China represents a massive opportunity for app developers across the world. The gigantic Digital China hub is the world’s top mobile market, currently consisting of no less than 800 million mobile Internet users.
China has now become the biggest market, ahead of the USA, in volumes of App Downloads and is one of the top three most lucrative markets in app revenue, presenting a huge opportunity for app developers.
With that in mind, there are essential facts that every developer should know before tackling China’s app ecosystem. Below is Part 1 of a 2 part report about how to master this very different yet significant region.
1. App content
Before releasing your app in China, you’ll have to make sure it is fit for the consumers’ tastes, as there is quite a cultural gap between China and the West. You’ll have to localize all texts into local languages, with the most important ones being Mandarin, Simplified Chinese and Cantonese.
So-called culturalization often goes beyond the written word, as there are other elements to adapt. There are countless examples of smart adjustments made by successful publishers when launching their game in China. In its Year of the Dragon update, Angry Birds replaced the Mighty Eagle with a Mighty Dragon, which chases Red Koi Fish rather than sardines. A locally famous sexy character was added as playable in Temple Run. In Fruit Ninja, among the changes they applied was implementing the peach into their game, as it is a symbol of longevity in Chinese culture. It is important to ensure that your content will suit cultural habits and appeal to the local consumers.
The same logic applies to special events and in-game promotions: tie them to festive events on the Han Calendar rather than your usual Christmas and Halloween. The Lunar New Year is of course a key season but there are other dates to bookmark, like “Singles Day” on November 11th, which last year surpassed American Thanksgiving and Black Friday in terms of gifting and shopping frenzy.
Similar to any other country, you want to make sure potential customers can find you easily when they search for your company, brand, products or services on the Internet. Since Google is not allowed to operate in China, a local search engine rival, Baidu, has taken the dominant spot in this sector. With over 500 million using its web site, Baidu holds 63% of the China search market. Baidu's algorithms don't work quite the same way as Google's systems. In order to rank your Mandarin web site higher in Baidu, I recommend reading this neat recap of the top parameters you should keep in mind.
3. App file size matters
Although 4G speed is available in Tier-1 cities, several second- and third-tier cities are still on the outdated 2G network. When taking the whole map into consideration, 52% of mobile users in China still didn't have stable Wi-Fi access by the end of Q1 2014, with the sole means to download apps for half of the user-base is through cellular data network only. It is therefore well advised to keep your app file-size to the bare minimum. 20 MB is the optimal point if you want to propagate your app in high volumes.
This poor data access situation also has an impact on user behavior in the face of updates. TalkingData indicates that when an update is released, 62% of existing users will upgrade within two days. After two days, only 9% of users will still choose to upgrade. Close to 30% of users will never update. Games that enforce automatic updates experience higher churn rates. Each update results in a loss of 4.2% of the total users, according to TalkingData.
Asia is where the Free-to-Play model found success first, so much so that it's basically the only model that the vast majority of Chinese gamers have known. Even more so than out West, Free-To-Play is completely dominating the market, with very little room left for premium content. As can be seen in the chart below (based on Google’s survey data from Q1 2013), China lags behind other territories when it comes to paid apps. The chart shows that China has one of the lowest rates of installed paid apps across all smartphones, proving the dominance of the freemium app market in the region.
It's also worth pointing out that the consumers' commercial behavior inside a game is very different in China than in other markets. For example, would you believe that the best time to incentivize a player into making an in-app purchase in China is within minutes 4 and 8? LTV cycle actually peaks at day 20. This is a front-heavy market where monetization needs to be “in your face.” With promo pop-ups being pushed front and center, Chinese gamers tend to ignore the in-game shop button completely. Pricing grid needs to be decreased as well, as Western entry-levels for IAPs are considered too high.
Think of China as volume play at its paroxysm: a huge amount of tiny transactions is how you build up revenue. Last but not least, ‘Pay-to-win’, frowned upon out West, is a totally admissible thing in Asia. In fact, paying customers are expected to be treated like VIPs who get to unleash the full scope of the game. Paying customers are also very vocal and expect a feedback box to be readily available for them within the game. They expect fast turnaround servicing of their feedback too: between 15 minutes and 24 hours is the standard for customer support in Asia, including on weekends. In fact, especially on weekends, when around half of the weekly installs occur.
When it comes to getting paid, credit cards don't prove to be as popular a form of payment for online transactions in China as they are out West. Chinese consumers are still wary of transmitting their digits over the waves and tend to opt for alternative digital solutions.
You’d be well advised to support "bill to carrier" or "pay by SMS," which are supported by all three legacy giants (China Mobile, China Unicom and China Telecom). To hook up billing with these three telco operators, you will either need a Chinese subsidiary company or a partner in China.
There are also PayPal equivalents, focused on facilitating cash to virtual transactions across all digital channels, such as ePay or Alibaba-owned AliPay. Both are very popular and widespread in China. Another inevitable is UnionPay, which allows direct bank account debits.
Apple is sure not to be discarded, and is in fact soaring in the region as of late, especially with power users. Yet the domination of Android in China is more overwhelming than anywhere else on the planet. This is mostly a result of the Open License nature of the Android platform: all the local brands and device manufacturers are producing their own Android models so China is flooded with Android products. Even more so than in the western markets, supporting Android with your app is not optional. Elsewhere, you'd be giving up on about 50% of the market, give or take. In China, it's more like 80%.
Though often not prioritized due to minimal knowledge of the region or a lack of resources to master it, the Chinese mobile app market is evidently a huge opportunity for app developers.
Part 2 of the report on 12 Ways to Master the China App Market will be released next week as we continue to delve into the essential facts that every developer should know before optimizing their app to China’s mobile market.