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3 things you need to know about augmented reality in China

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The potential of AR is firmly into the spotlight for global technology companies. Keen not to miss out on what some say could be bigger than the smartphone itself, Chinese tech juggernauts Baidu, Alibaba, Tencent, and others are investing heavily in AR through mobile games and advertising experiences. In this piece, we’ll share three key things you should know about AR in China.

AR in China is mobile-first

China’s giant base of mobile users makes the smartphone the dominant platform through which AR is distributed. This mobile-first approach is similar to Apple’s approach with ARKit, Apple’s AR SDK for developers. This may be the fastest way to promote AR usage, as Chinese consumers are already engaged with companies such as Tencent through their smartphones; the company has 938 million monthly active users on its mobile messaging platform, WeChat.

Baidu, for example, has created AR experiences for its suite of apps that collectively reach more than 1 billion monthly active users. Its DuSee AR platform, launched last year, enables consumers to interact with 3D images overlaid onto the real world. Users of its Baidu Search engine can, for instance, view AR effects when they type in certain keywords. Baidu believes AR can be applied to other areas too, such as tourism. Last year it teamed up with the Hubei provincial government to create an interactive 3D map of the Shennongjia travel site, complete with directions to hotels and hiking routes.

Even foreign companies are getting in on the action. San Francisco’s Osterhout Design Group recently partnered with China Mobile to deploy its AR smart-glasses in China to China Mobile’s 800 million users. Because the Chinese mobile and internet markets — the rails on which AR run — are expanding at a rapid rate, we expect the Chinese AR market to ride on their coattails.

AR marketing is already viable in China

Chinese technology companies are already running marketing campaigns via AR experiences. These experiences provide incentives for consumers to come into retail stores by placing virtual coupons in shopping areas in China that can be found through AR apps. Take Baidu: The company joined forces with Yum! Brands last year to launch an AR smartphone game to 300 KFC outlets in Beijing. The game incentivized consumers with the offer of winning discounts on meals. They played by scanning stickers on tables in selected restaurants with their smartphones. Baidu said that the game was played 400,000 times within three days of going live.

Both Tencent and Chinese e-commerce company Alibaba have also launched AR smartphone games for China’s Lunar New Year holiday, which enabled consumers to try AR experiences using Alipay and Tencent’s QQ messenger app. Users of both games scanned physical objects with their smartphone cameras to find digital packages containing financial rewards.

Alibaba and Tencent reported that they invested $29 million and $43 million, respectively, on these mobile AR campaigns. While this may seem like an exorbitant sum of cash for a marketing initiative, Tencent was able to acquire 200 million new users for its WeChat communication app in 2014 as a result of a similar campaign.

The Great (augmented) Firewall of China

However, the Chinese government has banned Pokémon Go and similar AR games in the past, citing national security reasons and concerns over consumer safety. A similar ban on Baidu, Tencent or Alibaba’s smartphone games would be a setback to their efforts to speed up consumer adoption of AR in China – although it’s unclear to what extent Pokemon Go was banned due to its status as an app run by a foreign, non-Chinese entity.

One of the most unique features of the Chinese internet sector is that it is tightly controlled by China’s government, which has not shied away from restricting internet services in the past – most notably those owned by foreign companies. Google, Facebook, Twitter and other U.S.-based internet giants have been banned from, or had their services restricted in, China. Any foreign AR company interested in breaking into the domestic Chinese market may be treated in a similar way — that is, not very favorably.

The potential of the Chinese market, however, may prove too tempting to pass up. China’s huge mobile consumer base could entice US-based AR companies, despite regulatory concerns. They would do well, though, to study the struggles of those who came before them.

Michael Park is the CEO and founder of PostAR, a platform that enable you to build, explore, and share augmented realities.

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