You’ve probably seen the words “Pokémon GO” and “craze” over the last two weeks in some news headline. Thanks to this game, Nintendo’s company value now exceeds Sony’s. Basically it’s a game where you go outside and hunt for Pokémons using an app. This has caused some surreal events, like this one in Central Park in NYC, when people turned up en masse to go out “hunting”.
The game was not released in all countries at the same time. One of these countries was China. But as things move fast in China, a clone was built which is very similar to the original game.
As I heard from a friend, Nintendo didn’t protect their IP properly in this case therefore can do nothing regarding the fact that they lost the largest mobile market in the world for a local clone.
Anyway, these kind of stories make app companies and developers say that they don’t want to go into the Chinese market. It’s a mistake in my opinion and I’m going to explain why soon. But we get a lot of questions at AppInChina about how the market is built as it’s really different from anywhere else in the world. So, it’s a good chance to explain it all.
This article will have 2 parts, I’ll focus on background info on the first part and later on will get to the actual things that influence China’s mobile market.
Let’s start with the major news about China’s mobile apps space: Google Play doesn’t exist! Well, to be honest it does exist but is blocked, which makes it a fairly unpopular service. Google Play has a market coverage of only 2.46%.
You’d probably ask then how people download Android apps in China? Well, they use third party Android stores, estimations that there are 300-500 “Google Play” stores in China. The largest stores in China MyApp (which belongs to Tencent), 360 and Baidu has 23.37%, 17.59% and 16.73% of market coverage respectively (as of June 2016; data supplied by Talking Data). Compare that to Google Play’s market coverage of 2.46%
So, who are those companies that have this large coverage and how did they get to that point?
If we look at the top 20 ranked stores, you’ll recognise three major groups of companies.
- Mobile companies – These are one of the three mobile carriers in China. China Mobile, China Unicom and China Telecom. They distribute their store by installing it on phones people buy through their local stores. If you bought a new phone you get their store on the device you bought.
- Device manufacturers – On this list you’ll find Xiaomi, Huawei, Oppo & Vivo, as well as Lenovo, Meizu and Coolpad. These are major device manufacturers who sell the mobile device along with their store on the device.
- Large internet companies – These would be companies like Baidu who runs the most popular search engine in China, 360, which is the #1 security company in China which owns one of the leading browsers in China, Tencent, which owns QQ and WeChat, the 2 most popular messaging platforms in China. All these promote their stores through other products they have. Last one in this group is Alibaba which we will talk about in the next post as it just bought #8 on the list, Wanduojia, which is kind of an exception from all the other groups.
Adding to an already complex situation, some people would say that China’s mobile market is better off ignored as there is always the danger that your app will be copied.
There are two major reasons why it’s a mistake thinking this:
- China has the largest smart phone user base in the world. If you are looking into the Android market, this market is twice the size of the US population which is around 700 million users. iPhone’s user base is around 150 million and there is still room for more market penetration on both platforms.
- If you already have a successful app, the chances are that it’s already on the Chinese market whether you intended for this to happen or not. The third party Android stores in China scrape Google Play and upload these apps unofficially to their platforms or your app might be hacked and somebody else is using your branding with no control over your app (by the way, the solution for both of these problems is a process called “reclaiming”, which I won’t get into right now). Because of this reality we at AppInChina published a tool a few months ago to help our clients figure out if an app already exists on one of the major stores in China as we get a lot of questions about this situation.
The bottom line is this. Yes, the market is complex and full with pitfalls but there are certainly ways to penetrate this market and at least try testing the waters for companies who are willing to put in the effort.
Image credit by Eduardo Woo