The Demographic Drivers

In March, India overtook China as the world’s most populous country. However, it’s not just the sheer numbers that matter; the structure of the population is crucial as well. China’s demographic pyramid, coupled with lower retirement ages, presents a potential crisis, which might push companies to seek growth opportunities abroad.

The Japanese tech industry may also follow suit, spurred by their country’s population decline. Japan lost 644,000 people in 2022 alone, and this trend is projected to continue, with the population forecasted to shrink to 88 million by 2065, a 30% decline in 45 years. As a result, the need for overseas expansion will be increasingly critical.

The Economic Rationale

The economic factors further reinforce the argument for internationalisation and its impact on apps: China’s slower than expected growth rate of 2.2% in 2022 due to Covid lockdowns. Thus, as domestic economic growth slows, companies will be incentivised to explore foreign markets to avoid stagnation.

For many Chinese companies, this is uncharted territory, but they do have role models to look up to. Bytedance’s TikTok has shown how a Chinese company can conquer the West. Its monumental success could well be a blueprint for other Chinese tech firms looking to expand internationally.

Western Companies: The Flip Side of the Coin

Western companies, too, are not immune to these challenges. As they face similar demographic and economic pressures, we can expect to see them making moves to enter Asian markets.

Furthermore, western companies and governments may intensify their efforts to pressurise Chinese officials to open up their markets. A successful expansion of Chinese businesses abroad might compel officials to reciprocate, thus allowing Western companies to gain a stronger foothold in China.

Understated Success Stories

While we may not see another TikTok-like success that steals the PR spotlight, we should not underestimate the smaller triumphs. In the quiet corners of the tech industry, many companies are making inroads into foreign markets. These could be game developers, crypto projects, or other tech-based ventures that are quietly succeeding on each other’s turf.

The Challenges of Launching Apps in China

While the tech industry is geared up for an era of internationalisation, launching apps in the Chinese market poses unique challenges. One of these hurdles is the highly fragmented app store market in China.

Unlike in the West, where Google’s Play Store and Apple’s App Store dominate, China has a plethora of Android app stores vying for users’ attention. Giants like Tencent, Baidu, and Huawei each operate their own stores, and the Google Play Store holds a negligible market share. This fragmentation means that to reach a broad user base, apps need to be listed on multiple platforms, which can increase operational complexity and cost.

Another significant barrier for foreign companies trying to launch apps in China is the country’s stringent licensing requirements. Chinese authorities require companies to obtain licenses before their apps can be approved on app stores or before they can engage in advertising activities. The licensing process can be cumbersome and time-consuming, especially for foreign companies unfamiliar with the local regulatory environment.

Moreover, the licenses are not just a one-time requirement; they need to be maintained and renewed, adding to the ongoing operational expenses. This can deter smaller companies or start-ups with limited resources from attempting to enter the Chinese market.

Notwithstanding these challenges, the potential rewards of succeeding in the Chinese market are enormous, given its vast user base and increasing digital consumption. As such, while the road to launching apps in China may be fraught with challenges, for many tech companies, it’s a journey worth undertaking. It will, however, require meticulous planning, a thorough understanding of the regulatory landscape, and a willingness to adapt to a unique digital ecosystem.

The Challenges Ahead

However, this path is not without its challenges. The political tensions between China and the US might make it difficult for Chinese companies to establish themselves in the West. To overcome this, they’ll need to invest in lobbying efforts and strive to appear less connected to the Chinese government.

We believe the tech industry is on the cusp of a transformative period of internationalisation in the next years, driven by a confluence of demographic and economic factors. This shift may lead to a more globalised tech landscape, where East meets West, and vice versa. However, this journey will not be without its hurdles, and it will be fascinating to watch how these trends play out.

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It was smaller than expected, with one hall filled with exhibitors’ booths and another with booths and a presentation stage. The event was professionally executed, staff were welcoming, many of them speaking outstanding English, not to mention the exhibitors, who could flawlessly respond to our inquiries.

Unlike a number of other trade events in Tokyo where a dark suit and bright shirt, if not a tie, is usually expected, the dress code here appeared to be relaxed, T-shirts and jeans dominating the scene. In stark contrast with this was the high standard of talent, and in line with inclusivity this included a number of powerful female speakers. All our enquiries were answered in detail, and as a result we could learn a lot about the current state of the industry landscape in Japan, including developments that don’t necessarily have a direct impact on our current activities, but may help us recommend solutions to clients whose needs we otherwise would be unable to fulfil. English language literature was practically non-existent, which made some sense, since most attendees appeared to be locals. On the other hand, some Japanese exhibitors could definitely benefit from English language content online, as this is often a primary barrier of entry to reach Japanese customers and vice-versa.

Most presentations and panel discussions were conducted in Japanese, at times enhanced with bilingual slides, some speakers were presenting in English with an interpreter, or having near real-time digital translation provided by Rozetta’s Onyaku platform. The latter two would be a welcome feature at more Japanese tech gatherings as well. This meant that the event was not only a reasonable networking experience, but also, for expats like myself, a great opportunity to improve my Japanese.

We were fortunate to have interesting discussions with industry leaders and we’re thankful to all exhibitors and partners we visited ad ad:tech Tokyo. Amongst others, we’d like to thank Repro for sharing details about their ASO Insight tool that could be integrated into localization pipelines. Its features include keyword optimization, rankings, basic comparisons and more providing a simple workflow. This simplicity may be its virtue, potentially enabling a rapid workcycle of research, review, evaluation and implementation of keywords and other assets. Always great to learn from industry colleagues!

Considering recent news of significant decline in ad revenues, not excluding Alphabet, Amazon & Meta, it was great to see that such events still take place in the physical space.

All-in-all it was an afternoon well spent, and we will return next year. And who knows? Perhaps we will visit some of the other ad:tech events in New York, San Francisco, London or Singapore.

Post by Zoltan.

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