Google Inc. (GOOGL:US), which closed its Chinese search page in 2010, is making a new effort in the country by allowing domestic developers to sell paid applications in its Play store.
The biggest search engine is encouraging app makers in China to join its distribution system and generate sales abroad through in-app purchases and subscriptions, according to a post on the Android Developers Blog. The Google Play online store isn’t available to the nation’s 632 million Internet users.
Google is trying to find new ways to tap software development in China and earn revenue in a country where its YouTube service is blocked and its local search page redirects to Hong Kong. Beijing hosts the most software companies created outside the U.S. since 2003 with a value of more than $1 billion, according to venture capital investor Atomico.
“In the app space there are more and more interesting products developed in China, and Google would certainly want a share of that,” said Andy Mok, the organizer of Beijing Tech Hive, a series of events linking investors and startups. “It’s a huge positive for Chinese developers because more distribution is always a good thing.”
Google has a large presence in China through its Android operating system, which ran about 95 percent of the smartphones sold there in the fourth quarter last year.
Android users in China download apps through third-party app stores, including those run by Qihoo 360 Technology Co. and Baidu Inc.
Google Revenue
China is the latest of 60 countries that have been included on the Mountain View, California-based company’s app store developer list. Developers in the country can receive revenue payments to their Chinese bank accounts via wire transfers.
Google is becoming more reliant on its app store for revenue growth. In the third quarter, sales in the search engine company’s “other” category, which includes Play, rose by 50 percent, with the marketplace being the main driver for the expansion, Chief Financial Officer Patrick Pichette said on a call with analysts last month.
As Google searches for better apps in China, the country is seeing the parallel rise of smartphone makers including Xiaomi Corp. and Huawei Technologies Co., which sell Android phones. Xiaomi’s founder, Lei Jun, said the company may become the world’s largest smartphone maker in just five years.
Both companies are expanding aggressively in emerging markets that could provide the next phase of growth for smartphones.
“If you look at the next three billion people coming online, they are going to be in places like Southeast Asia, Africa, Latin America, most likely on Chinese smartphones,” Mok said. “Chinese app developers might be more in touch with what users in Southeast Asia and Africa want.”
It’s still too early to tell how popular Google’s app store will be among Chinese developers as many have already found channels to market their products overseas, said Michael Clendenin, managing director of China’s RedTech Advisors.
“Savvy developers in China are already actively distributing their apps overseas,” he said.
To contact the reporters on this story: Lulu Yilun Chen in Hong Kong at ychen447@bloomberg.net; Brian Womack in San Francisco at bwomack1@bloomberg.net
To contact the editors responsible for this story: Michael Tighe at mtighe4@bloomberg.net Robert Fenner
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