Internet giant Tencent is ready to launch its new open platform to provide software products for smartphones. [Provided to China Daily]

Domestic Internet companies planning third-party open platforms to woo Chinese app developers

Domestic Internet giants in China led by Tencent, Baidu and Renren are planning to build more "third-party open platforms" in a bid to attract more Chinese software developers reliant largely on global platforms like Apple's App Store or Google Play Store.

Tencent will launch its mobile open platform later this month, says Hou Xiaonan, deputy general manager of the open platform unit. The platform will initially focus on software products for smartphones and later on to other mobile devices like tablets.

With a huge pool of active users, the platforms developed by companies like Tencent are expected to be more attractive for Chinese Internet app developers, as they look to maximize profits. According to Tencent, the company's QQ instant messenger service has more than 720 million active users, while the number of users on Qzone (similar to MSN Space) exceeds 550 million.

"Our mobile platform is not a carbon copy of Apple's App Store. It is more like a multi-channel platform," Hou says. "Besides presenting apps by third party developers, we will also recommend and display them through Tencent's own apps. The marketing will be more efficient given Tencent's sophisticated user network."

Tencent launched its open platform last year focusing largely on personal computers. By the end of March, Tencent claimed to have more than 350,000 registered app developers and more than 50,000 apps.

The company adjusted its commission rates in January. Unlike Apple, which charges a fixed 30 percent from app sales through its App Store, Tencent has varied commission rates. App developers can keep all their income if they earn less than 100,000 yuan ($15,910, 12,110 euros) per month. Those whose earnings range from 100,000 yuan to 1 million yuan per month pay 30 percent of their income as commission. Other players who earn from 1 million yuan to 10 million yuan per month pay 50 percent.

The new policy is aimed at attracting more small and medium-sized developers to its platforms, the company said.

Renren and Sina Weibo, the Chinese equivalents of Facebook and Twitter, have also developed mobile platforms, mainly targeting smartphones with the iOS and Android operating system.

Renren says that its mobile platform is more like a mobile social channel, which integrates app developers with Renren's core business of real name social networking service.

Sina Weibo's mobile apps are, however, limited to apps based on Sina Weibo, providing services from entertainment to news content.

Hou from Tencent says that though most of the companies are currently testing the mobile app platform, the potential will be huge.

"Internet companies will invest more on mobile platforms, as they will need a steady supply of fine apps to keep customers satisfied," says Sun Peilin, an analyst with Analysys International, a Beijing-based consultancy.

Sun says that most of the Internet companies are operating with two channels, personal computers and mobile devices, in an effort to strengthen their presence.

Millions of app developers have been releasing apps on platforms like Apple, Google or Facebook. Even though there are barriers like language and cultural differences, many Chinese startups have managed to make gains in overseas app markets, especially in the mobile game market.

Wu Gang, CEO of WiStone Wireless Entertainment Inc, the developer of War 2 Victory, says that the game has generated $3.5 million (2.7 million euros) on the iOS platform so far this year, with about 2.2 million active users. The app recently set a record when it made as much as 30,000 yuan in a single day.

Liu Yong, founder and CEO of Rekoo Media Ltd, a major social game developer in China, says that companies like Rekoo have many products on different platforms at home and abroad. Even though Rekoo's revenue comes mainly from overseas markets like Japan, Liu believes that the domestic market will be the core business for Chinese app developers in the long run.

"Though overseas users are more willing to pay and we can generate more profits, we have to admit that the overseas market is not always rosy."

Liu says that competition is getting fiercer and Chinese developers still have problems like customizing products for overseas users due to cultural differences. In contrast, the domestic market has been steadily growing.

Liu says that in recent years the number of users in China is growing faster than other countries. Rekoo has about 900 million daily active users globally, of which around 800 million of them from China.

Mobile platforms of Chinese Internet companies may prove to be the better choices for developers like Liu to showcase their products as they are equal participants in the game with their own app development teams, whereas App Store and Facebook are just platform providers.

Renren Inc has its own games team, for example. Tencent says the company is toying with the idea of developing its own mobile application.

Joseph Chen, chairman and CEO of Renren Inc, says one of the reasons why his company is present in the app sector is that some market demands like 3D games cannot be fully met by third party developers.

But Sun from Analysys feels that such moves may prove to be a threat for third party app developers.

"Platforms need third party developers to diversify their products category. However, third party app developers may be in a weak position. They have no say in commission fees or acquisition deals, and they may end up losing consumers on the platform if they refuse to be acquired later on," he says.

Xie Wen, a Chinese IT critic and former president of Yahoo China, agrees. Xie says that it will be difficult for Chinese app developers to market their apps on domestic platforms.

"If the platform is not neutral, app developers may face the risk of being copied by large companies which set the rules," Xie says.

"What's more, different platforms have different target users, and small developers may have to take care of different platforms at the same time. In most cases, the income is not sufficient to cover the costs."

Contact the writers at suzhou@chinadaily.com.cn and linjingcd@chinadaily.com.cn