+ For what it is worth, the just-one-percent-of-all-Chinese is historically a poor business strategy.

+ As you point out, targeting price sensitive customers puts you in competition with Walmart and Amazon. Not only that but you are competing for their worst customers.

you're not fighting every startup on the planet for the same handful of clients

Not having access to good clients/customers suggests the business idea might not be viable. Chasing money from people without the wherewithal or will to pay, does not make your business idea viable.

But again it is a rule of thumb.

A good customer makes it easier to stay in business.

For fixed price customers that means paying a premium over time and materials.

If a customer pays more under time and materials pricing, they were not a good customer because they were making it harder to stay in business.