A new IBM study says:

IBM (NYSE: IBM) announced today the findings of a new study which concludes that in order for multinational companies to succeed in China they will need to develop strategies that focus more on China's mass markets, and increasingly less on top-tier cities where the competition is fierce and the market potential is maturing. The study defines "mass markets" as a combination of smaller, emerging cities with fast growth, such as Fuzhou and Hefei, that represent nearly 40 percent of China's urban population (234 million), and the rapidly growing consumer segment with household incomes between U.S. $3,000-$6,000 annually.

To read more on this issue:

http://www-03.ibm.com/press/us/en/pressrelease/21231.wss

And this McKinsey report:

http://www.mckinseyquarterly.com/article_abstract.aspx?ar=1796&l2=16&l3=17&srid=297&gp=1