China is a growing smartphone market that no mobile player can ignore and much has been written about the mobile app marketing opportunities in China. InMobi recently concluded a research survey to understand consumer behavior in China around app usage & discovery and compared the results with the US market.

1. WHAT IT TAKES TO WIN
In the Chinese
App Market
JUNE 2013

2. Table of Contents
Executive Summary.................................................................................................................. 01
Introduction.............................................................................................................................
02
Research objective and methodology..................................................................................... 02
App landscape.......................................................................................................................... 03
App discovery and download behaviour................................................................................ 03
u
iOS vs. Android.............................................................................................................................
05
u
App discovery...............................................................................................................................
07
u
In-app purchases..........................................................................................................................
10
What it takes to Win in the Chinese App Market.................................................................... 11
u
Fragmented App Distribution......................................................................................................
11
u
Lack of standard payment methods..........................................................................................
11
u
Local social media landscape......................................................................................................
11
u
Need for Localization...................................................................................................................
12
u
Piracy concerns............................................................................................................................
12
Monetization strategy for China.............................................................................................
13
u
Freemium model..........................................................................................................................
13
u
Partnering with a local payment provider..................................................................................
13
u
Know your users...........................................................................................................................
13
»
Ad monetization...........................................................................................................................
13
Conclusion................................................................................................................................ 14

3. What it takes to win in the Chinese App Market
EXECUTIVE SUMMARY
Could China be the next big marketplace for app developers? While the size of the
market has developers salivating, the complexity, fragmented eco-system and privacy
concerns are some of the challenges that must be understood and tackled before
developers can successfully monetize their apps in this unique country.
In March 2013, InMobi decided to conduct a survey amongst app users in the US and
China, to understand consumer behavior in both markets, the factors that influence
app discovery and download, and the monetization strategies that could be successful
in these markets.
Key results from the survey
1.
The US and China are comparable markets in terms of appetite for app
downloads and usage. Be it proactively searching for new apps, down
loading apps or using apps that were downloaded, the Chinese were
found to be heavy consumers of apps.
2.
While Chinese users are traditionally perceived to be averse to paying
for apps, our research indicates that there is a huge market for in-app
purchases in China. Also, many Chinese users revealed that price was
less of a determinant in driving their download decisions - contrary
to what was noticed amongst American users.
3.
Receptivity to mobile ads was found to be high in both China and the US
with users in both markets preferring ads that recommended apps to
them based on their interests and past web browsing history.
This whitepaper attempts to provide an in-depth overview of the research findings
and also provides several other market specific insights that can help developers craft
a successful app distribution and monetization strategy for the Chinese market.
1

4. What it takes to win in the Chinese App Market
INTRODUCTION
China is the world’s biggest mobile market in terms of subscriber base, and the fastest
growing in the history of telecommunications. According to IDC, in February 2013, China
overtook the US to become the world’s largest smart device market, with 246 million
devices (against the US 230 million) 1 and accounting for 26.5% of all smartphone shipments last year.
Concurrent with the growth in smart devices, mobile applications (apps) are also growing at an astronomical rate. While the top 100 countries average an app session growth
of over 200 percent, China is delivering more than four times this growth rate (870%),
spurred by a massive population voraciously adopting apps. 2 In addition, the falling
price of the iPhone and the increasingly capable low- to mid-range Android handsets
now available have further propelled this growth.
Despite the explosive growth, cultural barriers, piracy concerns, fragmented app distribution ecosystems and the need for localization have prevented most app developers
from entering this market. The common perception that Chinese app users were not
willing to pay for content and that app usage levels were not high enough to warrant
investments in heavy marketing, kept most developers away from China.
Today, however, the availability of local payment and carrier billing options with big
operators like China Mobile and China Telecom have made it easier to charge mobile
app users. 3 In addition, the market is witnessing a consolidation of alternative Android
app stores. These factors have sharpened the interest of mobile app developers in the
Chinese market. Tim Cook, CEO of Apple Inc., has publicly stated that China is going to
be Apple’s largest market very soon.
However, very few western firms have the understanding or knowledge to capitalize on
the Chinese opportunity. We decided therefore to conduct a survey to help developers
answer the question: “What insights about the Chinese app users can help developers
understand this market and launch their apps successfully here?”
RESEARCH OBJECTIVE AND METHODOLOGY
In order to understand consumer behavior around app usage and discovery in the US
and China, InMobi recently fielded an on-device survey around the above topics via its
global mobile ad network, across both Android & iOS smartphones. The survey was conducted with a sample size of over 1000 Android and iOS users (US Smartphone Users N=
510; iOS Users N= 251; Android Users N=259. China Smartphone Users N= 502; iOS
Users N= 206; Android Users N=296).
2

5. What it takes to win in the Chinese App Market
APP LANDSCAPE
In the US today, the Apple App store and Google Play are virtually neck-to-neck with an
almost equal number of downloads (50B downloads for Apple vs. 48B for Google Play).
However, the situation in China is quite different. While the Apple App Store is the primary store for iOS apps in China, Google Play is virtually nonexistent since access is
restricted. However, China has one of the most complex and fragmented Android app
store ecosystems in the world, with over 500 stores.
APP DISCOVERY AND DOWNLOAD BEHAVIOUR
Our survey showed that app discovery and download are similar across both countries
(Figure 1), with a near-direct correlation between apps downloaded and apps used in
both the USA and China.
Fig 1: App usage is high in both markets
Apps downloaded in the past 30 days
7%
10%
14%
7%
21%
20%
9%
11%
10%
35%
16%
8%
16%
17%
Q1. About how many apps have you downloaded in the past 30 days?
Apps used in the past 30 days
6%
7%
12%
10%
18%
19%
30%
9%
8%
11%
16%
15%
19%
19%
Q2. About how many apps have you used in the past 30 days?
Over 30
21 - 30
16 – 20
10 – 15
6 – 10
1–5
None
3

6. What it takes to win in the Chinese App Market
In addition, the Chinese have a strong appetite for exploring new apps. A whopping 97%
of smartphone users in China revealed that they proactively search for new apps to
download, with 37% of them searching on a daily basis (Figure 2). The Chinese also seem
to be more determined in their search for new apps, with only 28% of the Chinese rarely
or never searching for new apps to download, compared to 40% in the US.
Fig 2: App discovery patterns
91.0%
97.0%
Of Smartphone users in the US have
searched for new apps to download
Of Smartphone users in China have
searched for new apps to download
3%
9%
24%
25%
37%
32%
9%
24%
10%
25%
24% of the US mobile web users
search for new apps on a daily basis
37% of Chinese mobile web users
search for new apps on a daily basis
Q3. How often do you search for new apps to download?
Daily
Weekly
Monthly
Rarely
Never
4

7. What it takes to win in the Chinese App Market
A.
iOS VS. ANDROID
Fig 3: Apps expected to download in the next 30 Days
43%
40%
21%
15%
14% 14%
10% 10%
6%
None
1-5
6 - 10
10 - 15
4%
7%
16 - 20
4%
21 - 30
7%
4%
Over 30
Q4. How many apps do you expect to download in the next 30 days?
Fig 4: Apps expected to download in the next 30 Days
28%
21%
17%
17% 18%
16%
14%
10%
17%
13%
9%
9%
8%
4%
None
1-5
6 - 10
10 - 15
16 - 20
21 - 30
Over 30
Q4. How many apps do you expect to download in the next 30 days?
5

8. What it takes to win in the Chinese App Market
29% of Android users in the US say they search for new apps daily, versus 18% of iOS users
(Figure 5). In China, these numbers were nearly equal, at 38% and 37% respectively (see
Figure 6). This ties in with research from mobile research firm Canalys, who found that just
over half of all apps downloaded in the first quarter of 2013 were for Android. iOS, at about
40 percent share, was the only other big-time player. 4
Fig 5: Frequency of Searching Apps to Download
Of iOS users in the US
have searched for new
apps to download
91.0%
9%
Of Android users in the US
have searched for new apps
to download
92.0%
8%
18%
29%
27%
36%
27%
10%
10%
Daily
Weekly
Monthly
24%
Rarely
Never
Q6. How often do you search for new apps to download?
Fig 6: Frequency of Searching Apps to Download
98.1%
Of iOS users in china have
searched for new apps to
download
Of Android users in china
have searched for new apps
to download
97.0%
2%
26%
3%
25%
37%
38%
9%
10%
26%
25%
Daily
Weekly
Monthly
Rarely
Never
Q6. How often do you search for new apps to download?
6

9. What it takes to win in the Chinese App Market
B.
APP DISCOVERY
So, how do users discover apps in these markets? In both the US and in China, browsing
the app store is the most common method for both iOS and Android users (Figures 7
and 8). Also, in both markets, word of mouth is a bigger factor for iOS users than
Android users. In the US, 42% of iOS users use the recommendations from friends and
family to find new apps, vs. 27% of Android users. In China, these figures are 33% and
23% respectively. In both markets, Android users are more likely to look up reviews for
apps on mobile websites.
Fig 7: App discovery in the US
Browsing the app store
57%
53%
Recommendation from friends and family
27%
18%
19%
Recommendation from social media
14%
Websites I access through my mobile phone
Advertisements on my mobile phone
None of these
Websites I access through a desktop laptop computer
Magazines and newspapers
42%
25%
11%
9%
10%
10%
8%
7%
6%
4%
Q7. How do you usually find new apps to download to your phone?
Fig 8: App discovery in China
55%
54%
Browsing the app store
Websites I access through my mobile phone
35%
Recommendation from friends and family
23%
Websites I access through a desktop laptop computer
44%
33%
23%
30%
Recommendation from social media
18%
12%
Advertisements on my mobile phone
13%
20%
Magazines and newspapers
None of these
10%
4%
5%
3%
Q7. How do you usually find new apps to download to your phone?
7

10. What it takes to win in the Chinese App Market
The Chinese are also highly proactive in app search and discovery, with 36% of our Chinese respondents expecting to download over 20 apps in the next month, compared to
16% in the US (Figure 9).
Fig 9: Number of apps expected to download in the next 30 days
18%
6%
5%
8%
16%
5%
24%
10%
11%
9%
14%
17%
41%
Over 30
21 - 30
16 – 20
10 – 15
15%
6 – 10
1–5
None
Q4. How many apps do you expect to download in the next 30 days?
How do users discover new apps? In both markets, most users (55%) discover new
apps in the App store (Figure 10). However, US users are more likely to rely on recommendations from friends and family (35%), while Chinese users are influenced by app
review websites on a mobile phone (40%). Review websites are key in China, with 27%
accessing them through a desktop/laptop computer, as against just 8% in the US.
Fig 10: Channels through which users discover apps
55%
55%
Browsing the app store
Websites I access through my mobile phone
20%
27%
35%
Recommendation from friends and family
Websites I access through a desktop laptop computer
40%
8%
Advertisements on my mobile phone
17%
10%
Recommendation from social media (facebook & etc)
15%
18%
27%
Magazines and newspapers
None of these
7%
5%
4%
China Smartphone users
US Smartphone users
10%
Q7. How do you usually find new apps to download to your phone?
8

11. What it takes to win in the Chinese App Market
Receptivity to mobile ads is high in both the US and China. In the US, 65% are equally or
more comfortable with mobile ads as they are with ads on the TV or on the
desktop/laptop; in China this figure is 49%. 5 In addition, we found that there was no
silver bullet - different mobile ad formats such as static banner ads, rich media ads,
interstitials, and video ads are all effective in different situations (Figure 11). That being
said, we found that contextual ads are extremely well received - users in both markets
preferred ads that recommended apps based on their interests and mobile web browsing history.
Fig 11: Mobile ads that influence app download
iOS
Users
Android
Users
iOS
Users
Android
Users
Banner ads which appear at the top of
the screen.
28%
23%
18%
24%
Ads which include multimedia content
such as games, audio, and pictures.
25%
29%
24%
28%
A full screen ad which appears briefly,
while an app is loading.
18%
27%
20%
19%
A short video clip
22%
16%
17%
14%
Ads which recommend specific apps for
me, based on the website I am browsing
on my phone (for ex, ads for sports apps
displayed when I visit a sports website
on my phone)
34%
29%
39%
42%
Q8.When searching for mobile apps to download, which types of advertisements on your mobile phone would be the most helpful?
Fig 12: Factors that influenced the download decision
Price
51%
45%
Description and screenshots
50%
55%
App store reviews & rating
Recommendation from friends & family
30%
45%
US Smartphone users
41%
44%
App is ranked high on app store chart
33%
App featured by app store
Reviews from magazines or websites
61%
37%
18%
China Smartphone users
59%
30%
Q9. When you are deciding whether to download an app, which factors have the biggest influence?
9

12. What it takes to win in the Chinese App Market
What factors most influenced the download decision (Figure 12)?
Our research showed that in China, price is less of a determinant due to the prevalence of
free apps in the market. App store reviews were also considered important by about half
the respondents in each market. Interestingly, recommendations from friends and family
was less important in China (30% vs. 45% in US), with Chinese users giving far more importance to the app featured by the app store (59% vs. 33% in US). Lastly, the app’s rank on the
app store chart was also a factor of consideration in both markets (41% in US vs. 44% in
China), and Chinese users gave a higher ranking to reviews from magazines or websites
(30% in China, 18% in US).
C.
IN-APP PURCHASES
Fig 13: In-App Purchases
37.0%
of smartphone users in
the US have made an in-app
purchases
46.0%
of smartphone users in
China have made an in-app
purchases
Q10. When using an app on your phone, have you ever made an in-app purchase?
Contrary to popular belief that Chinese users are less willing to pay for app content, our
research indicates that 46% of Chinese have made an in-app purchase as compared to the
Americans (37%).
10

13. What it takes to win in the Chinese App Market
WHAT IT TAKES TO WIN IN THE CHINESE
APP MARKET
At first glance it seems as if the Chinese app market is ripe for the picking. However, effectively marketing apps in China is far more complex due to several challenges, as outlined below.
FRAGMENTED APP DISTRIBUTION:
In the US, the apps market is a two-horse race, dominated by the App Store and Google Play, both being
able to meet app distribution needs. In China, Android currently holds a 70% market share, which
is expected to increase to 75-80% by the end of this year. However, since access to Google Play market
in China is restricted due to political reasons, it is a relatively minor distribution channel. China has
one of the most complex and fragmented Android app store ecosystems in the world, with over 500
stores. With most Chinese Android apps downloaded from one of these app stores, apps developers
necessarily have to distribute their apps via third party stores.
Some of the largest app stores include Anzhi, AppChina, Gfan, Hiapk, Mobile Market, Nduoa, Snappee,
Tencent, Wandoujia, Baidu App Store (run by the Chinese search engine giant), Opera Mobile App Store,
and Pandaapp.
We strongly recommend marketing your app through one or more of the large stores listed above.
LACK OF STANDARD PAYMENT METHODS:
Credit card penetration is low in China, and hence alternative payment methods play a huge role in
enabling the in-app purchase market. Recently, big operators like China Mobile, China Unicom and
China Telecom have come up with local payment and carrier billing options, making it easier to charge
mobile app users.
We suggest partnering directly with carriers or device makers for pre-install deals. Several top developers such as HalfBrick and Rovio have benefitted from such arrangements.
LOCAL SOCIAL MEDIA LANDSCAPE:
Social media has a great influence on app download decisions amongst consumers in China (Figure 3).
While Facebook and Twitter are fixtures of daily online use in the West, the Chinese have no access to
these sites; local cousins such as Sina Weibo, Tencent Weibo, Renren and Douban dominate the social
media landscape here.
Developers must promote their apps heavily on these local social media channels to drive downloads
in China.
11

14. What it takes to win in the Chinese App Market
NEED FOR LOCALIZATION:
A Distimo report - The Impact of App translation (September 2012) revealed that 73% of
free downloads amongst the top 200 most downloaded free applications in China were
localized in Chinese, far outstripping other language-sensitive markets like Korea and
Japan. In fact, China is the only country where localized apps generate more downloads
than English apps. 6 In addition, close to 50% of the Top 25 most downloaded apps in
China have Chinese names.
Figure 14 shows how important it is to customize apps for the Chinese market. While
translating apps into Simplified Chinese is essential, localization should be beyond
simple translation – it is important to connect with user emotions and culture. Customizing with Chinese avatars and timing launches with Chinese festivals is a good strategy.
For instance, HalfBrick’s popular app Fruit Ninja was introduced as a Chinese version
with Chinese zodiac images among other customizations. In just 3 months, the Chinese
edition reached 40 million downloads, and racked up $6 million in sales!
% of iPhone apps w/ Local Language Names in
National Top 25 of monthly free downloads
% of iPhone apps w/ Local Language Names in
National Top 25 of monthly free downloads
Switzerland
Spain
Germany
Japan
Spain
Russia
Italy
Switzerland
France
Italy
Russia
Germany
Japan
Taiwan
China
Korea
Taiwan
France
Korea
China
0% 10% 20% 30% 40% 50% 60% 70%
0%
10%
20%
30%
40%
50%
60%
PIRACY CONCERNS
The Chinese market is notorious for piracy, and laws in China do not safeguard against
innovative ideas. Without Google Play to regulate the market, pirated games and
malware are rampant in the Android app space. A recent report from the Data Center
of China Internet indicated that almost 35% of Android apps pull user data unrelated
to the app. Many developers claim that almost 100% of their pirated users are either
from China or use Chinese devices.
One way to overcome this is by using a freemium business model as against paid
monetization. Frequent updates to the app are also recommended, which will make it
difficult for hackers to keep up. Small app developers should also consider partnering
with larger companies who are better positioned to handle piracy, given their access
to more resources.
12

15. What it takes to win in the Chinese App Market
MONETIZATION STRATEGY FOR CHINA
A. FREEMIUM MODEL
While developers in general have been moving away from paid apps to freemium apps
(apps that are free to download but allow users to upgrade to the full version upon
purchase), the freemium monetization model tends to work well particularly in China
for the following reasons:
u
u
u
Paid apps are easily pirated, especially in China
Chinese users like to try out the product before they actually make a
purchase
The trust of the Chinese user must be earned before payment
B. PARTNERING WITH A LOCAL PAYMENT PROVIDER
Given the low credit card penetration in the Chinese market, partnering with a local
payment provider such as Alipay is critical. While in the US, users are open to signing up
for a subscription service and having their credit card charged every month, automatic
recurring payments (subscriptions) are usually not a viable option in China right now. In
China, users must deposit money into their Alipay account before any payments can be
processed, and have to reauthorize their payments every month. It is therefore evident
that Chinese users have to make a conscious decision each time they pay for a service.
C. KNOW YOUR USERS
While marketing your app in China, do bear in mind the profile of users and how
they map to your app. For instance, online mobile games are known to appeal to middle
aged and young adults in the country, while Casual games appeal to low income, low
education groups and to children. Knowing who your apps will appeal to, will help you
target users and customize your marketing strategies appropriately.
D. AD MONETIZATION
Given the large user base, ad-based monetization can be a viable source of revenue.
However, the Chinese ad network space is quite fragmented, with over 70 competing ad
networks. Given the stiff competition, many networks resort to misleading reporting
and other unscrupulous practices to lure developers. Hence developers must conduct
due diligence and pick a trustworthy partner who can offer both performance and scale
to make ad monetization work for them.
13

16. What it takes to win in the Chinese App Market
CONCLUSION
Unlike the U.S, where Apple's App Store and Google Play dominate the app market, the
fragmented Chinese app ecosystem has hundreds of third-party app stores, making it
difficult for overseas developers to reach a wide enough audience. In addition, fears of
piracy and payment concerns have prevented many developers from choosing to
explore the Chinese app industry.
Do app and mobile game developers from the West stand a chance? While China is no
easy market for app developers, the huge potential of this market can make it very
lucrative for developers who adopt the right strategy and take the trouble to understand the Chinese market. It is important to understand the similarities and differences
between the US and the Chinese markets, and be willing to work with the Chinese culture and economy to be successful in this market.
We hope our research report has given you the data and the insights on how to craft
your app strategy to not only succeed but also thrive in the burgeoning Chinese app
economy.
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17. What it takes to win in the Chinese App Market
REFERENCE
1. http://blog.flurry.com/bid/94352/China-Knocks-Off-U-S-to-Become-World-s- Top-Smart-Device-Market
2. http://paidcontent.org/2011/11/02/419-mobile-apps-seeing-astronomical-growth-in-china/
3. http://techcrunch.com/2013/04/05/china-app-makers/
4. http://techland.time.com/2013/04/16/ios-vs-android/
5.http://www.inmobi.com/press-releases/2013/02/27/59-ofglobalmobile-web-users-are-now-as-comfortable-with-mobile-advertisingas- they-are-with-tv-or-online-advertising-2/
6. http://chinaappmarketing.com/
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18. What it takes to win in the Chinese App Market
ABOUT INMOBI
InMobi has been recognized by MIT Technology Review as one of 50 Disruptive
Companies of 2013. InMobi platforms enable the world’s leading brands, developers,
and publishers to engage global consumers. InMobi builds mobile-first technology
platforms that leverage advances in big-data, user behaviour, and cloud-based
architectures to simplify advertising. Agencies and advertisers leverage InMobi
platforms to create HTML5 rich media ads and engage 691M consumers across 165
countries. Developers and premium publishers use InMobi platforms to acquire users
and monetise their mobile apps and their mobile websites globally. With offices in
multiple continents, InMobi provides global reach with local service and support.
InMobi is venture-backed by investors including: SoftBank, Kleiner Perkins Caufield &
Byers and Sherpalo Ventures.
Developers can start monetizing instantaneously by downloading our SDKwww.inmobi.com/SDK
To learn more, please visit www.inmobi.com, follow us on Twitter @InMobi, or discover
the latest mobile insights at www.inmobi.com/insights/
Want to know more about InMobi Developer Solutions contact: developer@inmobi.com
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19. SIMPLIFYING MOBILE
www.inmobi.com