Editor’s note: Chris Shen is vice president at Chinese gaming company The9. Prior to joining The9, he served as group account director and account director for several advertising agencies in Shanghai and Taipei.
If you spend any time speaking with Western mobile companies, one topic that’s likely to pop up is their “China strategy.” Due to a mix of mobile penetration, sheer population, and popularity of the mobile web, Western mobile companies recognize there’s a lot of money to be made overseas.
The idea is not without merit: China is the world’s largest mobile market with almost one billion users, 69 percent of which access the Internet through their phones on a regular basis. As such, plenty of big-name Western mobile companies have already begun entering China. However, the mobile market is still immature with issues like fragmentation and piracy, making distribution exceedingly difficult for developers. China isn’t quite yet a home away from home for Western developers, but it’s poised to be the next big mobile market.
China’s lucrative potential is especially relevant for mobile developers. Mobile apps and games were popular in China well before the United States caught on, and the market is only going to get bigger. Smartphone adoption is picking up and opening a window for Western developers to introduce new titles, while in-app purchases are on the rise in China and app downloads have almost tripled in the last year (more on that in a second).
Rise of the Smartphones
China has over 980 million mobile users. While this number is staggering, the majority of users own feature phones. As such, many local developers create apps that cater to feature phones. However, in the past few years, smartphone adoption — both iOS and Android devices — has increased significantly. According to research firm Strategy Analytics, almost 24 million smartphones were shipped to China in 2011, surpassing the number of devices in the U.S. This trend is still gaining steam and creating a profitable window for Western iOS and Android app and game developers. The9 and GREE recognized this trend early and established the $100 million Fund9 to help developers port their games to Android and distribute them in China.
Loads of Downloads
In addition to a massive user base, China’s mobile activity is also skyrocketing. More people are downloading more apps and games. According to mobile analytics site App Annie China’s mobile download numbers have grown by almost 300 percent in the last year. Additionally, research firm Distimo reported that over 30 percent of Apple’s App Store downloads were coming from China by the end of 2011, as opposed to only 18 percent at the beginning of that year.
In-App Purchases and Virtual Goods
China’s massive mobile potential is more than just a numbers game. It’s true that there are more mobile users in China than anywhere else, but they’re also starting to spend more. A lot more. According to App Annie, mobile revenue in China has nearly tripled in the last year, increasing by 187 percent. This is partially due to Apple’s recent announcement that they’re going to start accepting App Store payments in Chinese yuan. Now Western game developers can seamlessly offer virtual goods to China’s huge audience.
Western mobile companies can’t afford to ignore the Chinese market. A good example of this is Flipboard. Before launching in China, Flipboard was plagued by multiple clone apps that grew in popularity in the app’s absence. Since launching in China’s App Store, the company has been successful partnering with big-name companies like Sina and Renren. Hit mobile game maker, Rovio, saw a similar problem with loads of unlicensed Angry Birds (even a theme park) being sold in China. Their solution: open an entire Angry Birds store in China.
There’s more incentive to enter China than just to protect a brand. Companies like CrowdStar, GREE, and Zynga have all announced China ambitions.
As China’s mobile market continues to mature, it’s safe to assume that issues like piracy and fragmentation will become less problematic. For mobile game developers looking to cash in on China today, there are still some ways they can bring their apps over successfully. Finding a local partner to help with distribution, security, and catering to a Chinese audience will ensure a more successful launch.
Companies like The9 recognize both China’s complexity and its opportunity, and are eager to work with Western app developers. By leveraging carrier partnerships and working with multiple distribution channels, local partners can eliminate the headache of entering China.
Developers also need to localize their apps if they want them to succeed in China. This means not only translating apps into Chinese, but also customizing design aspects to meet cultural preferences and various channel requirements.
China is a beast already and it’s only going to get bigger. As Apple and Google continue to penetrate the market and cater to Chinese audiences, there will be a great window of opportunity for Western developers to rake in the yuan.
[image via flickr/bfishadow]