Everyone says you need a business plan for starting a business in China. Yes, we need a plan and goals to improve our results. I would add that you need to be ready to adapt and have money to aim for new targets when you start.
In June 2009, I started my business in China from scratch. I had led several businesses in China successfully and transformed a couple others. I had 30 plus abilities to help businesses as a consultant. A little research indicated I needed a little more than that list to get businesses to sign contracts with my company. See also 6 Ways of Doing Business in China
I use Market, Capital, People, Technology to think about floating any business including my own. Briefly this was my plan.
Market – Initial thought was Chinese market and doing consulting and facilitation. We now do not seek Chinese owned companies or market any facilitation.
Capital – We had 8 months cash flow in hand to start.
People – I had an excellent Chinese hire who epitomizes our Trustworthy Talent® motto.
Technology – I knew how to coach, lead, facilitate, and recruit.
I bought the license for 5 Dysfunctions of a Team facilitation as saw in that model a lot of transformational potential. I hired a Chinese Salesman I knew well, and we went to work. Along the way, people called and wanted recruiting as my ability to transform had been shown in my ability to place game changers. We signed contracts to recruit Trustworthy Talent for Western Companies. Within 6 months we could see that the Chinese companies were not open to our facilitation and precious few Western Companies were either.
Our whole business plan was in the trash, but our business could move forward. Only gradually did I see that my only solid tool to bring transformation in all my experience in China was to place Trustworthy Talent. So finally, we focused on that alone. That has led to a 5 year average of 29% growth annually as we gain greater expertise through absolute focus.
So, my takeaways on starting a business in China.
1. Cash – It will always cost more than you think. We fell a little short of break even in the first year and almost went broke in the first half of the second year, so 8 months cash in hand was just barely enough to float us without getting extra funding.
2. Market – Even when you have a clear product/service with no adjustments needed, China will almost certainly lead to some adjustments in how you present. It did for us even in our recruiting model.
3. People – This is my base ability in China, so it was no problem. If I did not have great Chinese hires when I started, I could never have survived and ultimately thrived. I was doing a service business that needed few people, but what I needed was critical. If you meet anyone on my team, you will know why we succeeded. They are teachable, transparent, and work as a team like you may not have seen in China.
4. Technology – This includes how you get along, buy raw material, market, sell and understand in China as well as how your product is made or fits here. It is all your special knowledge.
It takes a lot to do well in China even if you have a good business in the West. Think like a start up when you start here. Take a long look at the outline given in the picture above. Along that line, you can also get valuable thought here that will help you with starting a business anywhere and certainly applicable to China. An oft forgotten point is not thinking through your values and the values of your hires enough.