China’s Powerful Mobile Tech Scene
Insights into China’s advanced ecosystem of superplatforms, mobile payments, and more.
So Sharon, “How’s China”?
Well. From a tech product manager’s perspective, it’s fascinating.
I recently moved to Shanghai to work as head of ops and product at a US-based startup. I never expected to work outside the US but I couldn’t pass on the opportunity to study China’s tech scene. As a passionate PM, my job is to understand how people use products and China is the biggest market in the world. And there’s no better time to force yourself out of your comfort zone than while you’re young and free.
Let’s jump right in. As you know, the Great Firewall of China keeps Western tech giants out (besides Microsoft), so China has essentially become the world’s biggest A/B Test. Since we can’t see into the black box, we often think: What’s life like with A: All the tech we’re used to or B: nothing?
But China certainly isn’t lacking. You’ve likely heard of some Chinese counterparts- Baidu=Google, Youku=Youtube, Weibo=Twitter, Didi=Uber. You might even have heard whispers that they’re massively successful, but comforted yourself by thinking China’s copycat culture can never reverse engineer Western innovation.
China is WAY past copycatting their way to tech literacy.
In fact they’ve superseded the US in e-commerce, payments, and all things mobile.
Enter Chinese superplatforms.
B.A.T. Baidu, Alibaba, Tencent. These three companies hold a monopoly on China’s tech scene. B.A.T. are megaplatforms each with functionality of a hundred US startups combined, though they each have different core competencies- search, finance, and social, respectively.
Take for example China’s most popular platform, WeChat. WeChat is Venmo, Skype, FB Messenger, Yelp, Maps, Wealthfront, Expedia, Angie’s List, Fandango, Delivery.com, Amazon, Uber, and more, rolled up into one, all powered by WeChat’s own payment platform. You literally never have to leave the app.
A typical day with WeChat looks like this:
Morning: Wake up, order brunch from WeChat’s third party app DianPing, pay the delivery man with WeChat transfers, add data to your sim card with WeChat Mobile Top Up, pay your electric bill with WeChat Utilities, call a housecleaner with WeChat Home Services.
Afternoon: Make a restaurant reservation, send the pin to your friends with Location, check-in, rate the food on your personal WeChat blog, share photos in WeChat Moments, split the bill with WeChat GoDutch, call a ride home with Didi straight from WeChat.
Evening: Video call your mom with WeChat, check if your favorite shops have any deals, order shoes from JD, shake your phone to chat with a stranger, order movie tickets with WePiao, collect interest from your WeChat Balance fund (which has a better interest rate than most banks), and finish crowdfunding a child’s education with 10 Cent Charity.
And I’ve just barely scratched the surface.
The Chinese User Experience: Easier than US apps.
How could an app possibly contain that much functionality and still work? Is WeChat a giant mess of feature creep? How did Tencent PM’s let their products get so out of scope?
PM jokes aside, WeChat is amazingly simple to use. It has a clean UI and smooth UX. In fact, most Chinese apps are so intuitive I can use them without understanding Chinese.
Chinese apps cater to a market of new and low-end tech users.
China dipped their toes in the PC era then dove right into mobile. Smartphone penetration went from about nil to 65% in the last five years. It helps that smartphones are super cheap; a top of the line Xiaomi phone costs $200 USD. Smartphones have even pushed into tier 5 cities and rural populations.
Since everybody is new to mobile in China, apps are specifically designed for unsophisticated users. US apps are built for a generation of experienced users, oftentimes by engineers used to designing for desktop. Chinese apps cater to a market of new and low-end tech users, with engineers that only think mobile. Here are some particular examples that impressed me:
Example 1: New User Authentication Flow
The typical new-user signup process for a Chinese mobile app is incredibly easy. Even with authentication, the process is quick and entirely in-app.
Let’s run through a user journey for an app I just downloaded, 易到。 YiDao, which roughly translates to “easy arrival”, is an Uber/DiDi competitor with a twist- you pre-commit money into their app as a deposit instead of paying per ride. In return they match your contribution, which means half priced rides. (I don’t even want to think about their burn rate.)
You open your newly downloaded app and realize you can’t read Chinese. No worries. The first input field has a “phone” icon, so you enter your phone number. Upon entering a valid number, a button changes color. You click on the red call-to-action button. (获取验证码 means “get verification code”, if you’re curious.)
You immediately receive a text message with a code in it. Now a greyed button is counting down from 60. It’s clear you have 60 seconds to complete a new action. You enter the code from your text message into the remaining empty field. Upon completion a button changes color, and you click on it.
Voila, you’ve created and authenticated your account in 30 seconds, without even knowing the language! Time to add money and start riding.
Every PM worth their salt knows that there’s the potential for drop-off at each step of the on-boarding funnel. The risk of abandonment is especially high if a user leaves the app environment, such as to check their email for an authentication code or verification link. By streamlining the process and keeping the user entirely within the app ecosystem, acquisition to activation conversion can be significantly higher.
Example 2: Features on a need to know basis
WeChat has some of the best menus I’ve ever seen. It also does a great job of introducing features on a need basis. For example when I first downloaded WeChat I didn’t have Wallet functionality until my friend sent me a 红包 (hongbao, a red money packet used in traditional Chinese gift giving). WeChat knows you need friends on the app before you can send them money. As a beginner user, they made sure I had a quality experience with their sticky social and messaging aspects.
Currently I still don’t have their financing feature. In fact I only discovered it was missing when chatting with a Chinese friend. He explained that I haven’t made enough transactions to warrant needing to borrow/lend. Since WeChat has all my in-app payment history, they can create an extremely accurate credit profile for me. 微粒袋借钱 loans will show up in my features list one day, after I become more comfortable sending and receiving payments online.
Simple menus. Icons that make sense. Features that only appear when needed. Fewer clicks to purchase. I highly recommend every product manager and designer study the top Chinese apps in the market. They’ve managed to overcome one of the most difficult tradeoffs in app development: # of features versus ease of use.
China’s 丰富多彩的 mobile apps
There’s more than just WeChat. MoBike is what Citibike should have been, on steroids. Didi ChuXing is Uber with appointment scheduling. Taobao is eBay but you can call the sellers directly and they’ll respond to you immediately with answers. eLeMa lets you do delivery from multiple restaurants at once. A-maps is Google Maps plus Waze plus all the other data you’ve always wanted, like labeled subway exits, real time traffic conditions, and alternative routes for rush hour. China has an extremely well developed mobile app market.
Most impressive however, is Chinese mobile payments. You can pay for anything with WeChat and Alipay, collect interest on your savings, request loans, even get a credit score. To sum it up, an entire bank in your phone.
China’s Mobile Banking War
There’s a furious battle for market control between the largest mobile payments providers in China. Previously, Alibaba commanded the lion’s share of online transactions with Alipay. Tencent made a strong comeback by directing users to WeChat Wallet during the DiDi vs KuaiDi ridesharing war. Alibaba’s seen huge success with their recent spinout of Ant Financial, an app with all the functionality of a modern bank, online. Baidu entered late but with a bang by partnering with Citic Bank Corp. Existing Chinese banks are also starting their own online branches and payment apps. Unarguably, all of China’s mobile payments and finance are more advanced than the US.
How has mobile payments spread so rapidly in China?
1. 1.3 billion early adopters
China is a kid in a giant candy shop. The previously closed-border country is finally stepping onto the global stage. Experiences, products, living styles, pop culture- they want everything new. It’s a giant market of early adopters, every tech startup’s favorite user base. As a result, Chinese people are receptive to new ways of interacting with technology such as mobile banking and payments. The Chinese market is also incredibly big. The network effects of virality and popularity are immense- when momentum gets going, it doesn’t stop. An oft-cited anecdotal reason for trying something new is, “all my friends are using it” and when everybody is using mobile payments, you use it too.
2. Mobile first, mobile only
An entire generation of Chinese users are mobile first, mobile only, and have never encountered issues with online payments. Snapcash and Facebook Payments received an incredibly skeptical reception in the States due to the America’s fear of hackers, privacy issues, and security breaches. To date, China hasn’t experienced a payments related security scare. An entire generation of new mobile users are trained to use scan QR codes and use their mobile device for payments.
3. Great products
The leading payment products are extremely well designed. They do an incredibly good job of assuaging any security fears with thoughtful yet subtle security features. For example, a 6 digit personal pin is needed to confirm any payments so unauthorized purchases or losing your phone isn’t a problem. Screenshotting a QR code automatically invalidates it as a payment method, and another is auto-generates in its place. A text-message receipt is generated any time a payment is made and kept under one account for storage. It feels effortless to send money and receive money with my phone, and I feel safe doing it.
China: A country of entrepreneurs, and not just in tech
There’s much more to China’s startup scene than just tech. Manpower is cheap, so delivery is better than Magic. A new Chinese co-working space is built every time you say “WeWork”. Cafe’s in Beijing’s Silicon Valley double as hardware tech demo areas. Tsinghua University accelerator is incubating over 500 startups. I met a guy starting a crossfit gym on my evening run. My roommate is starting a heritage pork importing business. I just visited an online education tech company with a VR filming greenroom. There’s a ton to learn, and I’m constantly amazed.
Questions?
China is full of opportunities, but it’s a hard market to crack. Find a local business partner if you expand to China; China has a deep history and strong cultural roots only navigable from the inside.
Since I’ll be at the heart of China for the immediate future, let me be your eyes and ears- I’ve met incredible people here with deep insights into their country.
What are you curious to know about China? Leave a comment below!
