Recently, the Chinese government renewed Google’s license to operate its search engine business in China. Although uncertainties over Google’s future prospects in the Chinese internet market still remain, Google has expanded its presence in the emerging Chinese mobile internet market by ambitiously pushing its Android mobile operating system in the past half year. China, the world’s largest online market and also one of the fastest-growing mobile web markets, is becoming a competitive arena for Google and many other foreign companies who have set their eyes on the tantalizing growth of the mobile Internet around the world.
Early birds in the Chinese mobile web space, like Google and Apple, have faced challenges from a unique cultural market and have adapted their businesses to the local environment accordingly. And despite some early stumbles, they have also secured some small victories worth noting. In fact, these experiences can serve as useful lessons for marketers looking to tap into new opportunities to extend their branding efforts in China.
Huge mobile subscriber base fuels China’s mobile Web growth
Currently, a staggering 855 million mobile users in China are transitioning to 3G mobile data services. Since 3G data services were rolled out in the fourth quarter of 2009, Chinese mobile carriers have seen impressive 3G adoption rates. By early 2010, market leader China Mobile has acquired 2.2 million new 3G subscriptions, while its rival China Unicom saw 3 million new 3G subscriptions, according to the research firm Ovum. The three major Chinese mobile carriers, China Mobile, China Unicom, and China Telecom, have focused on pushing smartphones as a key strategic move to develop their future data services and acquire high-end users. eMarketer projects the number of mobile web users will total 957 million by 2014.
The growing trends of smartphone and 3G usage in China opens up irresistible opportunities for Google’s Android mobile operating system and other major American mobile web players. Apple partnered with China Unicom last year to launch the iPhone in China, and despite the initial flop during its launch at the end of last year, sales of the iPhone are gradually picking up as a result of China’s growing 3G mobile web market development.
Unique culture sets bar for China’s booming mobile Web market
While the growing Chinese mobile internet arena attracts more and more players, there are several important market factors about the Chinese mobile market which foreign companies should pay attention to if they want to be successful in China.
Unlike the U.S., where mobile network carriers wield significant leverage over which mobile devices are sold and the operating systems they run, the manufacturers in China’s smartphone market retain much more power. Chinese mobile consumers are accustomed to acquiring unlocked cellphones directly from phone retailers, then subscribing to a service plan, including 3G data service. As a result, Chinese mobile consumers are more price-sensitive about mobile handsets, and can choose from pricey foreign-manufactured handsets or cheaper local Chinese-manufactured handsets.
Foreign marketers in China would also do well to learn the importance of China’s gray-market culture from the launch of the iPhone in China last year. The iPhone initially flopped not only due to its high price tag, but also the prevalence of numerous lower-priced, imported iPhones that were available in the gray-market long before the official launch. China’s gray market for mobile phones offers units smuggled from other countries, with smartphones from Apple, HTC, and others at a significantly lowered price. Some of the stores in the gray-market even offer an “in-store†one-year quality guarantee, which won many price-conscious Chinese mobile shoppers.
New opportunities emerging for foreign marketers
Along with many foreign companies in the Chinese mobile web market, Google is attempting to demonstrate that it has grasped China’s unique market culture. Google has worked closely with major international mobile manufacturers like Motorola and Samsung to have its Android mobile operating system adopted on the latest high-end smartphones in China. But to have Android reach its full potential in China, Google has also strategically partnered with local mobile handset manufacturers to produce more accessible, low-priced phones to compete for market share. One of the local leading mobile manufacturers Huawei, for example, released four different Android-powered handsets in February. These more affordable phones put Google’s Android mobile operating system into direct competition with the local mobile market leader Nokia on the emerging smartphones battleground in China.
With the rise of on-the-go connectivity in China, new opportunities for marketers also include app development, in-app advertising on major smartphone platforms like Android, Apple’s iOS4 and Nokia’s Symbian, not to mention many value-adding services like the sale of virtual goods within these platforms. Marketers should pay close attention to this booming mobile market when planning their branding efforts in China as these trends are sure to accelerate in the future.
While many international companies like Yahoo and eBay have fallen short in China’s desktop internet market, the emerging mobile web market in China presents an exciting new round of opportunities for companies to seize and take advantage of.
