Domestic apps strive to gain traction from value-conscious consumers worldwide

PubMatic, a California, United States-based advertising technology firm, is bullish on China's growth potential and its development in the digital economy, expecting to see a rising number of Chinese companies ramping up efforts to expand their global presence.

"China has been the growth engine for the global economy for many years and I don't believe this will change significantly in the post-COVID era," said Jason Barnes, chief revenue officer of PubMatic Asia-Pacific. "With the adjustment of China's COVID-19 prevention and control policies, the Chinese economy has shown a trend of stabilization and recovery, and the growth momentum continues to strengthen."

Barnes noted that the most resilient part of the Chinese economy will be the digital economy, saying that he believes the areas of innovation and investment will be held in the digital economy.

"We didn't see Chinese companies slow their pace in going global. In fact, they continue expanding into more markets, investing more in infrastructure and innovation."

PubMatic, a sell-side advertising platform that runs real-time automatic advertising transactions, allows app developers and publishers to sell ad inventory to advertisers across media, including connected TV and mobile apps. During the past few years, PubMatic has served a wide range of Chinese clients in their going global process.

According to Barnes, while China and South Korea are both the company's most recently entered markets in the past two years, it has seen strong signs of success and the pace of new business has continued this year. Some of its partners include major Chinese brands such as Xiaomi, TCL and iQiyi.

When it comes to new trends in Chinese firms' overseas expansion, he said gaming and entertainment apps like TikTok and e-commerce platforms such as Alibaba have gained huge popularity in overseas markets.

Barnes said he has seen huge growth potential in the Asia-Pacific region. "India and Southeast Asia have large maturing digital populations, which is very exciting for brands and e-commerce companies. Japan, South Korea and Australia are further along in their digital journey but are still experiencing solid growth."

"There has also been a shift in the 'growth at all costs' approach to now looking at brand awareness and customer retention. It is more competitive out there, so marketing can be used to extract more from existing customers," he said.

Looking ahead, he took a rosy view of Chinese companies' global expansion trend. "They are at the forefront of where consumers are. I would like to see TV hardware manufacturers continue to innovate, (as they) have access to huge audiences and can build software layers that provide value to consumers and advertisers."

Having noticed the changing environment and softer economic conditions, Barnes said many companies will invest less in research and development, as well as marketing and expansion, which presents opportunities for those brave enough to gain market share.

Meanwhile, he warned about challenges in terms of tighter privacy laws and third-party cookie deprecation, saying companies need to become compliant with local laws to extract, process and manage first-party data to ensure that they can still be used to make the internet experience more enjoyable while giving the users control over how their personal data are used.

For Chinese companies seeking global expansion, he said becoming familiar with global digital advertising standards is also important.

Zhang Yi, CEO and chief analyst of iiMedia Research, highlighted the considerable progress made by Chinese companies in their overseas expansion, particularly China's gaming companies.

"China's gaming companies have gained a competitive edge in the global market and their overseas business has become an increasingly important part of their businesses," he said.

Data from the Chinese games database Gamma Data show overseas sales of China's self-developed games reached $17.35 billion in 2022, accounting for over 10 percent of overall gaming sales in overseas markets.

To further expand Chinese firms' presence in overseas markets, Zhang said more efforts should be made to increase the acquisition of foreign talent and teams, which would be beneficial for their local operations, and to absorb exceptional talent from different countries and regions in terms of creative culture, game design and localization channels.