China is Apple’s second largest market for apps

China is Apple’s second largest market for apps, after America. But App analysis firm Distimo’s latest report reveals that, while the Asian app market is booming, it’s not exactly a gold rush: free applications rule the roost, with paid-for offerings only driving about a third of the revenue they do in the US.

According to Distimo, customers in Asia “appear to be more price-sensitive,” eschewing ad-free, paid-for applications in favour of free versions and trials. Perhaps unsurprisingly, iPhone users in America were found to be the most willing to pay for applications.

Perhaps the most worrying stat from an Apple point of view is the apparent reluctance of Asian users to embrace the in-app purchasing model. Apple receives a 30 per cent slice of in-app sales originating in its stores. According to Distimo’s report, only 34 per cent of revenues from the top-grossing applications in China originated from applications featuring in-app purchase. It’s not all doom-and-gloom, however; the report shows that in-app revenues in America in 2010 were only 39 per cent. By May of this year, that figure had risen to 68 per cent.

Developers looking to make inroads into the Asian market would do well to focus on localising their offerings. According to the report, while only 20 per cent of the most popular apps in Europe and America are aimed specifically at those markets, 65 per cent of the 300 most popular free apps in China are regionally popular only. In South Korea, that statistic is 87 per cent for free and and 78 per cent for paid-for applications, although the report says that this is partially due to the absence of a games category in the country.