How app factory Newborn Town pulls it off overseas
Developer of social and dating apps eyes mature markets after success in SE Asia and Middle East
Yumy, Mico and Yoho are all hit social media and dating apps in Southeast Asia and the Middle East. They also have something else in common: a single Chinese developer.
Just as made-in-China goods are a staple of retail outlets around the world, the country’s internet service boom in the past two decades has created an army of app factories with ambitions to turn their apps into household names overseas. And despite rising political scrutiny, Chinese developers like Newborn Town are increasingly proving they have the ability to pull it off.
Unlike Beijing-based Byte-Dance, known primarily for its massively popular TikTok shortvideo app, Newborn Town is making solid inroads in getting its many smaller apps onto smartphones and embedded into user lifestyles in many corners of the world. After initial success in Asia and the Middle East, the company had started to focus on more mature markets like the United States and Japan, co-founder Li Ping told the Post in an interview at his Beijing office on May 11.
Li’s journey to starting a business that churns out apps had humble beginnings. He initially struggled to find an ideal job after graduating from Hebei Normal University of Science & Technology in 2011, a regional university known for training teachers, when he moved to Beijing in search of a more promising future, like many other ambitious young people at the time.
The move proved fortuitous in a different way, however: Li met Liu Chunhe, who was looking for a partner to help start a business in the days when seemingly all of China was still gripped by the excitement of entrepreneurship.
“When we look back, we started the new business maybe simply because he couldn’t find people to join his business and I couldn’t find a job, so we hit it off,” Li said.
The venture proved a success as social media and live streaming took off. The proliferation of smartphones and broadband services permanently changed how people in China interacted with each other. Tencent Holdings launched WeChat, now the largest social media app in China, in 2011, becoming an essential tool for online life in the country.
Many other social and dating apps sprang up in the years that followed.
This boom provided the talent and experience that Newborn Town needed as it focused on overseas markets, where competition was relatively light. The company now owns a number of social media apps, including gay dating app Blued, since becoming the majority shareholder of BlueCity Holdings.
The firm’s social media apps have an average of 22.9 million monthly active users, according to its annual report. It posted 2.8 billion yuan (HK$3.1 billion) in revenue for 2022, up by 18.6 per cent year on year. Profit is rising even faster, jumping by 174.2 per cent to 287.3 million yuan.
In 2021, Li took the reins as CEO from Liu, who currently serves as chairman.
In its effort to conquer overseas markets, Newborn Town has been producing many localised marketing campaigns. Mico, for example, launched product theme songs in Thailand and Vietnam last year. Its song for Thailand titled Tuk Krub has been played 120 million times on YouTube. It was also a top five song by the annual click volume, as counted by a local mainstream music platform, according to Newborn Town.
“When people start a business in their home country, it’s natural to look at the domestic market,” Li said. “At the very beginning, we also did a similar thing, but when we look at the overseas market … we realise the market outside China is definitely bigger.”
Mark Tanner, managing director of China Skinny, said: “Southeast Asia and the Middle East provide advantages over other markets as they are growing fast, are digitally centric and quite ‘hot’ right now for businesses looking to expand globally.”
Geopolitical risks are also much lower in the region, where countries “generally have better relationships with Beijing and/or much more economic exposure”, according to Tanner.
Last year, Newborn Town expanded into LGBTQ social networking. Metaclass Management ELP, a fund founded through the firm’s capital contribution, participated in the privatisation of BlueCity.
Under a new agreement announced in March, Newborn Town became the company’s controlling shareholder.
“Our chairman was connected with the founder of BlueCity, and when we talked about the [purchase], we hit it off,” Li said.
“We are searching for an expansion of the social media sector, based on users’ real needs, and also reached a consensus with the original team of BlueCity. So the process took less than a year, and it was relatively quick.
“As you can imagine, LGBTQ people finding partners in reality can be very inefficient. But if they do this through social media platforms, the efficiency can be greatly improved and [they] will gradually form their own community atmosphere.”
Chinese internet companies, which have been aggressively seeking overseas expansion in recent years as domestic growth has slowed, are also facing setbacks in the global market. TikTok has faced tremendous pressure in the US, where it has 150 million active users, as the government has threatened a ban or a forced sale.
Chinese companies now face increased risks and complexity in overseas expansion, according to a Bain & Company report released earlier this year.
Bain partner Larry Zhu cautioned enterprises to have “the right expectations” when it came to geopolitical risks.
“We don’t want to present a false picture of peace and prosperity,” he said. “The geopolitical issue is becoming more obvious … especially when big events like the US presidential election take place next year.”
Li thinks the most important factor in overseas expansion is to just follow local regulations.
“When you think about a business model, you must conform to the rules of Apple’s App Store and Google Play and the policies of each market where our business lies,” he said.
We realise the market outside China is definitely bigger
LI PING, NEWBORN TOWN CO-FOUNDER