How Chinese apps like TikTok are silently racking up American users

  • 29-April-2019

Mobile applications created by a some of China's greatest innovation firms have been getting on with U.S. buyers in the previous few years, underscoring how companies on the world’s second-biggest economy are extending past their domestic market and Asia.

In the first quarter of 2019, applications created by Chinese firms or by companies with extensive Chinese investors, got incomes of $674.8 million in the U.S., as indicated by information compiled by Sensor Tower. The mobile application explore firm just took a gander at the best 100 applications by income and downloads over Apple's App Store and the Google Play Store. The income accounted for 22 percent of the top 100 apps’ total sales.

The current year's first-quarter haul marks an in excess of 67 percent year-on-year ascend in income from a similar period in 2018.

Chinese innovation firms have figured out how to venture into America regardless of the progressing U.S.- China trade war and negative sentiment toward companies like Huawei from Washington.

Viral hit TikTok was the third-most downloaded application in the U.S. in the first quarter, simply behind Facebook Messenger and a game called “Color Bump 3D.” TikTok is made by ByteDance, one of the most highly valued private technology firms in China.

While it passes by the name of TikTok in the U.S., the application is known as Douyin in China. Changing names and marking have helped Chinese applications prevail with American users.

“Chinese app publishers are becoming more adept at understanding what resonates with U.S. consumers, whether it be carving out a new niche in social media with apps such as TikTok or capitalizing on hot trends among Western gamers with battle royale titles including PUBG Mobile,” Sanders Tran, a data analyst at Sensor Tower, told CNBC.

“They have also greatly expanded their understanding of user acquisition in the U.S. market, which has allowed them to mount much more effective marketing campaigns. They’ve also backed these up with substantial spending, frequently topping the advertiser charts on Facebook and other mobile app install networks.”

“PUBG Mobile,” short for “PlayerUnknown’s Battlegrounds,” is a game developed by Tencent, China’s biggest technology firm by market capitalization. Tencent makes the iOS and Android version of the game. South Korean firm Bluehole made the original and other versions of the game for consoles and PC.

Many are using the apps without knowing they are made by a Chinese firm or Chinese-owned company. That is a strategy, according to experts, that Chinese technology firms are intentionally using as they try to expand in the U.S.

“Overall, there is low awareness about the origin of these apps,” Hanish Bhatia, senior analyst at Counterpoint Research, told CNBC. “At the same time, it is important for these apps to connect with users in the premium markets. So Chinese tech firms and apps are continuously making efforts to get rid of the Chinese tag. The idea is to position themselves as a global player.”

Tencent's strategies

Strikingly, just nine Chinese applications featured in the best 100 applications in the U.S. in the first quarter, down from 14 in a similar period a year ago, as per Sensor Tower.

The income rise was driven by various suucessful games. Fortnite, which is created by Epic Games, in which Tencent has a 40 percent stake, was incorporated into Sensor Tower's analysis. It was the seventh-highest earning app in the first quarter.

Other major hits include “Clash of Clans,” which is developed by Tencent-owned Supercell, and “PUBG Mobile.”

While TikTok has changed branding to appeal to the U.S., Tencent has taken a different approach. Tencent products, such as messaging service WeChat, haven’t had much success in the U.S., but the company has managed to get gaming products there through a strategy of acquisitions and investments in other firms.

“Tencent’s big push into the West already happened, but they mainly muscled their way into the market indirectly — via acquisitions,” Serkan Toto, CEO of games industry consultancy Kantan Games, told. “So instead of bringing their content to the U.S. and Europe, they rather invest in the crème de la crème locally and maintain a hands-off approach.”

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