General perception of the China market is that the market is so big that if just 1% of the people in China purchased a company’s product or service, the company will make a lot of money. With a population of over one billion, China has a strong purchasing power, and it is getting stronger as the economy grows.
This purchasing power is attractive to medical device startups often seeing it as get rich quick opportunity. In fact, many medical device startups visit China without the proper preparation. Marketing 101 tells us we need to focus on the targeted market – if everyone is your client or customer, then you have no market. This is also true for the Chinese market: you must be specific: by industry, location, ticket size or unit price, etc. Develop an ideal client profile or avatar and deliver the product and service specifically to them. For example, the investor slides for a cardio device company shows the addressable market to be 2% of the people above age 60 with a high probability of having heart attack requiring constant monitoring. In reality, the addressable market might be the first-time heart attack patients during the first few weeks after the attack occurs.
Do not skip the market studies and fall victim to the “BIG market” illusion. It is not unusual to see the addressable market shrink to only 10% of the original numbers on the slides, resulting in a valuation of only 10% of what the company claims. It is imperative to do the homework no matter the market – China or any other market – and even more so if the core team does not have strong clinical, marketing and sales experience.
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