It seems like there is an app for everything these days. That said, it doesn't look like that is slowing anyone down from creating the next app! Apps today are much like websites of yesterday. There was a time when "no one“ had a website and well, they seemed to do just fine. Then came the trend. Like usual having a website was seen as "new","fresh",and "innovative". Little by little the train picked up steam, and soon it was as if having a website, especially a corporate website was mandatory.

App become trends today.[Photo provided to Chinadaily]

Fast forward to today. The website buzz has cooled. Yet understanding the website trend is helpful in the context of considering the app trend. Apps are like the new website. It seems everyone is in a hurry to put one out or else be seen as "left behind". The problem though is that many apps are like many websites of old. Little more than a digital placeholder. The app itself is ridiculously simple, providing few if any "can't live without" features. It was poorly produced and sorely lacks creativity. Of course, like websites of old, the reason is cost. Apps like websites in their heyday can cost a pretty penny. In addition, even if someone has the cash to develop an app, there is the problem of intellectual property (IP). Again, history repeats itself as companies with a "good idea" want to put out an app (like launching a great new website years ago) but they lack the technical know how to do it themselves. In such a scenario they often face outsourcing the development.

Having a coroprate app could be the next step in unlocking new market opportunities. Yet,like developing websites of old,don't develop an app simply to "jump on the bandwagon".[Photo provided to Chinadaily]

The Risks

This is where the risk of app development may become a bigger barrier than cost. Risk of "losing" that idea via the development process is quite real. Especially for entrepreneurs in Tianjin where digital copyright laws are still maturing. There is a huge risk to lose control of the content, that is, the Intellectual Property (IP) itself and watch as the folks who were paid to develop that amazing app run off with the idea and profit themselves. Of course this doesn't happen in every case. However, it cannot be overlooked. The risk of losing IP is a huge consideration when thinking about outsourcing. In addition to having an ironclad Non-Disclosure Agreement (NDA) be sure the contract for services specifically states who owns the IP. If not careful, in some cases, by default the developer has some claim to the IP. After all, while the "idea" was someone else's, they "created" the code. Therefore, get the developer to sign off on any and all claims to the IP, including future revenue generated by the app.

Let's say though, a savvy entrepreneur either has the tech skills personally, in-house, or via a trusted third party vendor to proceed with app development. Next to IP risk the biggest barrier arguably could be cost. What are some ranges for app development costs? Well, it seems virtually impossible to get an app out there for less than a few thousand USD. This would be a very basic app at that. On the high side, apps can range in the tens of thousands, even hit six figures. Apps can be a bit of a black hole. Those looking to turn that "idea" into profit via an app need to go in with their eyes wide open. Sadly, a lot of apps are little more than a modern “website”, doing little to nothing in actually generating income. Yet, because of the current trend, the company feels obligated to "put out an app".

Overseas vs. Local Development

For expats hiring an overseas developer, meaning they are in Tianjin and the developer isn't, could create a few challenges. First, costs may be higher if contracting with someone in the States per say. Some may choose this option despite increased costs because it gives the app owner a greater feeling of legal security in terms of not getting the IP stolen. Regardless of location signing a NDA with any potential app developer, even if it is just to "get a quote". That said, especially in Tianjin, contracts need to be based on solid relationships. In Chinese culture, it is best to have someone feel committed to not stealing your “idea” both legally and emotionally. This may come as a surprise to expats who trust more in the "letter of the law" to get legal justice. Of course having things in writing should be "standard protocol" no matter what. However, when doing app development in Tianjin, don't simply rely on what's in print. Rather, make it an aim to sign contracts with "trusted" partners. That is, vendors who have passed the test of time. They need to prove over a period of time they are reasonably reliable and trustworthy in terms of providing a service. Of course, this is where app development may get tricky for Tianjin based entrepreneurs as their existing "relationship network" may not include any app developers.

Second, be aware of payment issues. If running a Wholly Owned Foreign Entity (WFOE) in Tianjin the currency problem is likely to rear its ugly head. Imagine hiring a trusted overseas app developer whereby services are provided based on payment in USD. The question becomes, how will the company in Tianjin pay that overseas developer in USD, or perhaps even in some other foreign currency, from their corporate account? The answer, not easily. Ideally, both parties will have a Chinese entity. This makes payment, receipts for services, and accounting for both parties a whole lot simpler. The caveat though, is it will take time and effort to find a trusted intra-China resource for app development. In some cases, it may actually be worth considering arranging for a foreign resource to come to Tianjin for the project. Whereby, the Tianjin WFOE would issue a letter of invitation, employment contract and make payment to them via RMB. This not only relieves accounting issues due to overseas payment, but also brings the developer on to home turf in Tianjin. Theoretically making it easier to account for their time and possibly even lowering the risk of losing the IP.

The Bottom Line

Having a corporate app could be the next step in unlocking new market opportunities. Yet, like developing websites of old, don't develop an app simply to "jump on the bandwagon". Be careful not to damage a brand by releasing a sub-par, copy-cat app that simply says: "I tried to save money on development." Weigh the risks associated with losing the IP during the development process along with the cost of writing the code. Understand in-house resources may be the most ideal scenario, but also requires more work from the company in terms of arranging local employment, especially if they are coming from overseas, however could reduce headaches associated with overseas payment. Do sign an NDA with any party who the idea is disclosed to. Yet, know what it means to do business in Tianjin. Don't just rely on a piece of paper for protection. Partner exclusively with relatively trustworthy vendors who have proven themselves loyal over a period of time. Don't forget to get a written release on IP so as to avoid any future claims to ownership or profit.