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With respect to mobile growth china is the next frontier

Despite rumblings to the contrary, China’s mobile market is still on fire. According to a recent study by IDC, a record 117.3 million smartphoneswere shipped into China during the last quarter of 2015. The figure represents an 8% uptick from the same period a year earlier.

Still, the overall rate of mobile growth in China has slowed down a bit as analysts downgraded initial assumptions of 11.3% growth year-over-year to a mere 10.4%. Both numbers show a significant drop off from the 27.5% growth recorded in 2014.

Ok, so what does this mean? Has China finally hit mobile critical mass? Even with slowed growth, the country remains the largest market for smartphones, claiming a whopping 32% of all new shipments worldwide in 2014.

Make no mistake: Mobile in China is still expanding faster than anywhere else in the world. More and more users are buying smartphones every day. And they’re using those devices to connect to the internet.

Just How Many Smartphones Does China Have?

Across the globe, mobile is growing faster than anyone could have anticipated. China is no exception.

According to recent data from eMarketer, there are 624.7 million active monthly smartphone users in China. By 2018, that number is expected to climb to 704.1 million — meaning more than half of Chinese citizens in total will have smartphones. To put that figure in perspective, according to the latest available data, there are only approximately 320 million people in America.

Shifting to a Mobile-First World

In 2015, 56% of the websites accessed in China were done so via laptop or desktop. That number represents a 29% decrease from 2014. On the other hand, 42% of websites were accessed via mobile devices — which represents a 136% increase from 2014 (Figure 1). Also, keep in mind, the average desktop user might have 15 tabs open in his or her browser at once; with smartphones, multi-window browsing is much less common.

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Whether it’s this year or next year, mobile will almost certainly overtake laptops and desktops as the preferred method of viewing content online for the average Chinese user.

As mentioned in a recent Business Insider article, 36.7 million additional Chinese users accessed the internet via their smartphones during the first half of 2015, bringing the total number of mobile internet users in the country to 594 million people. Based on the graphic below, this number represents 89% of all of China’s internet users (Figure 2).

We can expect this number will shoot up even further as more smartphones are purchased by Chinese consumers, who collectively become more and more comfortable using their mobile devices to browse the web.

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So all of these numbers, developments, and trends for the future are nothing but encouraging. Yet, we still haven’t seen Google, Twitter, or Facebook penetrate the Chinese market. Why? What’s the catch?

The Great Firewall of China: Challenges Ahead

Traditionally, China as a nation has remained closed off to western media for a variety of reasons, making the expansion of tech and e-commerce companies very limited throughout the country. Just earlier this month, Medium was suddenly banned from the Chinese web with no supporting reason or statement. This censorship has made it challenging for established western companies to fit within more rigid Chinese cultural constructs.

But perhaps the failure to expand abroad is more a shortcoming of the companies themselves rather than Chinese restriction. As Sequoia’s Michael Moritz recently suggested in a CNBC fireside chat, U.S.-based tech firms all too often maintain a “Western imperial arrogance” when attempting to launch in the country. This mindset leads to blind misconceptions about the complexity of the Chinese market, making it difficult to break into the territory at all. Granted, without much public knowledge of the landscape, it’s not easy to gauge exactly what’s needed to be successful; this carries significant risk that most cannot bear.

Nevertheless, history has proved it tough to establish any resonating footprint on Chinese consumers and their growing number of smartphones. But former Khosla Partner Andrew Chung is trying to change that mold with the formation of 1955 Capital, a firm directed at helping Western entrepreneurs bring their technology to China. His past experience helping companies scale to the eastern world will be an integral part of the overall strategy on both sides.

So despite today’s roadblocks, it appears progress, at least in some way, is on the horizon. And looking forward, those companies interested in tapping into China don’t necessarily have to go it alone.

The Emergence of Chinese Companies in Adtech

It’s expected that e-commerce sales in China will eclipse $1 trillion by 2018 — good for 40% of the global e-commerce haul. With 70% of the country’s latest Singles’ Day haul coming via mobile devices, it’s not hard to understand why many global organizations are trying as hard as they can to infiltrate the Chinese market.

While it might be hard to grow brand awareness inside China on your own, there’s no shortage of demand-side platforms and other new players in the Chinese adtech game that could give your brand a boost. Right now, only a few of those western companies are truly able to deliver high performance at scale. And here at Spotad.co, we’re leading the charge.

As of April 1st, Spotad has officially launched in Beijing. We expect to make groundbreaking strides as one of the first fully scalable western programmatic DSP’s buying from the ad exchanges in China. It’s an exciting time to say the least.

So do yourself a favor and partner with a brand that knows how to navigate the complex Chinese digital landscape. You may very well be able to conquer the world’s next mobile frontier — and snag a sizeable chunk of China’s booming e-commerce pie as a result.

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