HONG KONG, CHINA / ACCESSWIRE / August 18, 2021 / The United States has always been the leader in developing and marketing entertainment-focused and social media apps, but China is quickly taking that crown.
Most people are already familiar with ByteDance, but smaller companies such as Newborn Town (HK:9911), Yalla (NYSE:YALA), and BIGO (NASDAQ:YY) are quickly bringing dozens of apps to market that shoot up the rankings charts in categories such as social networking and short video.
While they make fewer headlines than unicorns like TikTok, these apps, when taken together, paint a picture of companies that possess vast portfolios of products, used by hundreds of millions of consumers, that still have enormous room for expansion.
According to data from App Annie, on 12th August, Bigo Live, whose parent is BIGO, and MICO, whose parent is Newborn Town Inc., entered iOS Top 20 highest grossing social apps in US, while Uplive, whose parent is another Chinese company Asia Innovations, ranked 26th in the same list.. With this tremendous growth potential in mind, international investors are increasingly looking at opportunities to invest in Chinese tech companies with an edge over competitors outside of Asia.
But are Chinese companies simply having their moment in the sun, or do they have foundational advantages that position them to see sustained, long-term growth?
Here are three advantages that signal a broader realignment in the global app ecosystem.
1. Big data and AI superiority
As Kai-Fu Lee highlighted in his book AI Superpowers, the 2016 Google DeepMind Challenge Match, which saw a computer beat Go champion Lee Sedol, served as a starting gun for AI development in China.
Seeing as data is the raw resource for AI development, the Chinese government and Chinese businesses noted accurately that the country-with nearly a billion mobile users at the time-had a distinct advantage in bringing and AI applications to market.
It's no surprise that Baidu would launch a self-driving car only five years later, Hikvision would become the leader in facial recognition technology, and ByteDance would make the world's most addicting entertainment apps.
Yet, the usage of big data has dissipated across companies throughout different industries to an extent not seen in the West. China now leads the world in the output of AI scientific papers by almost a two-fold margin, and AI firms have more government incentives than abroad to develop their homegrown AI research and talent.
This primarily means a distinct advantage for companies like Newborn Town, which-being founded in 2009-possess many years' worth of data accumulation. As AI becomes even more efficient and precise, they can quickly build algorithms to drive growth based on user behaviour.
2. Global localization power
China is unique because it has a large middle class (by gross number) while still being a developing country.
This means that Chinese companies have broad experience when it comes to launching products and marketing for the developing world's enormous, and varied, base of mobile phone users.
In the Middle East, for example, Newborn Town Inc. and Yalla are the top players. Newborn Town Inc has a portfolio of apps that includes MICO and YoHo-a live streaming and audio social app, respectively-and both of the two apps have entered Top 10 highest grossing social apps in all the Gulf Cooperation Council countries.
It's also not surprising that India also has a strong presence in the global app charts for much the same reason.
"Our local teams play a key role in our success globally," said Ping Li, the president at Newborn Town. "We have over200staffs who are engrossed in liaising with government, businesses, and consumers so that our apps are compliant and localized with the local environment. We recognize that developing markets have their own unique characteristics, yet remain equally important as developed ones, and will continue getting more important."
3. Labour costs and basic economics
At the basic economic level, Chinese companies have access to the same global playing field as those in the US to generate revenue. However, they have a unique advantage for keeping expenses low.
According to Glassdoor, the average application developer salary in Shanghai is just over $38,580, significantly lower than the $100,000+ that would be commanded in almost any US city for the same role.
Chinese companies can develop more apps faster while generating larger profit margins with increasingly competitive talent coming from the country's top universities.
"The strong pool of local developers in China allows us to respond to the needs of consumers faster and keep ahead of trends in the market,"Li said. "As we expand our portfolio, I have no doubt that it will be an advantage that not many other companies around the world can match-to both attract so much top talent while remaining highly profitable."
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