China Scale and Market “Niche"
A key question about China is how to evaluate the market for your specific products and solutions. You may have heard the anecdote from the early 80’s when two different US automotive industry’s marketing executives would have briefly reported on the market potential for their car in totally opposite ways:? “Chinese all use bicycles, no market for cars” vs. “Chinese all use bicycles, tremendous potential for cars”.
Today, we are far from those days when some organizations would use a simple but tragically wrong market sizing formula: “each Chinese will need one product; market size is 1.3 billion !”. Most people understand that evaluating the real potential of the Chinese market requires a more sophisticated approach, including in-depth analysis of the product fit to specific Chinese needs and trends, that is often a variant of what is seen in Europe or North America.
But it remains hard to get a feel for the potential of the market. And one of the reasons is that it is really hard to comprehend the sheer size of the country and, as a consequence, the real size of so-called niche markets.
Size of China and Trends
We all know that China is big. But we need to fully realize what this really means... It is large both in size and in population. Some specifics:
This leads to massive trends and momentum, for instance:
Another consequence of this size is that what could be considered a niche market in Europe or any of its countries represents a very significant segment at the level of China.
At our May 2017 seminar in Brussels, Karel Eloot, partner at McKinsey in China, illustrated this by comparing the automobile market (mass market) in several countries with “small” niche markets in China. For instance, if you take the market in China for nail polish and spa together, you get a business that is bigger than the total Belgian market for cars.
This means that targeting what would be considered a niche market in Europe can represent surprisingly large potential. And this is good news.
In the twentieth century, Western companies were able to provide China with “total solutions” and integrated systems. But in the meantime, with or without cooperation with Western partners, China has built local capabilities to handle many of these systems or complex solutions (building, telecom systems, high-speed trains, computers ...).
But the need for specific material, components, modules with high performance or high reliability and that are used in these systems and complex solutions is there and growing. This is a real potential for many companies in Europe, which are already world leaders in that particular sector and are selling to many of the world-leading integrators or OEMs.
And the good news is that such “niches” can have excellent momentum.
January 18th, 2018 (Shanghai)
Official opening of Sinnolabs new offices at Landmark Center Hongkou (North Bund Shanghai) and kick-off of the Sinnolabs mentor community meetings 2018.
We started the festive day with a first Mentor-Community-Meeting, the first in a series that will run throughout the year. In these meetings, Sinnolabs offers information on technology news from Europe, introduces new companies engaged in the Sinnolabs program, and provides mentorship coaching. These meetings also offer the Sinnolabs mentors a prime possibility to share ideas and experiences within the community network.
In the evening Sinnolabs invited mentors, founders, partners, and friends to a reception in their new office-space, overlooking the Huangpu River. Amongst our guest, we welcomed Consul General of Luxemburg Luc Decker, Consul of Luxemburg David Storne, Consul for Economic Affairs at the Consulate General of Belgium, Mrs. MatheÏ, Belgian Senator Rik Daems, representatives of our founding partners SFPI, Solvay, Moore Stephens, Riverbanks, De Wolf Law firm, CAIF and East West, as well as Vice Mayor of Shanghai Hongkou District Mr. Yuan Quan, president of the 13th political consultative conference of Hongkou District Mr. Guan Weiyong, former deputy chief of Shanghai IP Bureau Mr. Hong Yongqing.