 separate Android marketplaces, seventeen of which have significant user traction. Of those seventeen, nearly all are third-party players. Fun fact: You won’t see China Unicom, Baidu or Google in the top seventeen Chinese app marketplaces. Amazingly, almost every Android smartphone user I spoke to uses at least two marketplaces regularly.
- The Chinese are heavy app users. While most countries have increased their app usage (defined as the time spent using apps) by anywhere from 300% to 500% on average over the past year, China has jumped ahead by a tremendous 870%. So what are they using all these apps for? The Chinese are obsessed with local, mobile social and gaming apps (even more than US consumers).
Consumer vs Enterprise Apps
- The consumer app market is tough for developers because copycats often publish successful knockoffs overnight. Not to mention, stealing source code is considered a legitimate business model.
- If you don’t have defensible technology — and even if you do — you’re running for your money in China. Developers are cheap, and if they can create it overnight, they will.
For example, a knock-off company owns Groupon.cn and operates it exactly like the American company. There are actually 2,000 companies in China running various Groupon clones for the aggregate buying market.
- The market for apps is so large that developers only need a small slice of the pie to be successful – that’s why they keep entering this fiercely competitive market.
- The Chinese market is hot right now, and app companies are getting sky high valuations. When I stopped by TechCrunch Disrupt Beijing, multiple VCs told me the same thing: Valuations are high, and a $50+ million series A is not uncommon for an app development company. Protip: If you’re a US developer, consider raising money in China. These VCs seem to think you’re worth a ridiculous amount of money.
Tips for Developers
Everywhere I went, people were eager to give me pointers about developing apps in China. So I thought I’d share them with you here.
- The Chinese language is difficult and it can’t be ignored. If you want to enter the Chinese market, you need to support Mandarin.
- Not all of China is the same. China is a big country with over 1.3 billion people. Know your target market and have a launch strategy so you can start building a critical mass within key communities.
- You have to move fast. If you don’t move fast, someone else will move faster.
- Valuations are higher in China. In the past quarter, VC funding in the Chinese market increased by 84%, up to $1.3 billion. According to VCs, many pre-launch companies start with valuations in the tens of millions.
- Chinese app developers rarely innovate. Rather, they look at what succeeds in the US market and recreate it locally. Everyone is “the [blank] of China”. (After walking through the Battlefield at TechCrunch Disrupt Beijing, where developers were launching new apps, I can confirm this is definitely true.)
The Chinese market has a lot to offer developers – most importantly, lots of users. Although the competition can be fierce, savvy developers will realize the importance of the Chinese app space as it continues to grow.