Mobile habits evolve in China

24 December 2010

BEIJING: Location-based mobile services are beginning to gain ground in China, providing new opportunities for marketers to reach consumers.

The rise of Foursquare, Gowalla and Shopkick has been a defining characteristic of the US marketing landscape this year.

Parallel platforms are now forging ahead in China, with around 30 services in operation.

Shanda Interactive, China's biggest internet gaming group, has quickly tapped into this channel, adapting an existing travel website, which it rebranded as Qieke.

"Shanda has over 100m active users, most of them gamers, but they are also common people who hang out and have fun in real life," Song Zheng, Qieke's chief executive, told the Wall Street Journal.

"Users are out there, and what we need to do is to connect them."

Approximately 1m people access Qieke, but the number of regular participants is nearer 100,000, according to Shanda.

More than 100 brand owners, such as the IT manufacturer Lenovo, have partnered with Qieke thus far.

Coffee house giant Starbucks is also running a promotion giving customers checking in to selected branches at a specified time a free L'Oréal gift bag.

Low-cost hotel chain 7 Days rewards individuals visiting certain sites with toiletries, alongside adding them to a prize draw to win a one-night stay.

Rival service Jiepang, boasting 250,000 members, went live in May, and has forged links with Renren, a prominent social network, and Sina Weibo, broadly equivalent to Twitter.

"We're hoping that Jiepang will become an internet tool that everyone uses," David Liu, Jiepang's founder, said.

"The ultimate user desire is to share with friends. That's the same in the US and China."

Given major online corporations may soon enter this space - a list set to include Netease and Baidu - Jiepang must exploit a first-mover advantage.

"We do our best to serve the current users and grow with them," said Liu.

The fledgling firm has sought to achieve this objective through enabling consumers to receive discounts by making collective purchases from 1,000 group shopping websites.

Analysys International has estimated that between 3m and 4m people utilised location-based offerings in the third quarter of 2010.

"It will be relatively easier for big companies to get started due to their large user base and brand names," Ren Yanghui, an analyst at Analysys International, said.

"But there is no overwhelming superiority. After all, it's a new field, and everybody starts fresh."

IIMEDIA, the consultancy, believes 18% of China's 800m mobile population own smartphones, a figure that should climb by 35% annually in the next five years.

"In Chinese culture, people always bargain. Discounts and benefits can be attractive lure to potential users," said Zhang Yi, IIMEDIA's chief executive.

"Chinese businesses attach more importance to short-term profits, and the LBS sites provide a pretty goal-oriented marketing solution."

But governmental censorship and increasingly tight rules covering properties like online maps could prove challenging going forward.

"Another problem will be how to keep users logged in after they get bored with the simple 'check-in' trick," added Zhang.

Data sourced from Wall Street Journal; additional content by Warc staff