In a market upswing, everyone’s a genius. “Only when the tide goes out,” Warren Buffett warned his fellow investors, “do you discover who's been swimming naked.” The upswing of the Chinese market over the past three decades has been so persistent that its businesses have seemed immune to the global turbulence taking place outside the Middle Kingdom. That held true until recently, when the tide went out for Apple. The company cut its sales forecasts for the first time in 17 years, citing the unforeseen “magnitude” of the economic slowdown in China.
Even casual observers would notice that the challenge that Apple is facing in China goes beyond the country’s macroeconomic concerns. The company’s innovation engine seems to be spluttering; where the ability to innovate is concerned, other latecomers to China have caught up with and even overtaken Apple.
WeChat, China’s most frequently used mobile app, has just over one billion users. It started to offer in-app “mini-programs” from third-party developers in 2017. Since then, WeChat users have been able to book a shared ride with Didi, order a gift from JD.com, or rent a bicycle from Mobike—and use over one million other “apps within the app”—without leaving the WeChat platform. Then two weeks ago, in 2019, WeChat launched a redesign that changed the way mini-programs were presented.
Matthew Brennan, co-founder and managing director at the consultancy firm China Channel, tweeted that it offered “a new home screen for your phone with mini-apps for everything.” Hence, it presented a real alternative to Apple’s app store. “The advantage that WeChat mini-program brings is not only [the] concentration of apps into one popular (platform), but it’s very enticing to developers, especially startups and (independent operators) who have limited resources, to focus on one single ‘app store,’” said TuanAnh Nguyen, an analyst at the technology research firm, Canalys, in an interview with CNBC.
The one million mini-programs that WeChat accumulated in three years correspond to half the volume of Apple’s app store, which took Steve Jobs and Tim Cook more than a decade to build. How was WeChat able to achieve so much so fast?
Market feedback drove the development of mini-programs like it did that of many inventions at WeChat. Among the business users of WeChat, the most popular option entailed business owners sending online messages such as promotional materials or discount vouchers to consumers. WeChat had long hoped to encourage business owners to use it to provide real services or transact business online. But it had achieved little success. More importantly, WeChat had wanted to tap into the next wave of growth among small-time proprietors and mom-and-pop stores.
The big idea behind mini-programs is reducing the maintenance costs for app developers and eliminating the burden of downloading additional apps for consumers. “If you build an app from ground up, you might be spending 70% or more of your effort sorting out the backend programming, an operation that end-users don’t see or even notice. We think developers should dedicate the majority of their efforts to thinking about the content and services they are trying to provide to customers,” one WeChat executive told me. “Right now, it can cost an app developer up to a hundred thousand dollars to build a generic iOS or Android app prototype. I think we could do better and faster for developers as an additional choice for quick deployment.”