App Makers in China Struggle on Home Turf
China has become one of the biggest sources of games for mobile devices like the iPhone and social-networking sites like Facebook. But software developers here are finding it difficult to make profits in their home market.
Rampant piracy and the smaller reach of distribution systems like Apple Inc.’s (AAPL) App Store have curbed profits in China’s nascent “app” market, even though the country has the largest cellphone market by subscribers and more Internet users than any other nation.
Developers say Apple’s App Store is hampered in China because of language and payment restrictions. The interface is in English and users must have credit cards that work for both dollar and yuan transactions—which many Chinese don’t have—to set up an iTunes account. Meanwhile, Chinese social-networking sites, which only recently opened their platforms to outside app developers, charge high commission fees.
Social games and iPhone development are “really suited for Chinese teams,” said Frank Yu, chief product officer at Kwestr, a Shanghai-based software start-up. “There’s a low capital base to get into this type of development work. A team of five to 20 engineers can design an iPhone app with little more than $100, a computer and an iPhone.
