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China presents a fascinating opportunity and challenge for international growth stage startups that want to penetrate a market with 1.4 billion people. From a pure economic perspective the answer is crystal clear based on Apple’s Q1 blow out earnings announcement relating to China. The high-end iPhone 6 Plus is currently the #1 selling mobile in China. With about 1.29 billion mobile users registered in China today, mobile consumption is at its peak. Likewise, online video is booming with more and more users tuning into video advertising. According to iReseach data, in 2014 the total transaction value of China online video market was RMB23.97 billion (US$3.88 billion) – that’s a 76.4% growth in just one year.
The giant brands: Baidu, Tencent, Youku, Sohu, Alibaba are all pushing more and more video apps to engage their massive user base. In addition, the large players have branched out internationally searching for IP, ideas, partnerships and investments to continue to bring best of breed to its customers. The pre-disposed concept of “look and copy” may still exist, but this practice has been marginalized. Based on recent experience, here’s my take on China’s online video market opportunities:
Mobile is a key player in shaping the landscape of digital communication, getting more people online than a PC. In most cases, people own a 5″ plus smartphone and it’s a common thing to own two devices. The majority of China’s mobile users are millennials. Ultra-connected, this demographic consumes online video by the bucket load – with video ads and online streaming of series or movies omnipresent.
At a high level, China has skipped CRM, email and PC and dived straight into smartphones and apps. Apps count for everything. The increasingly popular messaging service WeChat has features that far surpass the functionality of Western apps like WhatsApp and Facebook. It allows you to purchase an airline ticket, call for a Didi Dache (China’s version of Uber) or read the news. What you think should be done with your technology may be a guideline and the end result will be different.
Companies rely on very large developer groups that want to access IP, APIs, tool kits, SDKs to develop custom apps that meet the needs of the Chinese market. This practice and process should be welcomed and embraced.
Stable infrastructure needs to be implemented at scale in mainland China. A reliable Cloud partner that allows for easy data integration, storage and extraction is essential.
A simple rule of the thumb is to take your capacity projections for the US market and multiply that by 10.
Creating a connection and network with the local young creative, tech-savvy online communities is critical for gaining acceptance. Their voice is viral firepower and can spread your company’s message faster, wider and better than anything. Consider this a gateway for success, adoption, awareness.
Doing business in China is often heralded as a complex process due to cultural barriers, IP issues, etc. This is simply not true anymore. If you understand and respect the scope and size of the opportunity you are presented with and scale up appropriately doing business is very functional and beneficial.
Digital video in China is by far the biggest opportunity in the market today. The combination of size, connectivity, capital and scale is second-to-none. The opportunity to leapfrog to dynamic personalized video is a greenfield and exciting place to be.
Co-Founder and VP R&D at Idomoo.