FIG News Blog

The Chinese Bicycle Problem

Posted by James King at 1:00 17/09/09

Recently a FIGurehead was chatting to me and he said he was excited to become a FIGurehead as he sees FIG helping him avoid listening to pitches that suffer from what he called “The Chinese Bicycle Problem”. The problem can be illustrated in the following mock pitch…

There are more than 450,000,000 bicycles in China. I’m going to make bike socks and sell them in China. They will cost 50p to make. I will sell them for £1. Even if I only sell to 10% of the market I can make £22,500,000.

Sorted.

I’ll be on my yacht next year!

Yeah? Good luck with that.

Let’s pick up on a few points…

First and foremost, the market; there are approximately half a billion bikes in China (citation), but does every single bike rider wear socks? Probably not.

You may argue that people share bikes and that it will balance out… I’d say, prove it. Prove to me that all those bikes are in use and being ridden by people wearing socks.

There probably is still a massive market, probably millions of people who wear socks and ride bikes.

So let’s think about the industry. You would have to enter the clothing industry. Stock will need to be created and distributed. There are lots of companies that already make clothing and can compete with little to no effort.

Aside from the logistical nightmare of shipping about millions and millions of socks, how are you going to reach your customers and distributors?
Why would they buy your bike socks instead of normal socks/ other companies’ bike socks? Is the price competitive on a local scale? Can you make a profit if you compete?

10% is a HUGE chunk of any market. To sell millions requires a lot of stock and poses a massive capital risk.………………


The point being illustrated here is stats are all very well and good, but they can be meaningless, even deceptive if used out of context.

Think your idea through carefully, then research the market AND industry, thoroughly before ploughing ahead.

If you have an idea and you want to do just that, you can use our online viability test to help you.

 

Oh, and don't forget, 68% of statistics are made up on the spot in order to illustrate a point.

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