Editor's note: The following article was translated and edited from a blog post on the ifeng.com website. In the article, the author draws on the recent news of Facebook's billion dollar acquisition of iPhone photo app company Instagram, to argue that a domestic Instagram "success story" is not currently possible due to China's inferior and shoddy app development, the prevalence of jail-broken and pirated iPhone apps, the consumer mistrust of paid apps in general and how all of these factors combine to create a vicious market cycle that no one is really happy with.

Upon hearing the announcement that Facebook acquired Instagram, a popular photography application for the iPhone and other smart phones, countless Chinese developers no doubt let out a deep sigh, both out of jealously and despair. After all, in less than two years, the company's 13 employees grew their app's user base to more than 30 million, and it was sold to Facebook for a cool one billion dollars. If Instagram had been made by Chinese developers, even if it hadn't been shut down, it would have been plagiarised at the very least. And as developers rely on selling their apps or collecting micro-fees to pay the bills, as well as due to the thriving "black card" (黑卡) market, ultimately it's very difficult for any of them to earn a living that way, let alone be acquired by a social media giant for a billion dollars. Of course, being investigated (and shut down) and plagiarised cannot be avoided, but why is it so hard to get even a small proportion of Chinese consumers to pay for their apps?

Consumer mentality and spending power still lacking

In the iPhone's App Store, a "paid" app costs a minimum of 6 RMB. In contrast to the price of a new iPhone, 6 RMB for a new app is next to nothing. After all, if you can afford an iPhone, which costs several thousand RMB, what's 6 kuai more? However, the current consumer mentality in China is that if you've already spent so much money on the phone, then the applications should be free. It's not that iPhone users are lacking in funds, it's simply that they are unwilling to pay extra to use added features. In addition, despite the impression given by China's growing army of Apple enthusiasts who are queuing up to buy each new iProduct by the millions, it cannot be overlooked that for the vast majority of the country's population, the iPhone is still widely expensive – even in Shanghai, China's most developed city, an iPhone can cost nearly three times the minimum wage. The consequence of these two factors is that Chinese iPhone users would rather spend a lump sum to jail-break their phone after every iOS update than purchase a handful of apps.

App Store flooded with paid reviewers singing false praises of "crap-apps"

Despite China's thriving "black app market", there are still a few users who are willing to pay for apps, believing that if the product is truly good, then it is only right to pay for it and support the developers. The only problem is that very few of these domestically developed "paid" apps meet this basic criteria of "good", even if their overwhelmingly positive reviews may suggest otherwise. When browsing new apps, one of these users may stumble upon a promising-looking app which has received rave reviews from other users, and excitedly clicks to purchase the app only to discover afterwards that the app is junk and they've been duped out of their money. This is not an isolated incident either. As the iPhone has grown in popularity in China, the country's App Store has seen an increasing amount of these "crap-apps" getting up-voted by a suspiciously large number of users. The growth of the iPhone and the advent of less-than-honest user reviews is no coincidence: a massive grey market has emerged for shoddy developers to hire an "army" of users to up-vote their app for a few mao. And when the real users try to post their honest reviews of these inferior products on the App Store, they simply get buried beneath this sea of false praises.

The blame game

So which came first, the Chinese unwillingness to pay for apps or the jaded developer succumbing to snarky promotional tactics to sell their "crap-apps"? While there is no clear answer to this riddle, one thing that is clear is that this Chicken and Egg scenario has become a vicious cycle with no clear resolution. Without changes to the consumer's mentality and spending power, there will continue to be an unwillingness to pay for apps... in turn leading to a thriving market of jail breaking and pirating apps... in turn leading developers to continue making inferior apps and deceptively market them to people to earn a living.... in turn making customers even less willing to pay for apps. And repeat.

While this brief analysis of why Chinese people are unwilling to pay for a 6 Yuan iPhone app is more or less inconsequential in the long run, it can also be viewed as an allegory for the overall battle between consumer trust and Chinese counterfeits that has been growing in China since the early 1980s. And if the last 30 years of economic reform have taught us anything, it's that the only thing that can improve both sides of this battle are continued reforms of the market system itself. Over time, after mechanisms are implemented that effectively clamp down on the torrent of counterfeits and inferior products that plague the App Store, the consumer mentality towards purchasing apps will improve, and with this increased channel of revenue for the developers, so will the quality of their products.

Source: blog.ifeng 

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Keywords: China iPhone apps Chinese phone app market Chinese app developers China smart phone apps