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How to Make Money in China

Marc Jarrett
With over 1.3 billion inhabitants, about one-fifth of the world's population, China is the world's most populous nation and is experiencing exponential growth in practically all areas – including Internet usage. Some 137m people, about 10 percent of the overall population, are already online, and this figure is expected to grow rapidly in the next few years – making it arguably the world's most attractive market in the long term.

The sheer size and potential afforded by this vast market are simply too big to ignore. One study recently concluded that China is already the world's largest consumer of (offline) porn.

When it comes to online, your entire business model will need to be adjusted to accommodate the unique characteristics of this market.

For starters, porn is technically illegal in China. The Chinese authorities do their best to censor the Internet, a task which can never be realized due to its organic growth. To check if you have been blocked, go to www.greatfirewallofchina.org – if so, Chinese surfers are taken to a decidedly un-sexy page of the "Ministry of Fisheries and Agriculture."

Despite a growing Internet-savvy middle class, online purchases in China have been slow to take off with traditional payment systems. Credit card-based payment systems that succeeded in North America and Europe have proven ineffective in China, where credit card usage remains low. Even more important than credit card penetration rates, is the issue of trust between buyers and sellers in a business environment where personal relationships and cash-based transactions have served as the traditional means of securing and settling a deal.

Furthermore, wages in China are low. A white collar Manager can expect to earn about $500 a month. Thus, selling a $29.90 monthly credit card subscription to him is futile on two counts: It is very unlikely he has one and even if he did, the subscription would represent an enormous proportion of his overall disposable income.

Clearly, cash is not suitable for web transactions. However, there is one payment device that practically all Chinese have access to – the phone. Indeed, cellphone penetration in China is beginning to rival those of more developed markets.

Since the payouts available via such billing are less, you simply give them less time. After all, a monthly subscription usually equates to about a cost of about a dollar a day. So give them (say) 24 hours access if they pay you this way.

Another important consideration is that of language. Only about a quarter of Chinese learn English at high school, so it is imperative that you communicate with your new prospective clients in a language they understand – theirs!

Your phone processor should be able to provide you with geo-IP tools that will enable you to easily accomplish this. If not, you should consider switching to one that does.

Then, and only then, can you start to make money "Made in China."