Israel eyes China smartphone market

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Article Summary
Israeli ventures are trying to gain a foothold in the lucrative market of 300 million Chinese who are using Android devices.

With 300 million Android users, more than 600 million Web surfers and an annual growth rate that exceeds 20%, China is the world's largest market for smartphones. But it is not these figures alone that turn the Asian power into an attractive business target, but no less so, the fact that these days, even small players without deep pockets can gain a foothold in the app market of this huge country.

Indeed, the rapid and successful penetration of iPhones and Android devices into the Chinese market has brought in its wake a wave of local Israeli developers who are vying for this new market.

The new app market emerging in China, which, unlike other spheres of activity, is decentralized and not controlled by the notorious Chinese regulation and the bureaucracy, is where the creative and free-spirited aspects of Chinese culture are revealed.

A parallel online universe

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Google Play does not offer apps for purchase in China, while Apple's App Store started offering services in local currency in the country only after years of neglecting the market. The vacuum left by the absence of the two has been filled by third-party stores like Qihoo 360, AppChina, and 91 Wireless (recently acquired by the local Chinese language Web search giant Baidu for $1.8 billion). The infrastructure of Baidu, Alibaba, Tencent, and other Chinese Internet giants creates a parallel online universe, which is virtually closed to the global Internet network, and which provides alternatives to most of the familiar services, some of which are blocked in China. Thus, for instance, Sina Weibo, the Chinese microblogging service, provides a successful alternative to Twitter, while WeChat provides an upgraded mobile messaging service similar to, and improving on WhatsApp.

Like the Chinese Internet services, local users have their own unique usage patterns, which are quite different from those of their Western counterparts. Chinese smartphone users are downloading far more apps than smartphone users in the United States. In fact, according to the findings of a survey conducted by the advertising company InMobi, of which mobile industry entrepreneurs would no doubt be happy to hear, app prices are not a crucial consideration for prospective Chinese consumers.

“I hear more and more of small companies, which all of a sudden see traffic from China, without even trying to target that market and without any advertising there,” said Shlomo Freund, the founder and owner of Start Up Noodle, a company specializing in helping technology entrepreneurs to enter the Chinese market. “It just goes to show that there’s interest and opportunity, and that today, unlike in the past, entry on a small scale, which does not involve commitment to a large investment, is definitely a viable option. Israelis should dare to take the initiative and go for it.”

Freund, himself an entrepreneur who moved to Beijing two years ago to explore the local market, offers a package of services based on his expertise in the unique characteristics of the Chinese market. The service offered by Start Up Noodle, labeled AppinChina, connects between app developers and Chinese app stores, and offers localization services and promotion of the app in the app stores. This service is of special significance in China since Google Play has almost no presence in the local market, in part, due to the widely publicized conflict between Google and the authorities in China.

In addition to the tens of thousands of local app developers, there are quite a few foreigners in the Chinese app market, who managed to overcome the language barrier and cultural gap. “There are two groups [of entrepreneurs] in Beijing, the Chinese group and that of the foreigners, which gradually merge into one another, and jointly launch various initiatives,” says Freund. “There is a vibrant community of entrepreneurs in Beijing, which is concentrated around the city’s high-tech zone in Zhongguancun, close to Microsoft headquarters.”

Not interested in the West

Some of the foreigners operating in China have chosen to focus on the niche of foreigners and outside visitors like themselves, offering apps designed to help them overcome the cultural gaps. One of them is Ran Ethiya, who studied the Chinese language and culture in Beijing, and developed the FOODragon, an application and a website designed to help tourists and newcomers to China to order food in local restaurants, even if they cannot read the menu or communicate with the waiters.

“I have frequently heard people complaining that they have nothing to eat in China or that the food is awful,” says Ethiya. “A lot of people have given up on the Chinese culinary experience, as they are worried about getting along [in Chinese restaurants] or of being served unfamiliar dishes. My goal is to help them discover the Chinese cuisine. I plan on expanding the app to include cooking classes and everything else about the Chinese cuisine.”

Similar applications developed by Westerners who have lived for years in China enable the user, for instance, to scan a restaurant menu and get instant translation into English, to get translation of location and transportation services, or to access a Chinese phrase book — all of which are essential services for tourists traveling in China or entrepreneurs doing their first steps in the business arena there.

Pioneering app developers are already establishing their presence in China. However, Shlomo Freund emphasizes that to make it in China, it's important to know how to fit in with the goals of the local market. “We are assuming that we, Westerners, have come here to rescue them, and show them how to reach out to the West, but the Chinese market has its own agenda,” he says, “and for many of the local companies, expanding into the West in not on their agenda at all. They feel, quite understandably, that the domestic market is large enough and that they had better focus on it.”

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Found in: technology, israel, finance, china, business
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