Software developers in China had historically been faced with a number of hurdles when it came to selling products in the U.S., included distribution, marketing, payment, and a host of cultural issues.
But the emergence of Apple’s app store cleared away most of this hurdles, sparking a new wave of software development, mostly focused on games.
Take High Noon, a fighting game developed by Happylatte, a division of Beijing-based game design company Exoweb. It was recently ranked as the 14th most-purchased app at in the U.S. app store, according to Beijing-based research firm App Annie, which tracks sales and market statistics for App Store publishers.
“We have seen Chinese app makers have been growing fast in the global market,” says App Annie CEO Bertrand Schmitt.
Happylatte is not alone. According to App Annie, there are more than 100 iOS apps developers in China whose apps—mostly interactive games—have been widely purchased at Apple’s global app stores.
This market is attractive because consumers are willing to pay for apps, and has a straightforward and robust marketing and distribution system.
Among all the Chinese iOS app developers, Shanghai-based Triniti Interactive is probably the most aggressive, with 78 iPhone apps released since November 2009.
“About 50 percent of our downloads come from the U.S., with the rest from mostly English-speaking western countries, and some from East Asia,” Triniti Vice President Andrew Seid says. The company’s apps, including Gamebox 1 and Doodle Truck, have been downloaded more than 100 million times.
“We’ve targeted the U.S. from day one, and that’s where we’ve seen our biggest success,” he says. “We’re designing with the U.S. consumer in mind.”
Seid, the only foreigner at the company, is from the United States himself—and heads up the marketing and business development efforts.
“For the nitty-gritty, and also big-picture stuff, where non-English-speaking Chinese employees might have trouble, that’s where I can help,” he says.
For example, app designers often ask him for input on character design, he says. He offers feedback on everything from clothing styles to body proportions, “all the cultural stuff that you have to be an American to get,” he says.
He is also responsible for product naming and marketing copy, which are “very difficult for non-native English speakers to do well,” he adds. On occasion, he even helps with story writing for those games which require extra background and depth.
Triniti isn’t the only Chinese company bringing in foreign experts to help target Western markets. Happylatte—which declined to comment for this story—has more than 10 foreign staffers.
“Chinese developers have the technical skills but often lack the ability to promote the products in a way that western consumers are used to, because of the huge differences in culture and languages,” says Tong Bin, an analyst at Shanghai-based research firm iResearch Consulting Group.
But hiring foreign staff isn’t the only solution, he says. Chinese companies could also hire international marketing agencies or use foreign game publishers like Chillingo—the Cheshire, U.K.-based company that helped to distribute the popular Angry Birds game from Finnish developer Rovio Mobile.
That’s what Astepgame CEO Tang Zhongning plans to do.
Astepgame is a Beijing-based startup with 40 employees, all of whom are Chinese, and hasn’t had much success yet in cracking the American market.
“We are looking for the right foreign company to help us do all the promotion,” Tang says, adding his company is trying to develop apps targeting western consumers. “Without the help, it’s almost impossible for us to reach our target successfully.”
Astepgame’s major product is Three Kingdoms-Legend of Shu, an app based on the historical Chinese novel “Romance of the Three Kingdoms.” Priced at $3 for iPhone, and released in English, Chinese, and Japanese, the game got over 100,000 downloads since December 2010—but most were from China and the rest were either from overseas Chinese communities in Singapore and elsewhere or from Japan.
“It’s a typical Chinese story so maybe not that attractive for westerners,” Tang says, adding that a Korean version of the app will be released soon.
But the company was trying to target a Western audience right from the start, and originally released the app just in English.
The reason? Not only are Chinese consumers less used to paying for apps, but few have the dual-currency credit cards necessary to make payments at the app store, Tang says.
Instead, most Chinese iPhone users jailbreak their phones, says iResearch’s Tong Bin.
“That way, users can download pirated apps for free,” he adds.
Though there are no official statistics of the number of iOS devices sold in China,Wang Jianzhou, CEO of China’s largest mobile network carrier China Mobile, recently told local media that the company had over 5.6 million iPhone users as of the end of May 2011—and the number is rising fast.
Apple reported the sales in Asia Pacific surged 151 percent, or $2.9 billion, during the second quarter of 2011 from the same period in 2010, with major growth force coming from sales of iPhones in China, Hong Kong and South Korea.
But even when Chinese consumers do download legal apps, they opt for the free ones.
According to Utrecht-based research company Distimo, China is second behind the U.S. in the number of app downloads. Meanwhile, revenue from paid apps for all of Asia is about two thirds of what it is just for the U.S.—and the bulk of that is from consumers in Japan.
Targeting the global market may bring companies more revenue, but it also poses a big challenge to Chinese developers, and not just when it comes to cultural barriers, says Sun Peilin, analyst at Beijing-based research firm Analysys International.
There is a lack of creativity, he points out. “A lot of China-made apps are just copying foreign apps.”
For example, consider Weixin, a social networking app by Tencent, China’s leading technology company. Tencent owns QQ, the widely used instant messenger in China.
But Weixin is just a copy of WhatsApp Messenger from WhatsApp Inc, a California-based startup.
Some Chinese app developments shops are battling to change this. Shanghai-based Coconut Island Studio, for example, is getting proactive about innovation.
“Everyone in our studio is encouraged to share his ideas. We also hold an internal design competition regularly to find some great ideas,” Chen Wen, co-founder and business development manager at Coconut Island, says.
In January, Coconut Island was also the host of 2011 Global Game Jam, a project by the New Jersey-based International Game Developers Association designed to encourage creativity through a 48-hour design competition. It was also the first time that Global Game Jam came to Shanghai.
“We know that western players, especially American players, are highly sophisticated in choosing games, and it pushes us to meet their criteria through constantly seeking fun, original ideas,” says Chen, who had studied in Germany and now frequently flies between Shanghai and Stuttgart.
Coconut Island’s push for creativity and quality has already started paying off. Its iDragPaper app, a simple game that asks players to drag paper as fast as they can, has seen over 11 million downloads for its free and paid version, with American players in the lead.
Coconut Island is making a particularly big splash given the small size of the company—just six people, one of whom is a programmer from New Zealand. It was founded in 2009.
Chinese developers are beginning to look at the Android app market as well, but not with the same degree of interest.
Chen says that Coconut Island has released an Android app—10sec, a simple game that asks players to count 10 seconds—and is working on other two apps for Android devices, but the iOS platform offers some business advantages.
“Apple App Store is simple, independent and has global reach,” he says. “All we have to do is make good apps and send them to Apple.”
Astepgame’s Tang agrees, adding the payment system of Android Market is immature, a major strike against it for a lot of app developers. And there are other disadvantages.
“Most Android apps are free,” he says. “And also, the store doesn’t have an efficient marketing system like Apple’s.”
Due to the fast growing Android device users in China, Tang says his company has started to work on Android apps, “But our focus is still on iOS.”
Then there’s the fact that the Android Market is actually banned in China, due to the tumultuous relationship between the Chinese government and Google, which operates the market.
Instead, China has its own Android app stores.
There are third-party stores like Hiapk, and stores set up by phone makers such as Lenovo. “There are many Android app stores in China, but none of them can guarantee a marketing system that is efficient enough to attract app developers,” says Analysys’s Sun. Often, developers still have to work on promotion after paying for the app stores for marketing. “They just think it’s not worth it.”
That’s true for Coconut Island. “For a small team like us, we really don’t have the time and energy to do all the negotiations with these stores, so we are happy to settle down with Apple,” says Coconut Island’s Chen.
[Maria Korolov is a freelance business and technology writer in Massachusetts. She can be reached at firstname.lastname@example.org.]
This story, "Chinese developers take a bite of the Apple" was originally published by Network World.