Raonic, from Thornhill, Ont., never faced a break point but could not do better than eight aces against the court-smart Nieminen, who was a finalist here in 2010. He was unable to turn the tables on the 31-year-old Nieminen after dropping the opening set in 36 minutes.
Raonic lost serve only once in the defeat, which took just over 90 minutes.
"He played pretty much better than I did," Raonic said. "I was not doing things right and he was executing his game plan.
"He made me hesitate a lot and managed a lot of good shots."
It was the first ever meeting between the players.
Raonic, ranked a career-high 15th in the ATP Tour, is competing in Asia after reaching the first two Masters 1000 quarter-finals of his career in August at home in Toronto and at Cincinnati.
He got as far as the fourth round of the US Open, levelling the best Grand Slam showing of his career but lost to eventual champion Andy Murray.
Coming into the Nieminen match, Raonic had won 10 of his last 13 contests. He is now one victory short of his 40th match win of the season, standing 39-16 overall and 4-4 in quarter-finals.
Raonic will now move on to Tokyo for next week's Rauketen Open, where he made his breakthrough as on the ATP stage as a teenager in 2010 by facing Spanish star Rafael Nadal.
"Hopefully next week in Tokyo and can make some progress and play better and better each day," he said.