7-Step Formula to Uncover Your Profitable Niche Market in China

book-7-Step Formula to Uncover Your Profitable Niche Market in China

7-Step Formula to Uncover Your Profitable Niche Market in China

This is the most important part of Ultimate Guide to Finding Your Profitable Niche in China.

The goal of my 7-Step Formula is to help you answer this question:

Is this MY PROFITABLE market?

  • Step 1. Ideas: Describe your niche as specific as possible.
  • Step 2. Needs: Are there real problems and people want to solve?
  • Step 3. Money: Will people pay for this? How much will they pay? How Big is the Market?
  • Step 4. Feasibility: Is this opportunity suitable for you?
  • Step 5. Strength: Are you confident to be the no. 1 in this niche market? How?
  • Step 6. Client: Find your first client.
  • Step 7. Optimization: Confirm your market and adjust.

Step 1. Ideas: Describe your niche as specific as possible

First, brainstorming some ideas for your potential niche markets in China.

One question I always ask my new client is:

What inspires you to explore the China market?

I am sharing you with several useful tips for your brainstorming stage.

  1. Expanding your existing business to China.
  2. You know some successful business in China from your father, your brother, sister, cousins or friends.
  3. Understand the market trends in China from professional reports and news.
  4. Get ideas from your life experience.
  5. Your travel/working/living experience in China.
  6. What are your skills?
  7. What are your hobbies? or interests?
  8. What do Chinese people might want?
  9. Problems you found in Chinese consumers from your observation.

Remember to describe your potential niche as specific as possible, it will be meaningless if you are listing a very vague and broad niche.

Some typical ideas:

  • I can write and edit academic writing, esp. medical papers, and I think many Chinese doctors, university students might need this service.
  • My uncle is an owner of several pecan orchards in Texas, USA and Sonora, Mexico, and it seems he made a lot of sales in China, I want to sell pecans, or some other tree nuts to China too.
  • I am native French raised in Paris. I am a perfect French and English fashion copywriter. I might help Chinese fashion companies to write their web copies.
  • I am running a web store selling nutritional supplements and it is quite successful in the US and Australia market, can I promote it in China?
  • I have the high-end medical resources in Germany and US top hospitals, can I send Chinese cancer patients for medical treatments?
  • I am selling real estate properties in Brisbane and Melbourne, Australia, I want to expand my sales leads from China.

Step 2. Needs: Are there real problems and people want to solve?

Now you have some ideas, let’s step further to verify whether it is a real market instead of an imaginary one.

Figure out whether real problems exist for your target Chinese people or companies and are they willing to make some change.

There are several ways to check:

  • Are there sufficient people talking about the problem?
  • Could you find these topics in Baidu, online Chinese communities, Chinese forums, Weibo, WeChat and other social media in China?
  • Do they need what you can offer?
  • Are there similar products or services in the market?
  • Are they sold on Chinese eCommerce platforms like Tmall, Taobao, JD etc?
  • How many competitors in the market? Are they foreign merchants too? Are they Chinese local ones?
  • What is their current solution for the problem?
  • Do your target customers really care if this problem solved or not?

A common mistake is to sell to a market that nobody is working on. You might argue that it would be more profitable if it is some virgin market.

It might be right, but it means you need more resources and takes more risks. If you are a small to medium company, a startup, or a freelancer, your chance of success will be extremely low.

I strongly recommend you to choose your first business in China in my way.

So make sure you can find similar products or services, or some competitors in the market. It means you find some market that can make money, otherwise these competitors won’t be there.

Whether Chinese Customers are Different?

Your foreign experience might work for Chinese customers, might not.

Study your potential customers and find out the possible differences.

  • You are selling weight loss solutions in western countries, and you are targeting on Age 45-70 women in the US. Is the same market segment of Chinese people interested in your weight loss solutions?

Step 3. Money: Will people pay for this? How much will they pay? How Big is the Market?

Now let’s move to the money potential questions:

  • Whether your Chinese customer will pay for what you provide? and how much?
  • How many people will pay?
  • How big is the market?

The most convenient way to do this is to study further on your findings in Step 2.

Whether your Chinese customer will pay for what you provide? and how much?

  • What is the purchase behavior difference on these products/services between Chinese customers and western customers?

Check the pricing of existing products or services in the China market and whether they are selling well.

  • How many items were sold if they are sold in eCommerce platforms like Tmall, Taobao, JD?
  • What are the best selling items?
  • What is the pricing? Find it through their websites, web stores, send inquiries to get it, play as mysterious customers to get it…

How many people will pay? How big is the market?

  • How many competitors are in the market, either foreign and local?
  • How many people talking on this in Chinese communities, online and offline?
  • What is the Baidu Index of the keywords of your niche market?
  • Are there any online/offline ads in your China market niche? Where are the ads?
  • How do your competitors send their message to the market? How do they promote?

You can find the potential market size through proper market research and analysis.

Step 4. Feasibility: Is this opportunity suitable for you?

OK, Now you’ve got a profitable niche in China, but whether is this your real opportunity?

Let’s do something further based on your findings, again!

Analyze the existing competitors in your niche with special attention on their web copies, product/service descriptions, videos, articles, blogs, customer reviews, comments, news, and reports.

Write down what you likes and dislikes about them and what Chinese customers like and dislike about them.

Find out whether you have the knowledge and resource to do the same things as your competitors, or do better than them.

You can come up with ideas how you can do the business differently, yes, that will be your unique selling points.

I Don’t Know the Chinese language.

Is it a big problem? I am sharing a cost-effective solution with you.

  • First, you can easily get a rough idea of many information from machine translation like Google translate, and it is totally free.
  • Make notes and copy important pieces of information you want to know better, make it in a single document.
  • Find some translator on upwork.com for a fair translation (or upload to Chinesetrans.com and place a quick order to get the professional translation), you can read the translated information again and make sure you get the points.
  • Hire a China virtual assistant to do the research and translation and seek for his/her advice. This is a very cost-effective way.

If you want to go further, here is an advanced solution

After the research and analysis, If you are still comfortable with this niche market.

You can go to the next step.

Step 5. Strength: Are you confident to be the no. 1 in this niche market? How?

Let’s talk about confidence and your capability.

Unique Selling Points

Do you have unique selling points? If not, why?

You must develop your unique selling points and deliver something special to your target market.

  • Look on the products and service your competitors are selling. Do you have anything better than them or something useful for the target market but not available in the market?.
  • Are your competitors good marketers? Do they work well on eCommerce platforms? Do they play well on Chinese social media? Do they have hot WeChat marketing accounts? Do they have a strong sales and business team? Do they good at writing Chinese PR articles?  Do they hold offline events often? You can beat them if you are strong in marketing.
  • Do your competitors make stupid mistakes? Wrong positioning, wrong pricing, wrong products, or wrong places to sell? Poor government relationship or Wrong choice of local partners?

Is your niche too broad?

You need to avoid the fierce competition in a seemingly profitable business.

If you are offering the same products/services (actually it is only your dream in most cases, your competitors are way much better than you.)

  • A crappy online English training website won’t bring any client for you. English training is a very profitable business in China. Online English training is a big niche market and it is booming in China. If you are small, be smart to choose a much smaller segment, you need to choose your own niche market and have a right strategy.

You can never compete with tycoons who are investing thousands of millions in marketing when you are small.

Big online English training schools are investing heavily in their China Marketing (image: A Metro Ads for an Online English Training School in East Nanjing Road, Feb. 2017, by Chao)

Big online English training schools are investing heavily in their China Marketing (image: A Metro Ads for an Online English Training School in East Nanjing Road, Feb. 2017, by Chao)

Review your choice of the niche again and describe it again, as specific as possible.

You will have a good business if you can be the no. 1 of a niche with sufficient Chinese customers.

Step 6. Client: Find your first client

Now it seems that you have everything.

Let’s turn your opportunity into a real business, a profitable business.

Start finding your first client, or getting some leads. You need to verify your market before your heavy investment.

See whether you can get some leads and how it goes, what people say, and what you see, hear and read will definitely help you plan for the next step.

This takes some time, depending on how well you prepared and what exact niche you have chosen.

When you can sell the first business to your first client, you can conclude whether it could be your business worth your fight in the coming years.

Step 7. Optimization: Confirm your market and adjust.

Finally, we can say you found your perfect niche in China if you do not regret in Step 6 struggling for your initial leads.

You still need to do a lot of things to set up your business.

  • Have you created a comprehensive China market entry strategy?
  • Implement your strategy and follow your action plans.
  • Optimize your products/ services and localize them for the Chinese market.
  • Go through all necessary procedures and get all the approvals and certifications as required by the China government.
  • Set up your China local team.
  • Find local partners.
  • Happy Selling!

Regulation and Joint Ventures

For some market segments, you need necessary approvals and certifications, and you might find a local partner to set up a joint venture. You need to be fully prepared for this and it takes the time to trust a local partner and go through all the procedures.

A Big Challenge: Localization and Implementation.

  • Do not apply your western model completely in China.
  • “This is how we do it in US/France” normally won’t work in China.
  • Localize your operations and adapt it to the China market.
  • Be sure to localize your business and make your offerings attractive to Chinese customers.

Cost Effective Solution for Your China Local Team on Early Stage

Your local team needs to be well trained and proper coaching before they can fight for you.

You can outsource some jobs to external resources to form a remote team to save your time and cost on early stage.

How to Start Your Business in China

Optimize and Establish Your Own Stable Team

  • Optimize your business and make it fully localized.
  • Be present in the important meetings.
  • Be good at marketing: Make full use of your skills in consumer insights, branding, and pricing to differentiate from your competitors.
  • Protect your intellectual property (IP) and find a strategy for the China market since it is a challenging work.
  • When the business grows bigger, put a 100% trusted senior partner in China responsible for daily operations and smooth communication, you need the real market feedback in the first time.
  • Long-term commitment in China will help you win friends: Too many short-term speculators wanted to make a overnight fortune in China failed and earned a bad reputation.
  • Don’t do anything to compromise your reputation.
  • Make you bring real value to your target Chinese customers.

Wish you a good luck and make a fortune in China!

Thanks, please let me know if you have any questions.

Chao Cheng

China Market Expert Expert, Senior Partner at SinoStep
Author of Sell Online To China (Your Opportunity in China’s Booming Cross-border eCommerce Market) andHow to Build A Right Chinese Website That Works In China.

Cheng Chao has extensive expertise in China market entry, global translation & localization, cross-border business development, and global digital marketing.

Chao founded ChineseTrans, where he led a team of senior linguists to establish ChineseTrans as the market leader in professional Chinese translation services.

Since 2011, Chao has served as the managing director of SinoStep, a consulting agency helping foreign investment enter into the China market. Backed up with a strong team of China business consultants experienced in different sectors, Chao has successfully introduced dozens of overseas brands into the China market, established their operations in China on early stage and adapted their businesses to the China market.

see Chao's Bio

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About Chao Cheng

Author of Sell Online To China (Your Opportunity in China’s Booming Cross-border eCommerce Market) and How to Build A Right Chinese Website That Works In China. Cheng Chao has extensive expertise in China market entry, global translation & localization, cross-border business development, and global digital marketing. Chao founded ChineseTrans, where he led a team of senior linguists to establish ChineseTrans as the market leader in professional Chinese translation services. Since 2011, Chao has served as the managing director of SinoStep, a consulting agency helping foreign investment enter into the China market. Backed up with a strong team of China business consultants experienced in different sectors, Chao has successfully introduced dozens of overseas brands into the China market, established their operations in China on early stage and adapted their businesses to the China market. see Chao's Bio

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