A fair number of people dream of someday owning a small cafe or coffee shop. This dream is soon crushed and smashed by the reality of Cost and Competition in a typical North American market. How many of you have met someone who wants to ‘open a coffee shop’ only to have your reaction be…… “How original”.
Well, my friends and wanna be cafe proprietors, there is a path to your dreams. The path you should follow is to China. While most people, even “experts”, can only recite a few of the major Chinese Cities, there are in fact hundreds of smaller 2nd tier cities, ripe with opportunity. A second tier city is categorized by being
between 500,000 and 9,000,000, a considerable spread indeed. A good deal of these places, while not on the tongue of many westerners are fertile ground for almost anything North American. In fact, from personal experience, some of these “small” cities show no sign of Caucasians anywhere, yet are loaded with a young population infatuated with all things west. The presence of a westerner would cause great excitement and be the subject of much curiosity. Your very own, built in, marketing angle.
You see, they are not only interested in you, but what you may bring. In most cases, the Caucasian who pops his/her head into one of these places is there to teach English, rarely do you see a pale faced person opening a business. And there lies the opportunity.
NOTE: In fact your best way to investigate one of these unknown communities would be visit as a teacher, make some contacts, then get the lay of the land.
While living in a community of 500,000 only to discover the only western style hangout in site is a KFC, will tell you something about opportunity potential. Locals have attempted to create ‘western’ style hang outs, but the product is still Chinese. While hard working and entrepreneurial, they lack the refinement or knowledge to complete the look. Especially if that person has never been in a western style restaurant or cafe. And, by the way, the coffee is really really really really bad, even for Tim Horton’s standards.
There is also a local reason why you tend not to find ‘western’ names in small communities of 500,000. To the local businessman, the market is too small. Imagine for a moment a market of 500,000 being too small. But if you could head an hour over to Yantai ( pronounced “Yan-tie”), with with a population of almost two million or head 3 hours south to Qingdao (pronounced ” tea-ing dao”) with a population of 9 million, why bother with a petty 500k?
Something outsiders need to understand, on a cultural level, for at least two generations the Chinese have not known a time where leisure was abundant or even considered, a novelty reserved only for the wealthy. Times have changed, an adventurous boy or girl can place themselves at the opening of the flood gates, a time where a generation is going to benefit from the struggles past, to enjoy leisure and extracurricular activities. They have time to ‘hang’ in a coffee shop and chat with their friends or cruise ‘wexin’ (pronounced “wee sheen”, the Chinese version of Facebook). You can access the group where the previous generation will resent and use such phrases as ‘kids today’. In fact, those born after 1990 are already being painted in the brush of ‘misguided’, ‘spoiled, or ‘irresponsible’. Like our Baby Boomers, these will be China’s first real spenders.
Moving from manufacturing ‘stuff’ for the rest of the world, China is making the change to a service based economy. Once this difficult process is complete, the rest of the world will be knocking [beating] at the door for a chance to sell goods to their new Chinese customers, just as we do now with the US. A debt-loaded, exhausted American consumer will be replaced with a Chinese Customer who saves over 30% of their earnings and now is ready to reap the rewards of generations of saving.
Back in Canada, you would have to be extremely concerned with price, costs, and finding reliable Employees. In ‘small town’ China, costs are low and you would have control over Pricing, since you are now unique in a market and not the 1000th incarnation of the same thing. People here will expect to pay more for ‘western’ style. Think about that again, control over pricing. Need proof take a look at the menu at KFC, in China, and you will find one of the more expensive restaurants in town. Travel 1 hour north and Pizza Hut is playing Jazz music and is a far cry from the typical ‘hut” in your local town. These locations are reserved for the more well to do and for those who want to be seen as ‘hip’. Yes the word ‘hip’ was used.
Naturally, doing business here will not be lollipops and puppy dogs. If you plan to be the first in town or attempt to bring something new to a foreign land, there will be plenty of bumps and pain. Getting the materials or supplies you need may take “slightly” more effort. Ensuring your design or construction standards are met will be a constant challenge. And do not forget the language barrier…all challenges that are manageable.
a glass of scotch
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