The Ultimate Guide to Succeeding in the Chinese App Market
For foreign app companies, expanding into the Chinese app market is a polarizing topic. People fall on two opposite sides of an extreme spectrum. One side point to China’s huge market potential and infer that entering China will allow you to automatically generate income without exerting much effort, while the other side emphasizes that all the differences between China and the West, and dismisses the possibility of succeeding in China altogether.
The truth is that succeeding in the Chinese app market is definitely possible, but it’s far from straightforward. This guide will break down the whole expansion process from pre-entry research to post-entry monetization, highlighting all the key factors along the way.
1. Research: China Entrance Strategy
The Chinese internet ecosystem is the most complex in the world and the mobile segment of the market is no different, so carrying out extensive research before starting app localization is essential.
According to a report published by China Internet Network Information Center (CNNIC), the country’s internet user base now stands at around 772 million, 97% of whom are smartphone users.
Meanwhile, AppAnnie’s insights measured the revenue generated by apps in China for 2017 at USD 35 billion, and they estimate that app downloads from Chinese Android stores will reach 86.95 billion by the end of this year, as the shift from desktop/laptop to mobile devices in smaller second and third-tier cities continues.
Just like other prominent foreign websites and apps such as Facebook, Twitter and YouTube, Google had most of its services, including Google Play, blocked by “The Great Firewall of China” back in 2010. Although Chinese smartphone users can still technically access the Play Store via a VPN, only a very small percentage of users actually do so.
As a result of Google Play being blocked, China’s largest tech companies created their own stores to fill the void in the market. There are now more than 400 third-party app stores in China, with local tech powerhouses (Tencent, Alibaba, Qihoo, Baidu), smartphone suppliers (Huawei, Xiaomi, Oppo/Vivo) and mobile network providers (China Mobile, China Unicom, China Telecom) holding over 80% Android app market share in China.
At the moment, all foreign app companies must either have a Chinese entity or use an authorized local distributor to publish apps. Additionally, all of the major app stores require a Chinese Software Copyright Certificate and if the app’s data is being hosted on Chinese servers, then stores will request either an ICP recordal license (for public content) or a full ICP license (for e-commerce and other commercial activity). Industry-specific documentation will also be requested to complete distribution depending on the app type (travel, finance, health etc.).
2. Localization: China-Specific Modification
In China, the culture, the language and more importantly, mobile user habits are totally different from the rest of the world. This unique climate means that simple translation won’t suffice, and more complex redesign is often required.
Since popular services such as Firebase Storage, Facebook Analytics and Google Services aren’t fully functional in China, testing a foreign app’s performance is vital and can save an app company a lot of redevelopment time and resources. To ensure that an app has complete functionality, testing across multiple devices, networks, and locations is recommended.
To increase the chances of receiving a high ranking on app store categories and increasing the likelihood of being found by Chinese users via search, it’s vital that all app content is localized to fit the Chinese market. This means not only translating the app name, app description and in-app content into Simplified Chinese, but also adjusting word choice and incorporating internet language and slang.
QR-codes are hugely popular in China, partly because they are being used for multiple purposes. From daily processes, such as login authentication and payment confirmation, to professional usage, i.e. social media promotion, on a variety of different types of apps. Therefore, foreign apps should consider implementing a built-in QR-reader to connect with the most prominent local apps.
In China, there are 4 popular types of login authorization: SMS confirmation; QR code authorization; third-party authentication; and email/password login. Similar to the West, the majority of apps implement third-party login authentication. However, since Facebook and Twitter are blocked in China, social account login authorization comes via WeChat, QQ and Sina Weibo, so foreign apps should consider integrating these local login SDKs.
Unlike in the West, Chinese mobile users have already fully embraced the usage of e-wallets for mobile transactions, with only a very small percentage of people using credit or debit cards for digital payments, so third-party payment solutions are integrated into most Chinese apps. Any foreign app that relies on in-app purchases or subscriptions should implement the two leading payment solutions, WeChat Pay and Alipay, into their APK.
Geolocation services are widespread and used by a range of different local apps, such as social networks that allow users to meet people and participate in nearby events, and entertainment streaming apps that allow users to share consumer habits with people in their vicinity. Depending on the app type, features based on geolocation data can bring added social value to foreign apps entering the Chinese market.
- Voice Integration:allows users to use voice message and voice search functionality as an alternative to using text.
- Chat Interface:offers users the opportunity to communicate directly via in-app chat instead of using stand-alone messenger apps.
- Downloadable Content:helps users to access in-app content without a WiFi connection, since Chinese data packages usually aren’t unlimited.
3. Distribution: Multi-Store Management
Apple’s App Store is available in China, however since Google Play is blocked, it is necessary for companies to publish and promote their apps on the major Chinese Android app stores.
In China, the competition between app stores has become so fierce that it’s common for foreign companies to find that their app has already been unofficially distributed on some of the local stores. This means that before an officially stamped version (“官方版”) of an app can be published, proof of ownership will need to be provided to get the unofficial versions taken down.
Uploading an app can vary in terms of difficulty depending on the type of app store and number of stores targeted, so the first task is to figure out which app stores to publish on. This decision is often influenced by the stores’ market coverage:
- Top 5 Stores: 60% Market Coverage
- Top 10 Stores: 80% Market Coverage
- Top 15 Stores: 90% Market Coverage
Once the desired stores have been chosen, all that’s left is to set up individual app store accounts and upload the requested creative materials on each platform. The app will then be available for Chinese users to download from one of these platforms.
Unlike in the West, the most effective way to promote an app in China is to buy users through user acquisition, with paid ASO (artificial user reviews and downloads) and paid app store promotion (featured spots) being the quickest and easiest methods to gain market share. Once a foreign app appears to have a large enough user base, a combination of different types of promotion, commonly social media marketing and influencer marketing, can be effectively utilized to push traffic through to the app.
4. Monetization: Chinese Revenue Generation
In China, most paid and subscription-based apps don’t generate revenue, as free unofficial versions are readily available. This has led to the majority of companies monetizing apps through ads and in-app purchases.
Traditionally speaking, splash ads (ads displayed before reaching the homepage of an app) and interstitial ads (ads displayed between two content pages) have always been by far and away the most popular methods of app advertising in China, with nearly all of the most prominent local apps implementing them to promote in-app purchases and other relevant products. Recently, banner ads and video ads have become increasingly common and they are now effective optional methods of advertising, especially on social networking apps. Depending on the type of app, utilizing ad platforms, local (AdView) or international (AdMob), to display these ads can generate the most solid stream of income for a foreign app in China.
According to a report released by AppsFlyer, Asian mobile users spend 40% more in-app than consumers in the rest of the world. Whether it’s products, services or events, foreign apps have a great opportunity to generate income from in-app purchases in the Chinese market. Similarly to the West, app companies will be charged a small percentage (between 2-3%) for every transaction made in-app.
However, this isn’t charged by the stores but by the third-party payment solutions that need to be integrated in order to receive the payments.
Following these steps and paying close attention to the idiosyncrasies of the Chinese market will give foreign app companies a chance of joining LinkedIn, Evernote and Coursera on the ever-growing list of international companies to successfully expand in China.
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