China’s Influence on the App Store

China is one of the largest markets for mobile phones and apps, but Apple has done little grow their share in the budding market. A variety of factors impacts Apple going forward in the region, and in this article, we will run down some of the reasons and Apple’s future in China.

Many economic forecasters fear an economic slowdown in China, and some gaming regulations have changed that greatly impacted Apple’s short-term bottom line.

Apple had to remove over 25,000 gambling apps from their App Store to due changing regulations in the country. Many of these games were deemed illegal, and the Chinese government is taking a hard line against these types of games.

The problem for Apple is gambling apps make up a significant chunk of App Store profits. Microtransaction-heavy and gambling games have changed mobile gaming and increased profits for free apps.

In countries with less stringent gambling laws, app developers and Apple make money hand over fist with a wide variety of gambling and casino apps. You only need to open up the app store and type in casino or gambling, and hundreds of apps will pop up ready to be downloaded.

China’s anti-gambling stance will significantly impact the amount of money going through Apple’s app store, but removing the apps might save Apple grief in the long run. Tech companies like Apple and Google are often careful of running afoul with Chinese authorities in these matters.

Another factor in Apple’s slowdown in terms of the Chinese App Store is rising competition from WeChat, a powerhouse in the region. Typically, Apple faces the stiffest competition from Android, but in China the messaging app WeChat is king.

Tencent owns WeChat and is expanding its app ecosystem, and the company now claims that they have half of the market share that Apple has in terms of the app store market. WeChat’s familiarity in Asian markets has allowed Tencent to move into the space and compete with Apple.

Approximately 50% of iOS app business is done in the Asia-Pacific region, and while Apple accounts for a significant percentage, Tencent is seeing huge growth in this area. Gaming is still an overwhelming portion of this business, but WeChat is expanding its ecosystem and moving in on multiple transaction markets.

WeChat now has 1 million apps or ‘mini-programs’ for users to download, and they are clearly betting that some users will do all of their online app use through WeChat. This is a powerful play in a market dominated by Apple, and they look to be implementing a similar model to Apple.

Apple’s app store is so successful because the iPhone and iOS build a sense of loyalty, and with the app store built into the phone, there is no need to go anywhere else. For many across the globe and especially in the West, there still is no competition for the Apple ecosystem.

But Asian countries’ populations and economies are moving at a fast pace, and they are becoming a bigger chunk in the global market. Unlike in other regions, Apple has a strong competitor in WeChat, and as a Chinese company, it does not need to bend to the will of the government as much as Apple does.

Apple will need to make shrewd business in order to grow in app market share in China, and the removal of the 25,000 apps is certainly a short-term setback for the tech giant. But, competition might set a fire under Apple and encourage the company to bring new innovation to Asia.