There are considerable challenges in achieving success in the mobile apps market. Those have to do with launching and promoting an app in the right store, figuring out monetization model that works and is sustainable, overcoming China-specific technical challenges and, finally, making sure that your product is not easily copied by a competitor.

Here is the list of 10 most important factors to consider before venturing into China’s mobile apps market:

The right mobile OS

Thanks to the low cost of entry level smartphones in China, two out of three users are on Android system which makes it the one to target first. iOS still represents about one third of the total market but Android will certainly continue to dominate China in the near future. Windows phones didn’t get much traction in China yet, while Blackberry and Nokia’s Symbian systems being even less relevant.

Fragmentation of Android apps market

There are literally hundreds of Android mobile stores, each focusing on a specific niche, demographics or geographic region. Understanding complex Android ecosystem is crucial to launching your app in the right store. Simply applying to all or most of them is not an option because each store has its own QA and approval process as well as billing system. The best strategy is to focus on the top 5 stores and monitor the performance of each of them. The most popular Android independent stores in China include AppChina, Anzhi, Gfan, Hiapk, Liqucn,Wandoujia, eoemarket, and 91Market (note that Google Play is not even in the top 20).

In addition, many large companies, such as China Mobile (largest mobile provider), Baidu (top search engine), QQ (popular messenger), as well as Huawei, Lenovo, Xiaomi etc., have their own store.

Mobile network speed

The speed of China’s mobile networks still lags behind Western countries, Japan or Korea. If your app is graphics-heavy making it loading slow, it will most likely be abandoned. If you are considering localizing an existing app for Chinese market, you need to make sure that it works fast enough on much slower network speed.

Hopefully, the ongoing development and introduction of 5G infrastructure will help alleviate this problem.

Social media integration

Another challenge of localization is the integration of the local social media channels. Your app won’t work in China (unless used with VPN) if signup or login options use Facebook or Twitter as those are inaccessible from the Mainland. Same goes for sharing and retweeting. If social media is essential for your app, make sure to integrate the most popular local platforms such as Sina and/or Tencent Weibo, YouKu or WeChat.

Cloud storage issue

Popular cloud storage services, such as Dropbox or Box.net, are often too slow or inaccessible from China. Out of popular Western services, only Microsoft Skydrive seems to be relatively stable at the moment. If cloud storage is required for your app’s functionality, consider using one of the local solutions, although they may not be as fast and convenient. 

Payment system

Local mobile-based payment services have won the war against any other payment method. Two of the most popular services are Alipay and WeChat Pay. Remember that Chinese use of credit cards is very limited as they seem to entirely skip the credit card era straight to the digital money world. Another popular payment system with mobile in-app purchases works directly through mobile carrier, such as China Telecom, China Unicom and China Mobile. This, however, require more complex integration of your app into their payment system, something that can’t be done without an experienced local partner company.

Everyone takes a cut

Apps stores fees range wildly, something to be taken into account when choosing the most suitable one as well. QQ for instance, takes up to 70% of an app’s revenue, while China Unicom takes 30%. In addition, each store has its own guidelines and procedures as well as its own government tax and banking rates. Note, that government tax and various regulation fees can easily reach up to 30% on top of the app store cut!

Piracy concerns

If your app is successful there is no question that it will be copied. All of the world’s most popular apps have local copycats. Partnering with a local partner that is familiar with the apps store ecosystem can also help ensure that the copycat apps are pulled from the store to be replaced by the official ones. On the other hand, if you are simply coming up with a concept for an app and it is a good one, such “partner” can simply appropriate it. Therefore, due diligence is paramount in choosing your local partner.

Monetization model

Purchasing apps outright has been in decline worldwide. In China, people are even less willing to pay for an app, no matter how insignificant the price would be. This means that more creative monetization strategies should be considered. One of them would be selling ads. Recently, BBC ran a story about Chinese mother who developed flash card app for their kids which is now supplementing her income by $1,000 every month from the ads alone.

Another model is based on in-app purchases. It makes more sense to give away an app for free to get users more familiar with it. Once, hopefully, they start liking it, they would be more willing to pay for extras. This model works well for games and chat apps.

Finally, premium model is another one to consider: user downloads an app with limited functionality but has to pay for more enhanced features.

Apps for brands

Finally, there is another type of apps that aims at building brand awareness or serves as a marketing tool to supplement and support offline or web-based sales. If your app doesn’t require payment system or complex integration with other services, it can be launched much more easily. Also, such app would not be in any danger of  being copied as it has no value of itself without the brand behind it.

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Top 5 China emerging cities with fastest growing local economy

No. 1: Guiyang

Guiyang is the capital of Guizhou province of Southwest China. Guizhou has been the poorest of China provinces with economy heavily relying on state owned enterprises. With the population of 2.8 million, it is now becoming a hub of operations for Chinese giant telecom companies. Private companies are also following the lead with Alibaba setting up cloud-computing facilities in the city.

Guiyang also serves as an important transportation hub for South Western China. The Guiyang–Guangzhou High-Speed Railway began operations on December 26, 2014. Three more high-speed rail lines to Chongqing and Kunming, and Changsha will commence operations within the next few years.

Disposable income per person is currently at USD 5,100, almost half of China’s average of USD 9,800. Guiyang has been ranked number 1 fastest growing local economy by the Economist.

No.2: Xiangyang

Xiangyang is a prefecture-level city in northwestern Hubei province. Xiangyang possesses large water energy resources whilst its mineral deposits include rutile, ilmenite, phosphorus, barite, coal, iron, aluminum, gold, manganese, nitre, and rock salt.

Textile production has been the mainstream industry of the area followed by machinery manufacture, chemical processing, electronics, and manufacture of construction materials. However, in the last few years, it has become an attractive destination for industrial transfers, the trend of companies relocating their manufacturing facilities to cheaper locations.

With its population of 1.6 million and disposable income per person stands at USD 4,300 and the city has been ranked at number 2 among China emerging cities.

No.3: Hengyang

Hengyang is the second largest city of Hunan Province after its capital Changsha. The population of the metro area is 1.3 million but if counting the suburbs, it reaches over 7 million people.

As a busy and growing industrial hub and transportation center of Hunan, its economy has traditionally relied on manufacturing of chemicals, agricultural, mining equipment, textiles, paper and processed foods. However, it has also become one of the destination of industrial transfers. Most recently, Taiwanese Foxconn, the main maker of Apple products, has been investing in the city.

Hengyang’s disposable income per person is currently USD 4,900. It has been ranked at number 3 China emerging city.

No.4: Chongqing

Chongqing is a major city in Southwest China and one of the five national central cities in China. Administratively, it is one of China’s four direct-controlled municipalities (the other three are Beijing, Shanghai and Tianjin), and the only such municipality in inland China.

It is an enormous city of 8.9 million people and booming real estate market. It is also one of the fastest urbanizing centers in China with more than 1,300 people moving into the city daily, adding almost 100 million yuan (US$15 million) to the local economy.

Chongqing is China’s third largest center for car manufacturing and the largest for motorcycles. US car giant, Ford Motor Company, has 3 plants in Chongqing. In addition to presence of major financial companies (HSBC Standard Chartered Bank Citibank, Deutsche Bank, ANZ Bank, Scotiabank) and retail brands (Wal-Mart, Metro AG, Carrefour), it is also another major site of Foxconn investment.

Chongqing disposable income per person stands at USD 5,400 and is ranked at number 4 among China emerging cities by the Economist.

No.5: Suqian

Number 5 on the Economist scale is Suqian, is a prefecture-level city in northern Jiangsu Province. Suqian has been benefiting from closer integration with the other economic hubs in Jiangsu, one of the most well developed Chinese provinces, and the city’s proximity to both Shanghai and provincial capital Nanjing.

With the population of about 1 million and relatively low disposable income per person (USD 4,100), Suqian is still one of the cheapest location for manufacturing in the province.

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Baidu is the Chinese version Google. It is the largest search engine and is, in terms of business interests, as diverse. Alibaba is the world largest ecommerce operator that runs Taobao and Tmall, two main shopping sites in China. Tencent is the company behind WeChat, the most popular mobile based social app, as well as QQ, the messenger service.

All three China BAT giants, however, almost never get along. In fact, the war between them often comes at the expense of users’ convenience, although everyone accepts it as another fact of life in China.

For example, Baidu blocks search results from Alibaba ecommerce sites. Tencent doesn’t allow users to open Taobao and Tmall links in WeChat browser. Alibaba blocks rival payment systems on their sites and the list goes on.

Here is our latest infographic on those three companies.

China BAT: Baidu Alibaba Tencent

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Back in 2007, Bill Gates told Fortune that he expected China to be Microsoft’s biggest market, “though it might take 10 years.”. Those comments were made during a visit to Beijing when Gates was awarded an honorary degree from Tsinghua University and met with four members of China’s ruling Politburo. 

Did the policy of accommodating the authorities actually helped Microsoft in China?

Unfortunately, Gates’ “Chinese dream” has never materialized. While Microsoft doesn’t release specific figures, it is estimated that China contributes less than 10% of the revenues. Sales of Microsoft’s biggest earner, Windows OS and MS Office are almost non-existent in China where 95% of installation are pirated. Although, those products run on almost every computer in China, the market share simply can’t be translated to revenues.

First, back in 1992 when Microsoft just entered the market, they tried to get tough with existing users using illegal software copies. They sued some Chinese companies but ultimately lost, angering the authorities in the process. At the same time they tried to sell legal versions of their software at the cost of several monthly wages while a pirated copy could be bought at a street corner for less than $1. Not surprisingly, that didn’t work either. Fast forward to the present, Windows 10 is now offered for free to all users in China, including those running pirated copies.

In their efforts to please the authorities, Microsoft began censoring the content according to Chinese government guidelines and even revealed the Windows source code to them. The company has also customized Windows security to the specs of Chinese government clients. The consequences of that move were later blamed for helping Chinese hackers in their attacks on Google as revealed by WikiLeaks a few years later.

After all of that, Microsoft was still treated with suspicion by authorities culminating in anti-monopoly investigation of the company in 2014. In July of that year, about 100 officials from SAIC (State Administration for Industry and Commerce) stormed four Microsoft offices in China, questioning executives, copying contracts and records, and downloading data from the company’s servers, including email and other internal communications.

The investigation coincided with Microsoft’s decision to stop supporting Windows XP in hopes that the move would force users to replace it by upgrading to Windows 10. Unfortunately, Windows XP was still widely used by many companies in China including the government who didn’t take that decision well. Some analysts suggested that angering the authorities culminated in the infamous antitrust probe of 2014.

Finally, Microsoft not only agreed to provide Windows 10 upgrades for free but also to develop a special customized version (officially called ZhuanGongBan) to meet specific demands of the Chinese military.

Things started to look better for Microsoft when Bing was allowed to continue operating in China while Google, who didn’t agree to censor its search results, was cut off the market. However, at that point, Baidu was already an established leader with about 70% market share and Bing, which incidentally sounds like the word “sick” in Chinese, seemed to miss the train. Today, its market share in China hovers around 2%.

That still wasn’t the end to troubles of Microsoft in China. Most recently, the company has announced that its MSN website in China will be shut down on June 7. The portal currently hosts news, lifestyle content, and the company’s Bing search engine for Chinese users. Unfortunately, it never really caught on barely registering against much more popular competitors like QQ.com, Sina and Sohu. Among other reasons was the fact that Microsoft was forced (again) to change its Windows 10 default search from Bing to Baidu cutting off traffic to the portal via its desktop OS. On the mobile front, there simply aren’t enough Windows phones in China to compete with Android dominated ecosystem.

Microsoft will have to get really creative in order to stay relevant in China, especially in the face of competition represented by BAT (Baidu, Alibaba, Tencent) as well as others who continue to encroach on Microsoft traditional territory of operating systems and office apps.

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Most popular example of PPP based scale is a Big Mac index, popularized by The Economist. Most commonly, the baskets of goods are used to compare purchasing power across countries.

This recent infographic by SCMP (South China Morning Post), Hong Kong newspaper that was recently acquired by Alibaba, shows the comparison of the economy of China vs. US.

For example, it shows, that in GDP terms, Chinese economy is still significantly smaller than US, $10.36T vs. $17.42T. However, in PPP terms, IMF puts China slightly ahead of US for the first time:  $17.92T vs. $17.8T.

Of course, considering that China’s population is about 4 times larger, the GDP per capita is only $7,593 vs. America’s $54,629.

The infographic than makes some interesting comparisons between different goods and services in China vs. US using Beijing and New York and the representatives for each country. For example, it turns out that most clothing, shoes and gas are more expensive in Beijing. However, transportation, is significantly cheaper in China, up to 94% difference in the case of public transport.

Click here for high resolution graphics.

Economy of China vs. US

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According to Wikipedia, Shanghai, with it’s population of 24 million, is also the largest city proper by population in the world. It is also a home to a vibrant expat community of 174,000 and counting. With more than double per capita disposable income compared to national average, Shanghai is also the shopping capital of China.

Despite dismal air quality, the average life expectancy of Shanghainese stands at over 82 years, on par with the most advanced countries in the world.

In this post, we’d like to share an infographic from Go-globe on Shanghai in numbers.

Shanghai in Numbers

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To this end, the understanding of brand building power through digital and mobile communication and knowing how to effectively insert themselves into the ongoing conversations are crucial and major factors; especially for any company aiming at the Chinese consumers.

According to a report by McKynsey, consumption will account for 43% of total GDP growth by 2020, compared with a forecast contribution from investment of 38%. Chinese consumers are an opportunity and will probably continue to be as they get richer. But there are still some unchanged variables like: Chinese pragmatism. They rely on multiples channels to get information about products and services. And as you can see in the graphic below, most of these channels are online platforms. This trend is still ongoing as the shopping behavior of Chinese people changes, they have lesser time to shop in physical stores so they are embracing new ways of experiencing the products and consumption.

3 Key Points for a Successful Digital Communication in China

Social Media

What is leading to the adoption of social media by Chinese people?

• The separation between families due to the rural exodus
• Young people that were born or grew up without siblings and during the Internet revolution
• Inexpensive access to the Internet

Why commit time and resources in developing your brand on social media platforms?

Here are some numbers to convince you from the Wearesocial report on Digital, Social & Mobile in China in 2015:

• QQ platform has 843 million users, Wechat has 600 million users;
• 714 million people in China are active on least one social media platform.

These platforms are also:

• Effective tools to build a brand by initiating conversations with consumers, creating and posting engaging social objects;
• Marketing tools: Chinese online buyers often post reviews or have their own blog where they discuss their latest acquisitions. This is the KOL phenomenon.

KOL stands for Key Opinion Leader. In China, they can be used to advertise a brand on a large scale as some of these KOL have millions of followers on Weibo. Paid advertisement campaigns on a platform like Weibo are not as efficient as on platforms like Facebook or Google. The rate of people clicking on these ads is usually low because Chinese consumers have distrust in traditional advertisement.
As mentioned above, Chinese consumers have a tendency to trust friends, coworkers when they research a product. They also trust their idols or online friends. That is where the KOL are useful for a digital communication strategy. They allow a company to reach successfully a specific target audience.

E-tailing

Why brands should be present on E-commerce platforms?

For the first half of 2015, E-commerce represent 10% of China’s total retail sales value. In that same period, E-commerce generated 253 billion dollars (1.6 Trillion RMB) of revenue in China. The major online companies Alibaba (which owns Taobao) and 360buy.com have established a national position, ranking among China’s top ten retailers. E-tailing platforms can help foreign companies building clear and consistent brand images and are a cost-effective way to reach consumers in small cities.
Due to the size of the Chinese territory, installation of physical stores takes a lot of time and money. The E-commerce system in China is well organized and can be seen as a replacement allowing companies to fill the gaps from lack of a physical store network.

The competition between E-tailers is growing. It naturally led to a cut of product prices, especially in the three major segments of Chinese E-commerce market: Apparel, Household appliances and recreational products. Transportation and health care product are also growing online markets.
The development of e-tailing is boosting consumption. The scope of opportunities is clearly widening for inside and outside players.

E-mobile

In July 2015, 20% of the population used a mobile phone to buy a product and 29% used a computer, 15% of the population used a mobile phone to research a product and 18% use a computer. It is estimated that, in 2015, half of all Chinese online consumers will be M-commerce consumers.
The price of mobile phones in China is dropping every year. It is a more affordable and convenient way to access the Internet. So much that they have replaced computers to become the main devices for accessing internet in 2012.
Why brands need to invest on mobile?

• Enable direct contact with the target audience: messaging apps (WeChat, QQ, KakaoTalk, Line, etc.) create a 1-to-1 communication with real end customers. For example: a company can create a WeChat official account where consumers can directly make a payment;
• Tailor-made and segmented content for brands;
• Optimize marketing expenses by geographic targeting and customer data analysis.

A successful digital communication will be the result of the integration of these 3 resources. Never forget that the objective is to make the brand concerned recognizable, trustworthy and different from its competitors. The business strategy must be carefully planned and also include: Point of sales, client relationship management and the product. Then, these factors must be coherent with each other and consistent for a good implementation in China.

Article written by Wei Hsu founder and CEO of INS Global Consulting, leader in PEO Services and HR Management in China since 2006.

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This situation also presents an opportunity to overseas firms offering various financial solutions which could range from personal finance management software to books and videos on investments.

Not surprisingly, most action is taking place online and increasingly on mobile. However, foreign firms are often unaware of major sites and financial news portals that are popular in China.

In this post, I’d like to share some slides from the recent presentation by Sampi Marketing on this topic. The full presentation can be downloaded from SlideShare here.

Here are the largest sites in terms of traffic worldwide and in China:

With the average number of monthly visitors at around 4.7M in China alone, Sina Finance is the largest portal:

HeXun network represents another popular source and is run by a private investment company HeXun:

HeXun Network links to other services that the company offers which includes increasingly popular P2P lending and micro-loaning service:

Finance QQ is another popular financial news aggregator run by Tencent:

Sohu runs its own news service that is focused on stocks and investments:

Among publications, the sites with most traffic in China are Wall Street China and FT (Financial Times) Chinese:

For full presentation, please go here.

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Overall, all signs indicate that China’s online population will continue growing in both size and complexity throughout 2015. Mobile is becoming the primary way of getting online and platofrms like WeChat, define how people communicate and connect with each other as well as with businesses.

As the slide below shows, mobile remains the fastest growing sector of the online economy:

Approximately, half of Chinese population is connected to the internet which is still behind most Western countries and it means that there is still plenty of growth ahead. There are over 600 million active social media accounts and over 500 million active mobile based social media accounts, majority of which are on WeChat.

Next slide shows that 37% of population is buying products online and 25% use mobile devices for that purpose. The majority of online commerce goes to Taobao with JD mall being the second largest ecommerce site.

It is clear that mobile based internet users represent an important segment that can’t be ignored by marketers in China. Mobile marketing is well on its way to become the central component in online marketing strategy for practically every brand. Below are some numbers to illustrate the trend:

Online social media has already become an integral part of Chinese society, here is the breakdown by type of social media channels:

Lastly, the numbers on time spent online: PC or tablet still leads in the devices category with almost 4 hours daily, followed by mobile with 3 hours 35 minutes:

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The recent data compiled by WeAreSocial, reveals that WeChat has been also gaining ground in a number of other international markets.

First of all, for the sake of completeness, here is the data on China where WeChat is currently the most popular social network:

The slides below show some international markets where WeChat has been in top 10 social platforms.

 Hong Kong

One of those markets, not surprisingly, is Hong Kong. Although, WhatsApp and Facebook with its Messenger remain at the top, WeChat rose to #4 taking 23% of the market:

 Malaysia

Thanks to Malaysia’s large Chinese speaking population (at about 40%), WeChat is quickly gaining popularity in this country. As the data shows, it reached close to 20% of the market, just slightly behind Google+:

 Singapore

Next door to Malaysia, Singapore with its majority Chinese speaking population, has also been adopting WeChat at the increasing rate. Although, it is still behind other networks, there are reasons to believe that it’s catching up:

 India

Apparently, WeChat’s appeal could also work for a country with no Chinese speakers. Indians have been shown to start adopting the platform as well. It currently holds 5% of the local social networking market:

 South Africa

South Africa currently represents the only African country where WeChat has reached top ten status with reported 7% market share.

Although, WeChat has been gaining in popularity worldwide, Taiwanese have not been too keen on widely adopting it. This may be partly explained by a certain anti-Mainland sentiment as well as the dominant position of Facebook and Line.

I do believe that eventually Taiwan will embrace WeChat, especially considering the fact that it is the platform of choice for tens of thousands of Taiwanese who are currently staying on the Mainland.

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