Market Insight: China

It was recently announced that Chinese investors have expressed an interest in Opera Software. I do not know and cannot comment on the specifics, but the news can be found on Reuters and Forbes. As it’s been a while since I’ve done a Market Insight post, this seems like a good time to take a look at how your app might fit the Mobile Market in China.

Demographics:

For starters, China has the largest population in the world with 1,375,150,000 people; about 90 million more than India. The urban cores of several cities have populations larger than many nations:

  • Shanghai – 24 million (more than the entirety of Australia)
  • Beijing -21 million (about the size of Romania)
  • Tianjin – 15 million (slightly smaller than the Netherlands)
  • Guangzhou – 13 million
  • Shenzen – 11 million
  • 11 more cities with a population over 5 million

China has 56 recognized ethnic groups, and nearly 300 living languages to go with them. By far, the most common language in China is Mandarin (960 million); with Wu, Yue and Min languages spoken by 60-80 million people each along with Jin, Xiang, Hakka and Gan spoken by another 20-45 million. While outside the scope of this article, the official language in Hong Kong is English.

This brings matters of app localizations to an entirely new level. Localization is critical in regards to both language and social-cultural look-n-feel. Marketing your app in English, or any other language, is not likely to win you many fans though over 100 million Chinese citizens do know English as a second language and the demand for English teachers and TOEFL tutors is very high.

Of additional demographical interest is the age and gender breakout to get a feel for the size of the market (in relative terms) by type of mobile app.

Age structure: % Male Female
0-14 years: 17.1% 124,340,516 107,287,324
15-24 years: 14.7% 105,763,058 93,903,845
25-54 years: 47.2% 327,130,324 313,029,536
55-64 years: 11.3% 77,751,100 75,737,968
65 years and over: 9.6% 62,646,075 68,102,830

Finances

In 2011, China’s GDP per Capita ran at roughly $5.6k and steadily climbed to roughly $7.6k in 2014; about 10% growth per year, but subject to fluctuations as all things are. What is important, however, is Purchasing Power Parity where $7,600 per year equates to about $13,000 in what it can actually buy. It is important to note that GDP per Capita and PPP do not necessarily reflect the actual average of household incomes (much lower), but are useful in relative terms.

China’s historically “cash is king” market is rapidly transitioning to electronic payment systems. Credit card circulation soared from roughly 25 million in 2002 to 186 million in 2009 and to over 450 million credit cards at the end of 2014.

Mobile Platforms and Proliferation

Per the World Bank, it is estimated that there are 93 mobile devices for every 100 people (up from 72 in 2011). Keep in mind that some people have multiple mobile devices and subscriptions. That equates to 1,275,000,000 mobile phones.

While over 70% of China’s mobile users have Android devices, few use Google Play, relying instead on over 200 other app stores. Thus, while the Chinese mobile app market is indeed massive, developing distribution channels is critical to achieve optimum performance.

Only two platforms are in play in China, Android (70%) and iOS (28%), with all others making up only 2%. It is important to note, however, that revenues are much greater for iOS apps than for Android.

Estimating an App’s Market Potential in China:

If you were to evaluate countries for which you would want to localize your app, China should rank pretty high on the list, especially if Mandarin is the target language. For the sake of a quick ballpark potential of app users, let’s presume we are considering a free to play game (with in-app advertising for monetization) designed to be interesting mainly to predominantly Mandarin speaking (spoken by 65+%), 15-24 year old males (106 million), factoring 90% have a mobile device, for a base population of 62 million.

Size of Prospective Market:

  • Android Market: 43.4 Million
  • iOS Market: 17.3 Million
  • Blackberry & Other: 300,000

Of course, reaching everyone in the market is another issue entirely, suffice that even selecting a fairly narrow niche the potential ROI for making your app available in Mandarin is likely greater than that of any other language. Girls are gamers, too, as are many under 15 and older than 24.

The Virtual Silk Road

China is an international player and has been in a long process of liberalizing and modernizing its market for many years. This short article could not possibly cover all of its important and very interesting impact on global trade, real or virtual. China is the largest online retail market with sales reaching over $400 billion in 2014 and estimated to reach a $1 trillion by 2019, per Forrester and TechCrunch. Factoring in purchasing power parity on a near 2 to 1 ratio, it would make sense for more developers to begin looking at China’s mobile market.

Project Manager at the Opera Mobile Store providing Sales-Marketing support. Content development and research.

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