Chinese apps flirt with global success

It’s an astonishing success story: Chinese app Momo launched just over two years ago and already boasts more than 120 million users. The free flirting app is particularly popular with China’s urban younger generation. Based on geolocation, Momo allows users to chat to people in their immediate vicinity by text and voice messages. Like every go-getting young IT entrepreneur, CEO Tang Yan would like to follow in the footsteps of his role model, Jack Ma, whose company Alibaba’s initial public offering in September is the largest global IPO ever. Tan probably isn’t being over-ambitious. Momo’s market value is around $3 billion (2.4 billion euros), after all. And he’s not the only app developer with his eye on the prize.

China’s start-up scene has been booming of late. Today’s university graduates are less risk-averse than their parents and they like the idea of being their own boss. The app industry, where a good idea is more important than development costs, allows them to set up their own companies with relatively little capital. Their mode of operation is much like that of the German Samwer brothers, who have made a fortune with US-inspired companies adapted to the German market - which is of course considerably smaller than China’s. Momo might be a copy of the US Tinder app, but is aimed at a market of several hundred million users.

More functions

The Chinese versions often have more functions than the apps they’re inspired by, such as taxi app Didi Dache and shopping app Lashou, similar to the US company Groupon. Chinese developers actually refine the US innovations: the popular chat app WeChat, originally a clone of WhatsApp, now includes superior features. The Chinese even beat the Americans when it came to introducing some of its functions, such as voice messaging. And unlike WhatsApp, which Facebook acquired for $22 billion earlier this year, WeChat has plans to monetize its user base.

Integrated into the app is a function which allows users to download sophisticated, animated Smileys, and WeChat is also set to introduce mini games that friends can play with one another. Venture capitalists are happy to reach into their pockets when it comes to funding such developments. In the first half of 2014, WeChat raised more than $2 billion. Major internet companies such as Baidu and Alibaba are also investing in smaller start-ups in a bid to assimilate the most promising.

Gap in the market

But for the time being, Momo is still largely independent. Rumor has it that Alibaba has a minority share, but most shares are still owned by CEO Tang. He‘s confident that his plans have too much potential to be sold off for less than they’re worth. China already has plenty of social networking platforms for friends, but not for strangers. This is the market gap that Momo is looking to close - though it’s a move that has already landed Tang in trouble.

Shortly after it was launched, Momo was issued a warning by the Chinese authorities. Some of the app’s users were reportedly using it for prostitution and pornography. Momo was forced to shut down the accounts of nine million users and still hasn’t quite managed to recover its reputation - it’s still widely seen among young people as the fastest route to a one-night stand. Hook ups are always popular, and there’s little the Chinese government can do about it.

DW columnist Frank Sieren has lived in Beijing for 20 years.