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> Many has business lines like, "The total market for car loans / social media advertisement / game currency is N trillion... I've heard this called "Chinese m
by bonesss 9y ago
> Many has business lines like, "The total market for car loans / social media advertisement / game currency is N trillion...
I've heard this called "Chinese math", a near-fatal flaw in business plans, because of the follow up to that framing: "... if we only manage to capture 10% of the Chinese soda market, we'll be forever rich!"
Turns out capturing 10% of Chinas soda market is hard.
Also you can only really set value on the things you can/will capture, not what you wish you could...
- sireat 9y agoThe fallacy is not that capturing 10% of China's soda market is hard, but that even capturing 0.01% of China's soda market is extremely hard.
- bonesss 9y ago0.01% of the Chinese soda market is hard to capture, for you or I, but doesn't provide the necessary market cap to engage in the fallacious thinking and investment at the scale that people who talk about "Chinese math" care about... And from that VC perspective: 0.01% of the Chinese soda market is not particularly hard to capture.. > Chinese soft drinks consumers prefer to purchase non-alcoholic beverages by brands of foreign origin... in 2013, only 20 percent of the purchase came from local brands. Coca-Cola, remains the dominate brand in China’s soft drinks market. So, Pepsi Cola invested and got a Chinese partner with a market disadvantage, from 2007 to 2012, to grow their market share from 8.8 to 12%... That's __320__ captures of 0.01% of the market in just 5 years from a single player. ... 0.01% of the $69 Billion Chinese soda market is just about $7 million in sales revenue... That doesn't leave a lot of margin to fallaciously justify a business plan with. $7 million in revenue is harder than playing XBox, sure, but not exactly a moon landing either.