The Chinese IT market is like no other. Based on the information from the China Internet Network Information Center’s report, 772 million Chinese have online access (the report is in Chinese, but Google Translate does perfect job in making it easy-to-understand).
To put things in perspective, that’s more than the entire population of Europe! Interestingly, the number of users who go online with their mobile devices is 753 million, making it a whopping 97.5% of the total number. Just think about it: almost every Chinese uses their smartphone as the main device to surf the Internet.
China’s online payment industry has also skyrocketed over the last year, counting more than 700 million online users, which makes China one of the most cashless countries in the world.
If you take those numbers and combine them with IT market growth rates, it becomes crystal clear that China offers great opportunities for IT businesses.
Specifics of running business in Mainland China
One of the biggest challenges that foreigners face when they enter the IT market in China is a different way of running business. Surely, the language barrier plays its role here. For anyone who doesn’t speak Mandarin, it’s almost unbreakable. Luckily, the number of English speakers has been growing steadily in the last decade. Anyway, if you’ve had a school friend with some Chinese speaking skills, you’d better be looking for their phone number right now! :D
It’s also impossible to underestimate the factor of the ever-changing legal regulations and the legal system itself. Make sure you’ve done your homework. Reading this article will give you a basic understanding of some important aspects to consider when developing a web/mobile app for China, but I still recommend googling about the realities of this country for an hour or two.
However, the bigger reason is that the success of most business activities in China depends on how well you get along with the locals. The best strategy will be to establish partnerships with local companies right from the get-go. This can spare you a lot of effort when it comes to sorting out paperwork and other legal issues or just getting things done on site.
Speaking of legal issues, you will need to set up a business entity in order to be able to run business in China. Depending on the type and the nature of your business, here are several ways you can do that:
- WFOE (Wholly Foreign Owned Enterprise).
- PE (Partnership Enterprise).
- Representative Office.
- Joint Venture.
Forming a WFOE is a go-to option for the most cases. What’s more, thanks to the new Shanghai Free Trade Zone (SFTZ), WFOE allows you to hold 100% of the equity shares of your company as long as you within the SFTZ. Before this, you’d have to set up a joint venture, giving the essential shares to a Chinese partner.
The Great Firewall
If you’ve ever read any articles about modern China, odds are you’ve stumbled upon the term the “Great Firewall” once or twice. Briefly, it’s a censorship system that was created by the Chinese government to regulate the incoming and outgoing traffic (including the encrypted one) in China.
To put it simply, the Great Firewall blacklists anything that the Chinese government considers inappropriate or offensive. This includes such sensitive topics as politics, government officials, anything illegal, and, of course, pornography. Mentioning any of the points above equals to a permanent ban. Make sure the user-generated content in your application is filtered to avoid the aforementioned situation.
In addition, The Great Firewall bans any websites that deal with user data and refuse to provide the government with access to it. This means that the majority of the services that you’re used to using most of the time are most likely banned in China.
Facebook, Snapchat, Twitter, Google+, and others aren’t available in China. In other words, if it’s popular in your country, chances that it’s banned and replaced with a local alternative are quite big.
The only way to visit such websites is through paid VPN services, which cost around $5–10 per month. That’s right, as soon as you’re in China, there is very little chance you’ll find a free VPN service or a browser extension since they all get closed quickly.
Another pitfall of heavy traffic moderation is that the speed of Internet connection with the rest of the world is really slow. In other words, The Great Firewall affects the performance of web/mobile applications, increasing the latency and load time.
For example, websites that are based in Europe need a whopping 33.1 seconds to load in China. This is SIX times (4.82 seconds) more than Chinese expect a common website to load. Furthermore, 54% of Chinese won’t visit a slow website again while 69% are unlikely to recommend it to their friends.
But there is more. Suppose your app is hosted on a shared server somewhere outside China. It’s thoroughly moderated and you do your best to steer away from any of the potentially offensive or sensitive content. However, if some other app that is hosted on the same server gets banned by the Chinese Internet providers, your app along with the entire server will be included in the blacklist as well.
The best way to avoid this is to move your application to China, where moderation is much more severe, which, in this case, is more of an advantage than disadvantage. Plus, this will have a positive effect on the performance side of things. However, in order to legally deploy it in China, you’ll first need to obtain an ICP.
The abbreviation “ICP” stands for Internet Content Provider license. It’s provided by the Chinese Ministry of Industry and Information Technology and is obligatory for any websites that operate in China. There are two different types of ICP:
- ICP license (issued for websites that sell things)
- ICP filing (issues for websites that don’t offer any goods or services)
Usually, the number of ICP licence is displayed in the footer section of a website. Here is how it looks:
To acquire this license, you need to have a legal business identity in China. The procedure of receiving the ICP licence is quite simple and straightforward… somewhere in a parallel universe perhaps. In reality, though, it’s a bit more complicated. Here is how it looks from a schematic viewpoint:
Receiving an ICP usually takes around 20 business days after you’ve submitted all the necessary documents to one of the hosting providers who offers such services. If everything’s fine, your documents are forwarded to the Ministry of Industry and Information Technology for a more detailed review. If it’s not, you’ll be asked to provide extra information.
As you know from the previous points, when your application’s infrastructure is hosted somewhere outside China, especially on the servers that are located on a large distance between each other, the loading speed as well as performance in general go through the floor.
If we’re talking about a website, in addition to the fact that it becomes very slow and barely usable, bad loading speed will affect your search ranking on Baidu, which is the Chinese alternative of Google. What’s more, this also results in much bigger bounce rate.
Hosting your app/website in China allows you to avoid all of the mentioned problems. Here is the list of the most popular hosting providers:
Alibaba cloud (Aliyun). With more than 2.3 million clients, Alibaba Cloud is the largest Chinese hosting provider and one of the largest providers in the world. When it comes to speed and security, Alibaba Cloud is by far the best hosting platform in China. In addition, it’s infrastructure reminds of AWS, which will be a great bonus if you’re Amazon’s aficionado.
Baidu Cloud. The second most popular hosting provider is Baidu Cloud. It provides a full range of computing, networking and hosting services, including website deployment and release, maintenance, and optimization. Its performance is comparable to that of Alibaba Cloud, so choosing between them depends on your interface preferences and previous experience in working with either of the two, if any.
“What about Amazon AWS?” — The good ol’ Amazon is one of the few large western companies that operate inside China. Basically, it offers the same range of services that you’re used to having overseas. Among Chinese AWS customers there are such big names as Youxigu and Qihoo 360. Unfortunately, AWS is still slower than its Chinese alternatives, so I wouldn’t recommend it.
Anyway, if you want to find a good provider, you should aim for the one that has 100% uptime, good performance, and comes with great customer support. The latter is one of the things that you’ll be needing a lot when hosting your app in China.
The specifics of the Chinese Internet infrastructure affects network performance as well. In short, there are three ISPs (Internet Service Providers) who have a monopoly on managing all the traffic that comes from 772 million users. They are China Telecom, China Unicom, and China Mobile.
Because of expensive and overloaded peering (it’s basically what connects ISPs and allows traffic to flow between them), the domestic Internet in China can be quite slow. Plus, there is a limited number of peering points, the majority of which are located in the heavily populated areas.
As a result, when data is sent from one part of the country to another, there is a chance it may not even reach its destination point. However, the situation is getting better every year, so, hopefully, this problem will be fixed eventually. Until then, third-party DNS providers are your best friends. Here is a few DNS providers I’d recommend using:
DNSPOD. This is one of the biggest DNS providers. The quality of its services is top notch, which is the reason why we used it in one of our projects. In fact, really saved us a couple of times.
QingCloud. QingCloud is also a big DNS provider that comes with an intuitive web interface and admin panel. It has in-built metrics and alert system. From our experience, it’s also quite good when it comes to routing traffic since it has connection to all major ISPs in China.
The cost of hosting
Good news first. In China, server hardware is supercheap. You can easily buy a powerful server for a comparatively low price. In fact, it’s sometimes even cheaper than what’s usually offered overseas. It may not be enough to launch space shuttles, but it’s more than enough to host a high-load application. On the screenshot below, you can see how much an eight-core server with 16 gigabytes of RAM costs in China (2374 yuan is roughly $378).
By this moment, you’ve probably realized that there is a catch. Indeed, there is one. The bad news is that as soon as you increase the traffic, the whole thing becomes extremely expensive. How expensive? Well, here is an example. After increasing the bandwidth to just 100 mbps the price jumps up in almost four times (8771 yuan is $1,396)!
It goes without saying that the design of your mobile application has to be of top priority. In the country where 97.5% of all online users surf the Internet through mobile devices, ignoring the specifics of both UI and UX equates to imminent failure of your app.
This basically means that whatever you offer to the Chinese audience, it has to be perfectly displayed on a mobile screen.
If you want to create a website, make sure you spend 90% of the time on making it mobile friendly. Even though this requirement has become a must for the rest of the world, Chinese practically don’t use desktop PCs or laptops at all, so if there is no mobile version, people will simply not use it.
It’s also important to remember that hieroglyphs take 30% less space compared to the Latin alphabet, which means the elements in the interface of your mobile app will need to be downsized accordingly. Last but not least, make sure to consider local design trends and UX best practices. For example, bright and saturated colors are common for today’s Chinese interfaces as well as huge amounts of information and animations.
Integration with third-party apps and services
Now, you’re probably wondering: “If all of the traditional social media is banned, what do Chinese use for communication? More importantly, what do I integrate my app with?”. That’s a very relevant question, but don’t panic just yet.
Despite Facebook and other websites being unavailable, there is a whole ecosystem of alternative social media and services flourishing in China. For example, Youtube was replaced with Youku, Baidu is the new Google while Momo is helping Chinese find a date instead of tinder.
Some of them have grown so big that they’re slowly becoming ecosystems themselves. So, here is a short list of Chinese apps and services that you should focus on.
The one thing you need to know about WeChat is that it’s the largest communication platform in China. How large? Speaking numbers, it has more than 938 million monthly active users! For Chinese, WeChat is somewhat of a place where they can do literally anything that can be done online: communicate via text/voice/video messages, send and receive money, purchase things, book tickets/restaurants/vacation, order taxis, and many other things. All of that you can do using just one single app.
What’s more, the recently introduced mini-apps allow third-party developers to build applications within WeChat itself, making it half operating system. In fact, there almost no services left that aren’t somehow connected to WeChat. Plus, in light of the last-year situation with Apple and the Chinese government, there is a definite possibility (albeit a very small one) that WeChat may become a fully featured OS.
This app is almost as popular as WeChat. Nearly 850 million of people use it every month, according to the report by Tencent. You may be surprised, but when QQ was first released in 1999, it was just a messaging app with very limited functionality. Today, it allows you to score points in numerous online games, exchange large files, stream music, find a date, send quick disappearing videos (like the ones in Snapchat), and, of course, communicate using text and voice messages.
In general, the difference between QQ and WeChat is that the latter one has a more mature audience. At the same time, QQ is used by younger people, which is the reason it comes with more entertaining services while WeChat is mostly focused on E-Commerce and in-app payments. Another thing that’s different between the two apps, is that WeChat has a strong international presence while QQ is mostly used inside China.
Remember I talked about some of the traditional social media being replaced by Chinese alternatives? Weibo is a good example of such policy. In a nutshell, Weibo is the Chinese counterpart of Facebook and Twitter with the main difference that it has only about 260 million monthly active users. As for its functionality, it’s basically the same what you’ll find in any social media: Weibo allows you to post things, share them with your friends, comment on posts, etc. Weibo is very similar to Twitter, albeit with more features.
The takeaway here is that if you’re going to develop an app for the Chinese audience, you need to make sure that its functionality allows users to share things to WeChat, QQ, Weibo, and other popular apps.
Considering that the vast majority of Chinese use their smartphones to go online, it’s no wonder that mobile payments are ubiquitous in China. Last year, mobile transactions yielded a whopping $32 trillion, according to the China central bank. Thirty two trillion of the US dollars, Carl! For comparison, in the US, this number is only $120 billion!
With that said, the ability to pay with your smartphone is extremely important in the context of developing mobile applications for China. In order to make your application easy-to-use, you need ensure proper integration with the payment services that are most used by Chinese: WeChat Pay and AliPay.
At this moment, AliPay is the leading payment system in China and the most common payment method on E-Commerce websites. It can be used for practically any type of online or offline transactions. From buying garlic on a street market to real estate and all sorts of vending machines — AliPay is supported everywhere.
When you want to buy something offline, you can either scan the QR code of the item using your smartphone or show a pre-generated QR code to the salesperson who will scan it with their device. Speaking of QR codes, they’ve literally taken over Chinese E-Commerce and retail. But don’t worry, I’ll cover this topic further in the article.
Even though WeChat has much more online users as of 2018, it still lags behind AliPay in terms of the number of monthly transactions. Same as AliPay, WeChat allows you to pay for almost anything as long as you’re in China. QR code functionality is also present. But because of severe rivalry, some websites may not support either of the systems, e.g. Taobao, one of the largest E-commerce platforms in China, supports only Alipay while WeChat is simply unavailable as a payment method.
This video gives an idea of how ubiquitous WeChat has become:
In 2016, WeChat introduced its new feature called “Red Envelope”. In plain English, it’s a digital incarnation of a Chinese tradition when people send each other money gifts in red envelopes on special occasions such as New Year or weddings.
In WeChat, though, Red Envelope isn’t just a message with money attached to it. For example, you can divide a Red Envelope into 15 equal pieces and send it to a chat group of 30 people. Those 15 people who open it first, will get their piece. You can also make it that whoever taps first will get a random amount of money. This feature has become insanely popular, driving more than 200 million new users to WeChat Pay.
“But what about other options?” — You may ask. Well, from what we’ve seen during our business trips to China, the two aforementioned payment systems are supported by practically all venues and websites, so they should be enough for most types of mobile applications.
As for more old school payment methods like credit cards and offline banking, they aren’t very popular among Chinese. However, if you do decide to implement such feature as the ability to pay with a credit card, go for UnionPay. It’s a Chinese national payment system that had been dominating the market until AliPay was launched.
What do Braintree, Stripe, and their counterparts have in common? — They all don’t work in Mainland China. Recently, though, Stripe was announced to support AliPay and WeChat Pay. Despite the optimistic tone of the news, it turned out that Stripe supports AliPay only in Hong Kong. Plus, the list of supported currencies is quite limited and doesn’t include yuan. As for WeChat, it’s not supported by Stripe at all. We hope that’s only a temporary issue and Stripe will provide support of the payment systems for the rest of China soon.
So what are the options here? From our experience, I can outline two payment gateways that didn’t pose any challenges when developing web/mobile apps in China. They’re Paymentwall and Ping++
Compared to its rivals in the form of Stripe or Braintree, Paymentwall encounters no issues working in China right out of the box, making it the only Western payment gateway that the Great Firewall seems to have no beef with. We’ve used in one of our projects and it really saved us then. However, if you’ve decided to completely move your app to China, it stands to reason to use a Chinese payment gateway like the next option.
This payment gateway is somewhat of a Chinese version of Stripe, which has good reputation in Chinese startup community. In terms of functionality, Ping++ offers integrated payment SDK for iOS/Android/Web and provides a common interface that supports all major banks, card groups and third party payment systems (like Alipay or WeChat Pay).
Ping++ is super helpful when you need to develop an application for the Chinese market able to work with local payment systems. What’s more, the gateway allows you to collect payment statistics.
Of all similar platforms in China, Ping++ is probably the most advanced and all-around solution that can spare you the effort of painful integration with Chinese payment systems. What we didn’t like about Ping++ is that it’s not localized. Speaking of localization…
Localize, not translate
Normally, entering a new market doesn’t require any drastic changes in your application or website. You just translate the interface to whatever language the new target audience speaks and that’s it. This is especially true for European countries, where a Spaniard can go to a French website and its UI won’t be confusing for them.
With Asian countries, it’s a whole different can of worms. And it’s not just about the fact that Chinese speak an entirely different language. It’s about that Chinese have a mindset unlike that of western people in the first place. Now, if you combine this with a dozen of dialects that are spoken in the country, it’ll become clear that localization is a kind of task that needs to be approach with particular finesse.
There is also a distinction between written and spoken language. As far as the former is concerned, it’s important to remember that Chinese has two writing systems: Simplified Chinese, which is basically a standard in China and Singapore and Traditional Chinese, which is used by Hong Kong and Taiwan.
When it comes to spoken languages, though, Hong Kong people use Cantonese, which sounds very different from Mandarin. At the same time, in Taiwan, they speak a dialect similar to Mandarin, but they use traditional characters. A person from Taiwan can easily understand someone from mainland China who speaks Mandarin.
Keep that in mind when creating/adapting the interface of your mobile application. After all, the last thing you want is your target audience not being able to understand a thing that is said on their screen.
QR codes are a big thing in China
While the rest of the world is slowly adopting QR-codes, Chinese has been actively using them for quite some time. In fact, QR codes are ubiquitous in China. They’re used to share links to events, buy things both online and offline, authorize on websites, etc. If you’ve been to Coachella or Tomorrowland or any other major event and you think you’ve seen a lot of QR codes, wait till you visit China.
Our team has been to China a few times and we were taken away by the mind-boggling number of QR codes printed everywhere. By saying “everywhere” I really mean it. When you’re in China, you’ll find QR codes on the seats in public transport, shelves in the supermarkets, bicycles, street walls, posters, tickets, etc. So now wonder why almost every Chinese app has a built-in QR reader. This feature has literally become a part of the everyday life of Chinese, which means they will expect your mobile app to have it as well.
… same as voice messaging
If there is something Chinese like more than their smartphones it’s using them to send voice messages to each others. Same as QR code scanner, the voice messaging feature is available in almost every app you can find in China.
As a foreigner, you’ll most likely be puzzled to see tens of thousands of Chinese speaking with their smartphones on the streets. However, there is more to this feature than you may think. Unlike millennials and teenagers, older people can’t boast proficiency in using modern technologies. Voice messaging has enabled them to communicate online without having to learn things like how to copy and paste text.
“But which language or dialect should I use for the voice messaging feature?”. The official language of Mainland China as well as Taiwan is Mandarin.
Sign up feature
The standard piece of sign up functionality in most of the Chinese apps is verification through SMS. You just enter your phone number on the sign up screen, tap the dedicated button, and receive an SMS with a code. Basically, the purpose of this feature is to verify you are a real user and have access to your phone number. If the code is wrong, you are not allowed to sign up.
The most popular service that is used to implement this feature is https://www.yunpian.com (we’ve used it in some of our projects and can confirm that it works good). Keep in mind though that it covers only Chinese numbers (area code 0086). So be sure to remember this aspect when developing the sign up feature of your mobile app.
Smartphone market specifics
This may come as a surprise to you, but almost none of the mobile manufacturers such as Samsung, LG, etc. that are widely used in European countries or the US, have very little presence on the Chinese market… well, except Apple. Chinese love Apple. Other than that, here is the top of the most popular mobile brands in China:
Why is this important in the context of mobile development? It’s because proper testing of your mobile application for bugs or any other issues requires having at least four or five models of smartphones from the manufacturers I mentioned above. Without them, you won’t be able to tell for sure if this or that feature behaves normally.
The good news is that in China, the iOS marketing flow works the same way it does outside of China. However, when it comes to Android, the number and diversity of app stores is simply mind boggling! Just think about it: there are more than 300 different places where you can submit your Android application to. In their turn, all of those app stores are divided into:
- Third-party app stores owned by such industry giants as Tencent, Baidu, 360, etc.
- Tech (mobile) manufacturers, e.g. Xiaomi, Meizu, Vivo, Huawei, Oppo, etc.
The pitfall here is that when you’re targeting multiple app stores, you also need to customize the APK file of your app to match the requirements of this or that store. Otherwise, it’ll simply be rejected.
In plain words, releasing to a single Android app store isn’t the best strategy unless your business have developed to a point when it’s widely recognizable among Chinese. However, even in that case, none of the available stores have enough user base to address all of your audience.
Here is what we learned today:
- Chinese are a mobile first nation. Be sure to remember this when planning your strategy.
- Having someone who knows the market and can help you with getting things done on site can be extremely helpful. Knowing some Mandarin will also be a great addition to the list.
- The Great Firewall poses some real challenges when it comes to developing a web/mobile app for the Chinese audience. Because of it, the load speed of your website as well as the overall performance of all your services that are hosted overseas can drop significantly.
- Most of the websites/services that are popular in the US or Europe are banned. However, there is a local alternative to practically any western website/service.
- Censorship is real. Avoid any politically-sensitive or offensive topics and do your best to moderate the user-generated content in your app.
- Chinese don’t like slow web/mobile apps. The best way to deal with the performance issues as well as avoid getting banned is to move your entire infrastructure to Mainland China.
- If you want to host your website in Mainland China, you’ll need to receive ICP licence. It’s obligatory for all website owners.
- For hosting, the best options are Alibaba Cloud (Aliyun) or Baidu Cloud. Amazon AWS works in China, however, its performance lags behind its Chinese counterparts.
- The Internet infrastructure in China is very specific and, as a result, the connection speed in different regions of the country may vary. In fact, it may vary even within the same town. Using a local routing provider can solve this issue.
- Server hardware is really cheap while the traffic is highly expensive. Be sure to consider this when calculating the costs on the maintenance of your app infrastructure.
- There is no Facebook and Twitter in China. Instead, there are WeChat and QQ. The users of your app have to be able to share to both WeChat, QQ, and other popular platforms.
- In terms of payment methods, the most popular ones are AliPay and WeChat pay. If you’re going to work with credit cards, use UnionPay.
- Localization is not just about pure translation, it’s about understanding the culture and language specifics of China.
- The ability to scan QR codes and voice messaging are among the most important features in a common Chinese app.
- There is a whole bunch of Android app stores. If you don’t want to miss out on a part of your audience, you should release to multiple places.
As you can see, there is a big number of factors that determine whether you business will succeed or fail in China. In addition to the aforementioned tips and pieces of advice, there is one important thing I haven’t mentioned.
That thing is having an open mind and being open to opportunities, which there is a plethora of in China. And, as I’ve said earlier, when you have someone who can help you, leveraging those opportunities and turning them into profit is much easier. Otherwise, with all the realities and business culture specifics, you may not have enough time for planning, executing, and finding solutions for your app/website.