‘If you’re a company that focuses on mobile and you’re not taking lessons from China, you’re making a terrible mistake’: Here’s why experts say China has an edge over the US when it comes to making money from smartphone users

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‘If you’re a company that focuses on mobile and you’re not taking lessons from China, you’re making a terrible mistake’: Here’s why experts say China has an edge over the US when it comes to making money from smartphone users

millions winner quiz mobile phone game china
China is paving the way to innovation for mobile, many agree.
REUTERS/Florence Lo/Illustration


Mobile is taking off in China.

Ninety-eight percent of the country’s 800 million internet users access the internet from their phones, and a growing army of engineers are building, developing, and tweaking scores of new apps every day.

If you’re not paying attention to the evolution of China’s mobile market, you should be. That’s according to Mike Jaconi, the CEO and founder of the mobile commerce company Button. Jaconi says he’s paid close attention to China’s mobile trends for years, even before he started building Button’s platform for seamless mobile payments in 2014.

Not only does China’s mobile economy dwarf that of other countries (for comparison, there are about 270 million mobile users in the US), but Jaconi believes the country’s use of technology has outpaced the US by several years.

“From a mobile perspective, the Chinese market is five years ahead of the US,” Jaconi said. “If you’re a company that focuses on mobile and you’re not taking lessons from China, you’re making a terrible mistake. I think people aren’t paying attention, and everyone should be.”

Perhaps one of the most surprising aspects of China’s mobile economy is its sudden, unprecedented growth — especially when considering the country’s slow adoption of desktop computers.

“If you look at the digital revolution in the US, in Western Europe, the PC was revolutionary,” Jaconi said. “But China completely skipped the PC revolution. Their introduction to digital was through the smartphone.”

In China, software is seldom built with only a PC in mind. Instead, engineers develop products almost exclusively for mobile.

“All of the innovation in China is oriented around a mobile device,” Jaconi said. “It completely changed the paradigm of how businesses are built, how money is made.”

Perhaps one of the most noticeable advancements in China’s mobile economy is payments. Walk down the street in Beijing or Shanghai, and you’re safe to leave your wallet at home.

“I don’t carry a wallet when I walk around China,” said Ron Cao, a partner at the Shanghai-based firm Sky9 Capital. “I just say, ‘Hey, charge it to my phone.’ I haven’t been turned down to pay with my phone anywhere. Even the owners of a small shop on the side of the street will have a scan.”

Not only has China’s mobile economy changed the way people buy and sell in real life, but it has also inspired an online payment revolution. The country’s behemoth e-commerce market is the largest in the world, taking in more than $1 trillion in sales in 2017 alone. None of this would be possible without China’s thriving mobile infrastructure.

“China went very, very strong in selling with low margins, in making an innovative way for an ecosystem to work together,” said Denis Barrier, the CEO of the global investment firm Cathay Innovation. “The ecosystem is more open than the US — all of the infrastructure of the network of payments is open. In the US, most mobile applications operate in walled gardens, and you can’t really interact with companies that are closed in from the world.”

Buoyed by China’s population of 1.3 billion, messaging apps like WeChat have spurred a new era of connectivity and online interaction within the country. Tencent, the creator of WeChat, takes in billions of dollars in yearly revenue. And unlike its Western counterparts, Tencent takes in only a marginal portion of its revenue from advertisements.

Jaconi says ads for mobile simply don’t work well. They’re viewed as too cumbersome and invasive for the smartphone’s slim real estate.

“The mobile world isn’t hospitable to ads,” Jaconi said. “With China’s apps, there’s no question of bulky advertising or ad blockers. Most of the business models they’ve built are commercial or transactional in nature. Commerce has no ceiling in China.”

Jaconi predicts that China will spur a new wave of innovation that will rival development in the US — and that if US developers wish to stay ahead of the trend, they should watch the country closely.

“When you combine China’s growth, investment, and innovation, it really spells out a recipe for dominance that should drive fear into Silicon Valley,” Jaconi said. “They will build off the backs of their population and it will create a resource allocation for building the future. The future of our technology will be centered in China, in the same way that everything we buy is manufactured there.”

See more: ‘The future will be won or lost on this technology. I’m very concerned’: The cofounder of a $9 billion company warns that China is on track to dominate the US in AI

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