Games and Payments in China: Overview

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China is one of the fastest growing companies, and this is true not only for financial and industrial sectors. The gaming industry in China is also on the rise, and here, at Xsolla, we are closely following the direction that local developers work in.

Hugo Barra and his work is a bright example of how attractive the Chinese digital market is. He was the one behind the creation of mobile OS by Google, case showing latest Android functions at Google I/O. However, he left Google in August 2013 and headed to China.

He joined Xiaomi, a company that develops software for mobile devices and consumer electronics. Lei Jun, Xiaomi CEO, is often referred to as “Steve Job of China.” Barra worked for Xiaomi for 6 months before he went to Le Web exhibition in paris, where he shared his opinion about the growth and prospects of Chinese IT sector. You can find his interview with All Things D here.

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First of all, says Hugo Barra, it is the high level of knowledge and education, rapid income growth and increase in the number of billionaires that distinguishes China from other regions. Given its young and flexible economy, the country sees a rapid increase in the number of active Internet users as well. Chinese leading Internet companies have a huge user database:

  • 603 million users — QZone
  • 500 million users — QQ
  • 271 million users — WeChat

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In the past few years several huge companies emerged in China that are yet not globally recognized. One of them is Alibaba Group with annual revenue of more than 4 billion US dollars (as of 2012). The company operates several payment systems and trading websites, among which are Taobao (similar to eBay) and Alipay online payments service. The latter accounts for over 50% of all online payments in China. Alibaba Group plans to get in on an IPO and start global expansion.

Tencent is another Chinese holding that has annual revenue of 49 billion dollars (as of 2012). It works across a variety of sectors, including mass media, entertainment, mobile services and online advertising. WeChat is an important part of the company’s portfolio. This is a mobile chat service that allows to send messages to friends and share a variety of stickers, smiley faces and other animated stuff. WeChat also features a selection of games available for purchase, which were first introduced in summer 2013 and immediately earned millions for Tencent.

Alibaba Group, in its turn, also announced the launch of a gaming service, which will be associated with Laiwang mobile service. The games will also be available via Sina Weibo and UC Browser, the two companies that closely partner with Alibaba. Alibaba publishing services are very attractive: game developers get 70% of revenues, Alibaba commission is 20%, and the remaining 10% are used for charity purposes. It is still unclear how popular Alibaba service will prove, but given the ever-growing number of Internet users, everything’s going to be great.

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