In the wake of China’s ever-so-booming growth of internet-enabled mobile devices, new mobile applications, mushroomed in equally impressive growth rates. According to statistics from January 2015, there were more than 1.4 million apps available in Google Play, while statistics in July indicated that Apple’s App Store had more than 1.5 million. China’s app developers played a notable role in inflating those numbers.

Where there is a continuous explosive growth, there lies entrepreneurial opportunities. At least that is what the app market in China looks like at the moment. However, the robust phenomenon might actually be far less bright and promising than it seems.

Apps spawn quick, and die even quicker

Recent survey data from iiMedia Research indicated that most recently downloaded apps have had comparatively low utilization and retention rates. 35% of users surveyed answered “Used once” and 17.6% answered “used less than 10 times”. Furthermore, the survey also indicated that the average life cycle of an app was about 10 months, and 85% of the users will uninstall downloaded apps within a month. Social media apps appeared to suffer worst in the competition, with “mortality” rates reaching 35%.

This was mainly caused by mobile app developers lacking vision and long term support for apps. Users in turn got used to having little to no commitment for any apps downloaded, and would quickly discard apps for little more than one unpleasant experience.

“General Purpose” falling out of favor

Statistics until the third quarter of 2015 indicated that there were 668 million mobile device netizens in China and 609 million of them being smartphone users. While these numbers seem promising, reality says that overall growth is slowing down instead. This indicates that mobile device holdings and size in China is fast approaching saturation, and room will continue to shrink. This comes as no surprise given China’s rather closed app market due to strict internet censorship that can only be circumvented with VPN services that are too expensive for the average Chinese netizen.

As a result, competition within the already congested app market got increasingly vicious.  Increasingly more apps became similar in nature, forcing the need for vertical market segmentation by app developers and apps to be further diversified. In such a climate, ‘general purpose’ gradually fall out of favor and made way for ‘niche market’.

The Matthew effect, app market ‘oligopolized’ by BAT apps

Only five apps–Headlines Today, MeituPic, 360 Security, 360 Mobile Assistant, and Kugou Music–made it to the AppTop20 ranks in China, with the rest being dominated by apps from BAT, namely Baidu, Alibaba and Tencent. The situation is made worse for small-time or start-up app developers, as BAT apps dominated nearly every other major app markets, which included mobile social media, mobile travel, mobile mapping, mobile shopping and more.

As such, small time or start-up app developers face immense pressure and challenges against their large, established competitors due to the Matthew effect. Other than having to dedicate even more time, effort and money into making and maintaining the app across multiple platforms than before, powerful sales and marketing capabilities are now also seem to be requirements instead of luxuries, in order to just survive.

Know your audience, diversify, or die

The aforementioned analysis of situation might have made it all seem bleak, all hope was not lost for those who wish to make their mark as app developers in China. While users might have, unfortunately, turned into unfairly harsh judges in the face of overwhelmingly huge amount of choices presented to them, they do still tend to respond well to those capable of fulfilling their primary needs, as opposed to majority of apps currently only focusing on secondary and peripheral needs.

Despite their prowess as large companies with immense resources, there were still segments of the app market that would prove too troublesome for BAT companies, thus enabling small-time and start-ups to make their mark and thrive. Heavily diversified niche markets such as fashion, early education, local life and many others are among those which present such opportunities.

In conclusion, the projected app trend in China favors, and rewards, niche market app developers who would probably study the needs of target audience, and would go on to properly fulfil them and support them in the long run. The time of start-ups and small-timers hitting the jackpot in one shot was long gone for the app market in China; it is now back to hard work, proper study, and taking calculated risks.

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