China Superpower 3: The importance of putting pen to paper and writing your China strategy

Education and research will give you a solid base of knowledge to identify the market opportunities in China that will benefit your business. Once you are equipped with the correct information and tools, your next step will be superpower 3: designing your strategy.

You may have dozens of good ideas, but they won’t become a reality until you put them down on paper. Now that you have the knowledge and data necessary to move forward, it is time to put your vision in writing.

This means creating a sales strategy, a business plan and a budget. This is a key point in the process, where many business people get stuck. They feel confident about the idea but lack the ability to translate it into a tangible plan.

This is particularly important if you are looking to attract potential investors. Creating a phased business plan within 5 to 10 years, will give you a better idea of how much money you will need to run your operation.

Knowing how much money you will need in order to run and operate your business successfully is one of the fundamental elements that will ensure your survival in the highly competitive Chinese markets. It is essential to understand where your money is going and how to maximize your resources.


Budgeting in China is specific to each industry and sector, but there are a few general points applicable to most companies. Once you start operating in China, it is important to look at your actual financial figures and match them with your budget.


Many business owners or sales managers without a financial background feel overwhelmed by the idea of creating a budget or may feel that it represents a constraint that doesn’t give them any flexibility. Similarly, they may feel that a budget “depresses” them because it shows that they are not reaching their goals.


A budget is supposed to act as a guide, and all emotions should be left aside. It is an important tool to keep you and your operations in China under control. As the old saying goes: if you can’t measure it, you can’t manage it.


Understanding where the real successes and failures are will allow you to properly manage your business and develop an appropriate strategy to improve things when needed.  Having a budget on paper will permit you to see more clearly what you have done right and what went wrong.


The creation of your budget should always be coordinated with the finances of your company and correlated to your business activities. The person responsible for the finances should coordinate all the various steps that are involved in every transaction that the company is doing. A budget will give you the ability to plan ahead.


Having a budget is particularly important during the first year of operations in China. The budget will help you identify your registered capital in China. When you incorporate a limited liability company you are required to define a Registered Capital amount, which is your working capital. These are the funds that you will be transferring over to basically build up your business and pay for all your initial expenses, such as rent, salaries, products, and other things.


Opportunities in China can be fantastic. However, they can also lead to tremendous disappointment. When you are creating your business plan and your budget, even if your data points seem overwhelmingly fantastic, be conservative.

Obstacles may present themselves in the least expected moment. Being conservative and leaving some wiggle room may be helpful if you find yourself in a difficult situation.


But a budget cannot go anywhere without a business plan; they go hand-in-hand. Obviously, this is even more daunting for a lot of start-ups in China. A business plan will guide your operations and support your general marketing strategy in a highly competitive market; it will as well determine your overall objectives and goals without looking at the numbers.


There are a lot of different economic circumstances that might cause your business to have issues along the way. That is why your company should update the business plan together with the budget on a regular basis. A quarterly review is recommended in order to keep you on track and help you report to investors and back to headquarters on what is actually occurring in the market.


Some enterprises design sophisticated business plans and budgets, but soon forget them in a drawer until the following year. What’s the point of having done this in the first place if you are not going to look at them on a regular basis? Budgeting and business planning can only be effective if it is an ongoing process.


If you want to achieve your goals in China, it is fundamental to pay attention to your guidebook. Your budget looks at the numbers and tells you how much money you will need to achieve those goals.


In the fast-moving Chinese markets, things tend to change quickly. By making your budget an ongoing process, you will be able to maintain a certain flexibility that will allow you to act swiftly when necessary and adapt to unexpected circumstances.


However, don’t rush. You cannot throw numbers together in a couple of hours. Take your time and seek the help of those who can offer guidance. Don’t pretend to know everything and look for professionals inside or outside the organization with enough experience to create a budget.


The fiscal year in China is the calendar year, from January to December. At a minimum, you should start to budget for your business in October, that way you will have three months to work on it and be able to use the financial information from the three previous quarters.


A budget is a flexible document that is supposed to guide you. If you have it finalized by January 1, you will be able to start the year with a clear view of the months ahead.


Once you have a budget and a business plan, you must keep it current. Have a team of people to help you analyze and update your strategies. They can help you monitor and evaluate the health of your business.


If you are having difficulties putting pen to paper, try to start with what you already know, for example what budget line items are done and where do you need assistance. There are a variety of people you can talk to regarding putting pen to paper and analyzing your business strategy.


It is possible to design a budget and business plan that give you enough freedom and flexibility to embrace the opportunities that come along. In China, your company may come across numerous interesting prospects, but not all of them will be correct for your business. You should always calculate the return on investment before jumping into a new venture.


Knowledge is power. Once you master Superpower 3, and have a solid sales, budget and business plan you will be prepared to make important decisions. Reviewing your strategy month-to-month, or quarterly, will give you the ability to guide and watch your investment.


It may take some practice and patience, but at the end of the day it will make you a better business professional.

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DISCLAIMER: All information in this article is verified to the best of our ability and is assumed to be correct at time of release; however, Woodburn Accountants & Advisors does not accept responsibility for any losses arising from reliance on the information provided within. The information provided is for general guidance and does not replace specialized advice.


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