Market Share China

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Market Share China

How to estimate a market share in China?

The method of “referential”

It is rare today to gain a foothold in a market without facing competition. A first method consists in:

  • Read encrypted information over its competitors for companies, many assessments are available on the internet
  • Search sectoral statistics accounting for the desired activity (including the average turnover per person employed in the business)
  • Make an initial estimate of projected sales in bringing these elements:
      • The economic environment that will host the company
      • The range of products sold,
      • And the target clientele.

Example : Creating a shoe business

Take the example of creating a shoe business. The steps to determine market share in China are as follows:

  • List all the competitors and their zone of action with the help of the service “files” of the Chamber of Commerce and Industry.
  • Search for balances published by competitors (established companies) from the Registry of the Commercial Court.
  • Study the industry figures, published annually by the approved management centers, the National Federation of the shoe industry in France and the press: see document Find information
  • Highlight the average turnover per person (other records will also be used to study the establishment of forecasting and financial) and multiply it by the number of employee (s) involved in the project.
  • Determine, for the first twelve months, monthly sales taking into account seasonality (for this example: sales, the arrival of new collections, weather conditions, etc.).

Warning: the CA balance sheets and professional statistics do not include taxes (VAT).

In the case of a new activity, it is naturally difficult to find reference numbers. It is tempting to trace a similar experience in another area and hopefully the same results.
But beware, a successful experience in one area may prove not be as successful in another location. Therefore, it is compulsory to take into account all the specificities of each project.

The method of “buying intentions”

At the time of the questionnaire survey, the potential consumer is often questioned about his intentions or shopping habits: usually quantities purchased, purchase frequencies, psychological price, average basket, etc. It is possible to use these to calculate a response revenue potential.

Of course we should be careful when we analyze the answers. Sometimes, a respondent may not actually buy a certain quantity of product but intend to buy this quantity. Also, a respondent may underestimate, over-estimate or even deliberately lie on their consumption. Therefore, it is important to remain vigilant, to interpret and to relativize this information.

Unlike the previous method, the purchase intentions are expressed withtaxes (VAT), by potential customers and so is the revenue resulting from this calculation.

The method of “goals and market share”

This method requires to:

  • Define the specific geographic area where the potential customers are (catchment area) and quantify the market potential.
  • Identify clearly the competition.

The literature review carried out upstream of the field study provides many elements on this topic.


Many Chambers of Commerce and Industry (CCI) are available for local studies on trade flows closer to their research department and / or documentation.
Chambers of Trades and Crafts, have built a tool called Olia local presence (Tool for the location and installation of the craft).
INSEE has also developed a tool for the diagnosis of local presence available online: Odil. A downloadable guide describes the operation of this tool.
Once the market is assessed, the project manager must determine the market share that it can take its direct and indirect competitors, taking into account not only potential customers unconquered (“not consumer related”), but also the avoidance of consumers (customers purchasing on other places due to lack of choice or the unavailability of products / services on place of residence).

Example: the sale of sporting represents 2 million in the action area of the project leader. Different competitors take 80% of the market (20% of escape to other Trade Points).
The future business leader estimated to 5% in the first year of the contract is 100 000 euros with a sales area of 150 m².

The test method (method of operation)

To test the project before creating her business, it is possible to use:

  • Porting wage
  • The CAPE device, Contract Support business plan.

These two formulas can be self-employed or being legally carried by another structure which tests the market during this period.
Annual revenues can then be estimated on the basis of real information: purchase orders / contracts on the test period, customers periodicals, partnership projects and subcontracting.

Other indicators

The different methods presented above are intended to establish a provisional CA.
However, this estimate must be approved by the board of local professionals and / or business covered by the project: accountants, advisors support organizations to create business, professional, …
Their experience can weigh forecasts: an estimated turnover must be neither too pessimistic nor too optimistic, but simply realistic.

market share China

Sources: APCE

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