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Apple's App Store is liberating government-hobbled Chinese entrepreneurs

“The Apple App Store — this thing really made a big change in my career,” said Lu Miao, founder of Rye Studio in Beijing.

San Jose Mercury News

“The Apple App Store — this thing really made a big change in my career,” said Lu Miao, founder of Rye Studio in Beijing.

BEIJING — Lu Miao speaks very little English. He's never traveled outside of Asia. He's not a software engineer. But in a few short months, he became the founder of a successful software company selling apps in the United States and Europe.

In less than six months, Rye Studio has sold 1 million downloads of traditional Chinese children's stories apps at 99 cents each for the iPad and iPhone. Lu bought a courtyard home in the city's tech hub Haidian District and converted it into a playful office with a giant replica of a Michelangelo painting and a bamboo garden. And he hired workers in three cities — Beijing, Shanghai and Chengdu — to develop software, video and music.

"The Apple App Store — this thing really made a big change in my career," the 32-year-old Lu said. "Before this, I owned an advertisement company. We tried something new, and many clients came to us. The App Store helped us spread our products around the world."

While China has long been viewed as the outsourcer to the world, a growing number of startups here are using the App Store to become global companies almost overnight, without spending a small fortune on marketing and advertising. App developers in other countries are doing that, as well, but the possibilities are liberating in China, where budding entrepreneurs have long been hobbled by government regulations and no access to venture capital.

Those entrepreneurs are now building original social games and other apps for iPhones and iPads, and hope to move on to Google's Android devices. They are aiming to do what so many other Chinese companies have failed to do — create business plans and products that cross cultural and market boundaries in other parts of the world.

For Apple, a flood of new Chinese app developers will, in the long run, make its iPhones and iPads even more attractive to Chinese consumers, whom Apple is aggressively wooing. The company has plans to roll out scores of new retail stores in China in coming months as its sales in the region soar. Last month, Apple reported that second-quarter revenue for Hong Kong, Taiwan and mainland China — which the company refers to as "Greater China" — was nearly $5 billion, about 10 percent of total sales. Just a couple of years ago, Greater China represented just 2 percent of total sales.

"The overall landscape has changed," said Allen Hsieh, director of operations and client services for Mobile Now International, a Shanghai-based iPhone app developer that has published the games King of Frogs and Super Ball Escape under the brand PlayLithium. "The little guy can now actually do something."

Last July, an independent Apple iOS app developers' conference held in the city's trendy 798 Art District drew 1,000 engineers. Bokan Technologies, a developer of iPhone and iPad game and education apps, has established an app developers' academy in Beijing that has so far trained 400 engineers. "The iOS opened a big window for everyone," said Bokan Technologies CEO Bo Wang, who said his graduates can earn twice as much as other software engineers do.

Whether a new class of global Chinese tech companies will emerge is unknown. These entrepreneurs with global dreams still face many challenges to create apps that not only hit the cultural sweet spot of Americans but also meet the quality standards that Western consumers demand.

"It's really hard to stand out from the pack when the pack is huge," Hsieh acknowledged.

Still, the App Store has created a golden global opportunity for a nation brimming with young engineering talent.

"They see the iPhone and iPad as a channel that affords them a cheap way of distributing apps worldwide," said Bertrand Schmitt, CEO of AppAnnie, a Beijing-based startup that provides sales and market analytics for App Store publishers. "They don't have to have special relationships outside China."

Apple has been quietly reaching out to the Chinese developer community and providing some support, though the company's representatives in China did not respond to a request for details.

Chinese developers have plenty of incentives to create apps for the global market.

China has the world's largest mobile market, with more than 850 million users, but it's dominated by state-owned carriers that call the shots, said Duncan Clark, chairman of BDA China, a Beijing-based investment and strategy advisory firm. "China Unicom can take up to a year to pay" independent developers, he said. And a business can be sidelined simply because its services or apps are "not considered appropriate," he added.

Apple's App Store is liberating government-hobbled Chinese entrepreneurs 05/14/11 [Last modified: Friday, May 13, 2011 8:25pm]

    

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