Key Points
- Alongside TikTok, Chinese-owned apps such as CapCut and Temu have gained significant popularity in Australia.
- The most successful types of Chinese apps in the international market are social media and shopping apps. Free Chinese mobile games are also increasingly gaining market share.
- By offering competitive pricing, and replicating proven business models, some Chinese apps have found success in Western markets like Australia.
The Australian government announced a nation-wide ban of TikTok on government-issued devices due to "significant security and privacy risks" in April, putting other China-based mobile applications under scrutiny.
So, what applications from China can be found on smartphones in Australia?
TikTok and CapCut
As a popular short video application, TikTok has a massive user base in the Western world.
Since 2021, TikTok has exceeded one billion monthly active users.
According to the Digital 2022: Australia report by We Are Social and Hootsuite, TikTok is the most downloaded mobile entertainment app among Australians, ranking third on the overall download chart, only behind Service Victoria and Service NSW.
TikTok and its Chinese domestic version, Douyin, both belong to the same parent company, ByteDance. Source: AAP, SIPA USA / AAP Image/Rafael Henrique / SOPA Images/Sipa USA
In Australia, although the user base of TikTok is smaller compared to Facebook (15 million) and Instagram (12.8 million), it is the application Australians engage with the longest, with users spending an average of 23.4 hours per month on the app – a 40 per cent increase compared to last year.
CapCut, also owned by Chinese company ByteDance, is a video-editing application tailored for TikTok.
Similar to its Chinese domestic version – Jianying – CapCut provides personalised video editing for TikTok, such as adding features including filters, subtitles, sound effects and video transition effects.
CapCut has surpassed 500 million downloads on Google Pay. As of the end of April, this app ranked fifth in total downloads through the Apple App Store Australia, while its sister app, TikTok, held the top position.
Temu, a popular shopping app
Another one of the most popular apps in Australia at the moment is Temu.
After Temu’s Super Bowl advertisement in February, the Google Search Index of this shopping app skyrocketed on the same day.
Temu is owned by the Chinese e-commerce giant, Pinduoduo, which was founded in 2015.
In China, Pinduoduo made a strong entry into the e-commerce market that had been dominated by Alibaba for over a decade.
In 2020, with over 730 million monthly active users – that is 30 times the population of Australia – Pinduoduo surpassed Alibaba’s Taobao and became the most widely used shopping app in China.
Temu officially launched in Australia and New Zealand in March 2023 as part of PDD's global expansion policy. Credit: Future Publishing/Future Publishing via Getty Imag
In the past month, Temu has quickly taken the top place in the app ranking in both the Google Play and Apple App stores in Australia. According to market intelligence company, Sensor Tower, in April, Temu attracted 10 million downloads worldwide in the space of just one month.
In the United States, Temu has surpassed Amazon and Walmart to become the most popular shopping app in less than a year since its launch.
Shein, a source of 'fast fashion' purchases
Besides Temu, Shein is another shopping app that has gained a significant market share in Australia.
It is widely believed that Shein serves as a prime example of how cheaper, made-in-China products have captured international markets through e-commerce platforms.
Through extensive social media promotion, Shein has gradually expanded its market while filling the wardrobes of young people.
According to Similarweb's statistics, 55.7 per cent of Shein's global user base falls within the age range of 18 to 34 while 18.4 per cent of users are aged between 35 and 44.
Established by Chris Xu in 2008, Shein now has become one major participant in the fast fashion industry Source: LightRocket / SOPA Images/SOPA Images/LightRocket via Gett
It relies on third-party suppliers from China for a small number of products, and determines whether to repeat production based on sales performance. This coincides with the typical model of 'fast fashion', with only six per cent of inventory remaining in stock for more than 90 days.
In 2022, Shein recorded 200 million global downloads, making it the most downloaded shopping app of the year.
It usually appears in the top 10 shopping apps' ranking list in Australia.
Free mobile game apps on the rise
In addition to social media and shopping apps, mobile games are another major force in Chinese apps’ global expansion.
Gaming, especially mobile gaming, is a traditional strength of Chinese tech companies. According to the Ministry of Commerce People’s Republic of China, in 2022, the total sales revenue of independently developed Chinese games in the overseas market was $US17.35 billion.
For instance, the highly successful game, Genshin Impact, an Action Role-Playing Game (ARPG) developed by Chinese company miHoYo, or Ho Yoverse, the global publishing subsidiary, has gained a considerable share of the internet market.
Genshin Impact, developed by miHoYo, is an example of the expansion of Chinese mobile games in the international market Source: LightRocket / SOPA Images/SOPA Images/LightRocket via Gett
Although Genshin Impact does not have an Oceania server yet, this game still performs well in Australia’s app stores. By the end of April, Genshin Impact was the second-highest grossing adventure game in Australia, and it ranked tenth on the free adventure game list.
Why are Chinese apps so popular?
So, what are the strengths of Chinese apps and why are they able to rapidly find a place in Western markets?
Senior software engineer at a Sydney-based tech start-up, Henry Lin, said that Chinese apps had distinct advantages across different categories.
“As for the traditional industry, apps like Temu and Shein leverage the advantage of China's manufacturing capabilities, as well as its strength in logistics and warehousing. Therefore, they are able to bring low-priced products to the global markets at extremely low costs,” Mr Lin said.
For social media apps like TikTok, Chinese tech companies have replicated their success with their own apps in overseas markets.
“For example, live-streaming apps like BIGO and Mico, they replicate the same business model that has already proven successful in China," Mr Lin said.
"It’s like they have created multiple versions of (the) same product. By using the same technology and spending similar operational costs, they are transplanting them overseas."
For the gaming industry, which requires intensive labour and a significant amount of development work, Chinese companies also have their unique advantages.
The gaming industry in China employs approximately 2.74 million people according to the Digital Cultural Industry Employment Report (2020) by Renmin University of China.
“Moreover, when it comes to profit models, Chinese game companies have their unique methods, making it easier for them to stand out in the competitive market of gaming," Mr Lin added.
“As (is) widely known, micro-transactions – the business model of making micro-payments to purchase virtual goods – was widely adopted and developed by Tencent (the company behind Chinese social media WeChat).
“It is actually a very healthy profit model and it helps the further development of mobile gaming companies.”
'Lack of transparency around data collection'
As Chinese apps continue to expand their presence in global markets, concerns regarding data security and privacy are persistently growing.
Several countries, including the United States, Canada, Australia, India, and the European Union have already implemented restrictions on TikTok to varying extents.
Dr Ritesh Chugh, Associate Professor in Information and Communication Technologies at Central Queensland University, said that the reason for this was these apps may pose risks in terms of privacy and data security.
“There is a lack of transparency regarding the data collection practices of these apps. Because, as a user, I don't have a clear understanding of what data is being collected, how that data will be used, and more importantly, how it will be shared with other companies,” Dr Chugh said.
These tech companies often collect a large amount of user data – including sensitive private data such as location information and browsing history – and there is no evidence that this data is inaccessible to the Chinese government.
TikTok is facing bans in multiple countries due to concerns over data security risks Source: AAP / MORGAN HANCOCK/AAPIMAGE
"This is where the problem lies because this raises concerns about privacy and security of user data ... as these apps are being widely used outside of China now.
"Take TikTok for example, in the United States, although TikTok is making efforts to separate itself from its parent company, ByteDance, and gradually transferring user data to Oracle's servers located in America, TikTok’s terms of service indicate that ByteDance still maintains access rights to the data of its US users and the same applies to users elsewhere, including those in Australia."
According to a report released by cyber security company, Feroot, after analysing over 3,000 websites and 100,000 affiliated websites, it was found that TikTok's pixels or trackers were detected on 7.41 per cent of the examined websites. This means that even if users do not download the TikTok app, their personal data may still be collected.
As for Temu, its privacy and cookie policy articulates that users’ data are stored locally. However, the collected data may be transferred, disclosed, stored and processed outside of users’ countries, including anywhere Temu and its affiliates operate.
Temu also states that it may share collected data with its parent company, Pinduoduo, law enforcement and government authorities under certain circumstances.
“The concern that I really have is, as a user, we never read the privacy agreement, the terms and conditions. It's basically we click on them, right? The company obviously presents that information to us, but it can be three to five pages' long,” Dr Chugh said.
We are accessing these apps, but in return, we are giving away our personal information.Dr Ritesh Chugh
"Privacy trade-offs are the currency of the digital age where we constantly weigh the value of personal information against the convenience and inter-connectedness of our lives ... That's where the privacy trade-offs come into play.”
