Web Developer Looking To Transition to Freelance - Advice?

Hello all,

I have recently been looking to take on some freelance work in addition to my regular 9-5 job as a web app/front end developer. It would also be pretty awesome to be able to transition to full time freelance in the future though I don't have a time limit/requirement for that at the moment.

From the experience side of things I think I'm pretty well set, with just over 5 years experience and a pretty strong knowledge of HTML(5), CSS(3) and Javascript (JQuery, knockout.js, ExtJs, angular and vanilla). I also have some decent server side experience in PHP, Coldfusion and Java.

To start with I have been frequenting some of the (many) freelance bidding sites (ODesk, Guru, blah blah) out there and have noticed that people with my skills (or at least claiming to have them) seem to be pretty numerous. A vast majority of them seem to be located in India or Asia and seem to be able to promise the earth for a bargain basement price and a lightning fast timescale. I am experienced enough that I can see that they are either taking massive shortcuts or outputting garbage, but seeing that isn't going to get me any contracts. How do I compete with these guys? Should I even try? Am I just looking in the wrong places? I am confident that my skills exceed 90% of these guys (from both personal experience and what others have told me from working with them), but that doesn't win me any jobs if I can't convince clients of the same.

Another shortcoming I have is on the design side - I have very little photoshop/design experience and nothing I can really demonstrate. I have done some online tutorials and played around but I think I'm a long way from being "good enough", and honestly it's not the kind of thing I excel at so I know it would be an uphill struggle to get to that level. One idea that occurred to me was to team up with someone who has these skills - I have read that designers often don't have great coding/developing skills. Two of us together could take things from start to finish to a high level of quality. Does this sound feasible or do you think it's better I just learn to do it myself? Where could I try looking for someone who fits the bill?

TLDR: I am looking to get some freelance work on the side. I have excellent coding/developments skills but weak design/photoshop skills. I also have troubles competing with the South Asian market who can offer a lot for very little money.

Thanks in advance for any advice.