A billion people in China are NOT in the middle class.

Typically we hear about the roughly 300 million people that make up China’s middle class. This figure makes marketers drool, and is the cause for much self-congratulation by the central government. Even the most cynical China watchers concede a hearty applause. Indeed, over the past generation, improvements to the lifestyles of this rising middle class are nothing short of amazing.

Of course, in China having 300 million people in the middle class means that approximately 1 billion people have yet to reach this socioeconomic level. This group includes marginalized rural populations, the urban poor, and nearly 300 million migrant workers.

While the business opportunities and economic success stories typically come from the middle class, my research suggests that the real space for innovations and market disruptions can be found among the 1 billion people forgotten or left behind by China’s breakneck development trajectory.

{To give credit where credit is due, I have adapted this perspective from CK Prahalad’s The Fortune at the Bottom of the Pyramid.}