China Tip 12: Better safe than sorry Many entrepreneurs still consider China as the Shangri-la of infinite possibilities. The immense population and the annual ‘double-digit’ economic growth result in a projection of flashy Scrooge McDuck dollar signs in the eyes of numerous businessmen. Of the ‘so-called’ 1,3 billion potential clients, an estimated 80% lives far away from the major cities with an annual income of EUR 600,=. It is unlikely, however, that they constitute your target group. This leaves about 260 milliard customers. In this group – according to Chinese standards – about 180 million people earn EUR 2,000.= up to EUR 4,000.= each year. This is sufficient to buy a car, pay for the children’s education and occasionally enjoy a holiday. Nevertheless, the salary is still less than the average salary in, for example, a country like Latvia (EUR 550.= a month) and is, therefore, insufficient to purchase the ‘Made in Europe’ products. The remainder is a group of roughly 80 million Chinese with the same purchasing power as us. This number equals to the population of Germany, but it is spread out over an area that is 20 times larger. The number of potential clients in China is unfortunately frequently overestimated. This inevitably results in companies taking far greater risks because the expected ROI induces visions of golden mountains. Of course, there are fantastical success stories of companies that managed to capitalize on the Chinese market. However, this usually concerns unique products such as the First Mover. China, with its fast-growing economy, certainly is a land of opportunity, but the only way to begin moving the golden mountains is by carrying away small stones. Therefore, investigate your target group and its purchasing power before coming to China. Better safe than sorry.