1. FREDDIE LEE’S AMERICAN GOURMET
China Business
Development Plan
Department of Economic Development
Summer 2016

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Table of Contents
Confidentiality Agreement..................................................................................................................3
1.0 Executive Summary .................................................................................................................4
1.1 Project Focus ............................................................................................................................4
Mission:......................................................................................................................................4
Objectives:..................................................................................................................................4
1.2 Methods...................................................................................................................................5
1.3 Market Research.......................................................................................................................5
1.4 Trade Finance:..........................................................................................................................6
1.5 Survey ......................................................................................................................................6
2.0 Obstacles......................................................................................................................................7
2.1 Competition..............................................................................................................................7
Basis of Competition....................................................................................................................7
Internal competition....................................................................................................................7
External competition...................................................................................................................7
Barriers to Entry..........................................................................................................................7
2.2 Language and Culture................................................................................................................7
Language....................................................................................................................................7
Culture .......................................................................................................................................8
2.3 Government Regulations & Issues..............................................................................................8
2.4 Talent Acquisition Issues............................................................................................................8
2.5 Facility Issues............................................................................................................................9
3.0 Recommendation for Market Entry................................................................................................9
3.1 Trends..........................................................................................................................................9
3.2 Guidance......................................................................................................................................9
3.3 Barriers to Market Entry ............................................................................................................9
4.0 Strategies ...................................................................................................................................10
4.1 Strategies................................................................................................................................10
4.2 Joint Venture Partners.............................................................................................................10
5.0 Finances.....................................................................................................................................10
5.1- Channels................................................................................................................................10
5.2 Pricing....................................................................................................................................11

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5.3 Pricing (continued)..................................................................................................................11
5.4 Financials – Profit and Loss ......................................................................................................12
5.5 Balance Sheet.........................................................................................................................16

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Legal Page
Confidentiality Agreement
The undersignedreaderacknowledgesthatthe informationprovidedby_______________ inthis
businessplanisconfidential;therefore,readeragreesnottodisclose itwithoutthe expresswritten
permissionof _______________.
It isacknowledgedbyreaderthatinformationtobe furnishedinthisbusinessplanisinall respects
confidentialinnature,otherthaninformationwhichisinthe publicdomainthroughothermeansand
that any disclosure oruse of same byreader,may cause seriousharmor damage to _______________.
Upon request,thisdocumentistobe immediatelyreturnedto_______________.
___________________
Signature
___________________
Name (typedorprinted)
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Date
Thisis a businessplan.Itdoesnotimplyanoffering of securities.

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1.0 Executive Summary
Freddie Lee’sAmericanGourmetsauce isanall-purpose sauce thatintendstodesign,patent,and
marketsauce products relatedtothe niche AmericanfoodmarketsprevalentinChina. Twoproducts
have alreadybeencreatedandhave a presence withinthe Americanfoodmarket. Twopatentsare
initiallyincorporated,one foreachproduct. The companyprojects$125m USD thousandinsalesinyear
two. The companyexpectstohave reached$150 thousandinsalesinyearfour. Patentapplicationson
itsfirsttwo marketentrieshave alreadybeenaccomplishedusingatoppatentlaw firm.
• The objectivesof Freddie Lee’sare togenerate aprofit,grow at a challengingandmanageable
rate,and to be a businessbasedof good morals.
• The missionof Freddie Lee’sistoprovide andall-purpose sauce thatcanbe usedonvirtually
anythingandprovide true AmericanAuthenticity.
• The keysto successof Freddie Lee’sare marketingandnetworking,authenticityandquality,
alsoto generate sustainable customers.
• The primaryproduct isan AuthenticAmericansauce thatissupposedtobringoutthe
ambiance of the Americanculture.
• The marketin termsof Chinais brandnew and the board to possibilitiesiswide open.
In Conclusion,the plantobreakgroundwithinthe specializedChinese market,projectspositivegrowth
interms of companyrevenue. Followingthe acquisitionof aJointVenture (JV),distributionchain,and
properlegal documentationthe profitsare expectedtomultiply.
1.1 Project Focus
Mission:FreddieLee’sGourmetsaucesprovide highqualityall-purposesaucesfora wide range
of culinarypurposes. Freddie Lee’sisdedicatedtomanufacturingadeliciousmulti-purpose sauce thatis
not onlyunique butvegan-friendly,glutenfreeandcontainsnohighfructose cornsyrup.With an
emphasisincustomersatisfactionFreddie Lee’sGourmetSaucesaimstoexpandintothe International
market.
Objectives:The objectivesof thisbusinessplanare:
1. To provide awrittenguide forstartingandmanagingFreddie Lee’sGourmetSauces
internationally;astrategicframeworkfordevelopingacomprehensive tactical marketingplan.
2. The intendedaudience isthe ownerof thisbusinessonly;thisplanisnot intendedtoobtain
financingfromoutside sources.
3. The scope of this planisto provide detailedmonthlyprojectionsforthe currentplanyear*

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The objectivesofFreddie Lee’sare:
1. Profit - To generate sufficientprofittofinance future growthandtoprovide the
resourcesneededtoachievethe otherobjectivesof the companyanditsowner. (Netprofitof
at least45% of salesinfirstyear).
2. Growth - To growthe businessata rate that isboth challengingandmanageable,
leadingthe marketwithinnovationandadaptability. (We needtofigure outatwhat rate)
3. Citizenship–To promote andenhance the AmericanandMissouri Economythroughthe
expansionintoforeignmarkets.
1.2 Methods
MethodOverview
1. Improve ProductQualityandDevelopNew ProductstoGain RecognitionFromCustomers
2. Create a friendlybrandidentitythathelpsbuildanew formof interpersonal relationshipswith
customers
3. Enhance CustomerService tobroaden possible businessopportunities
4. Designa MarketingPlanto increase revenuefromcustomersandattract new customerswithinthe
existingtargetmarkets
1.3 Market Research
Market Sizing
Note:Statisticsare basedonthe followingMercosurCommon External Tariff (MCET) Codes:84.17.20;
8433.60; 8434.20; 8434.90; 8435; 8436.29.00.100; 8437; 8438; 8479.20.00
Total MarketSize = (Total Local Production+ Total Imports) – (Total Exports)

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2014 China’simportmarketshare:12.1 %
2015 China’simportmarketshare:11.4 %
1.4 Trade Finance:
Thisis where itdescribesthe country’sfinancial systemandhow U.S.firmstypicallygetpaid.InChina
there are many waysto finance imports.The mostcommonplace are lettersof creditanddocumentary
collections. Chinahasbeenamemberof the International Chamberof Commerce since 1995. Most
majorChinese bankscanissue lettersof credit.Documentarycollections,are similartolettersof credit
howeverlessformal andcanbe receivedbythe exportersorimportershome office,andpaymentis
made or receivedafterapprovedbyall parties.ProjectFinancingishow majorprojectsare financed.
Multilateral developmentbanksplayamajorrole inprojectfinancing.Certainaid-fundedprojectsand
procurementsare opentoU.S. bid.Sourcesof financial supportavailable toU.S.-basedexporters
include:
* ExportCredits
* U.S. Departmentof Agriculture
* U.S. Trade and DevelopmentAgency
* Multilateral Agencies
1.5 Survey
Our surveyconsistsof findingandworkingwith aspecificauthenticAmericanfoodniche markets.To
complete thistaskwe will putintime studyingthe local foodmarketsand eventhe biggerconsumer
storesknownona global scale suchas Walmartfor example due tothe vastamountof theminChinese
society.While doingthiswe will acquire a betterunderstandingforwhatison the shelve thatmeetsour
certainniche market, whatare productsthat are similar,andhow our productwill fitonthat shelve to
meetthe demandof the consumer.
Questions:
1 What typesof placesthe consumercouldfindourproduct?
2 What will ourproductbe categorizedunder?
3 Howbig of a marketisAuthenticAmericancuisine inChina?
4 Who will buythisproduct?

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2.0 Obstacles
2.1 Competition
Basis of Competition
Internal competition
- Operators are awarded contracts on competitive bid basis, usually for 3-to-5-year
periods; thus, they compete both on the basis of price, quality and range of goods
- Catering companies tend to invest in major stadium developments to ensure long-term
supply relationships
External competition
- Potential clients provide their own catering of goods
- Some catering can be undertaken by broader food service sector, including the Single
Location Full-Service Restaurants industry and the Caterers industry
Barriers to Entry
• The Food Service Contractors industry has moderate barriers to entry. New operators to
the industry are restricted by their ability to raise an appropriate amount of capital, the
market power of existing operators, especially the large global players that control over
a significant share of the industry's market share, as well as the ability to provide a
range of complimentary services other than foodservices.
• Economies of scale
- High level of competition, with the top four players estimated to account for
just over 75
• Capital intensity
- Low level of CI because companies only need to supply staff, food and
beverages to serve their clients
• Full-service tenders
- Food safety is a big issue in China.
- The cost of complying with these requirements further increases the barriers to
entry into this industry
2.2 Language and Culture
Language: The national and most commonly spoken native language in China is
Mandarin. There are seven main dialects. The national language is the dialect that is found in
the capital Beijing. Cantonese is the second most popular dialect, which mostly used in Hong
Kong and overseas Chinese communities. In order to do business we recommend hiring a
translator. We would also recommend printing labels in Mandarin and English for mainland
China. For entry into Hong Kong printing in English and in Cantonese would be necessary.

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Culture: The key to success in a foreign market regarding cultural differences is to
remain sensitive. A deep respect for the customer service and support functions is necessary.
The customer service department is responsible for misunderstandings, mistakes and
malfunctions. Chinese Business culture is conservative and direct. The Chinese put a significant
emphasis on the value of ‘saving face’ and public appearances. It is common within Chinese
business practices to develop strong relationships and goodwill that is known as Guanxi before
closing a deal. Typical business times are between 8:00am and 5:00pm local time. Giving gifts is
forbidden by the government but has become common place in business and is best done by a
local joint venture partner.
2.3 Government Regulations & Issues
This has to do with the political environment that takes place in the Chinese Business Sector, and
what measures need to be put in place to secure Chinese Business. In the Case of Freddie Lee’s
we will need to cover the span of issues associated with importing to China while exporting from
China. When shipping a product overseas as part of a commercial transaction, the exporter must
be aware of packing, labeling, documentation, and insurance requirements. Especially in terms of
traveling throughout
China one must consider heavily the subject of having a Visa. A valid U.S. passport and Chinese
visa are required to enter China. A visa must be obtained from Chinese Embassies or Consulates
before traveling to China.
* Import Regulations for Food Products in China:
Normally, the Chinese importer (agent, distributor, joint-venture partner, or FIE) will gather the
documents necessary for importing goods and provide them to Chinese Customs agents.
Necessary documents vary by product but may include standard documents such as a bill of
lading, invoice, shipping list, customs declaration, insurance policy, and sales contract as well as
more specialized documents such as an import quota certificate for general commodities (where
applicable), import license (where applicable), inspection certificate issued by the General
Administration of Quality Supervision, Inspection, and Quarantine (AQSIQ) or its local bureau
(where applicable), and other safety or quality licenses.
* Food items containing certain food colorings and additives deemed harmful to human health by
the National Health and Family Planning Commission (NHFPC) are also barred entry.
2.4 Talent Acquisition Issues
While researching issues regarding Talent Acquisition for Freddie Lee’s American Gourmet
sauce it has come to our attention that there are not any particular issues with this topic,
mostly because it will be made in America so the only thing that needs to be done upon arrival
in China is to be placed on the shelve at market.

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2.5 Facility Issues
There are currently no facility issues pertaining to business in China. All manufacturing facilities
will be based in Missouri and Illinois.
3.0 Recommendationfor Market Entry
3.1 Trends
The Ascendant pursuit of various flavors has boosted both volume and value sales of overall
sauces, dressings and condiments. In addition, despite widespread usage of monosodium
glutamate and soy sauces across the country, some Western-originated sauces, dressings and
condiments such as mayonnaise, salad dressings, ketchup and pasta sauces underpinned the
steady growth of the category, with increasing acceptance of Western cuisines, particularly
among young urban consumers
3.2 Guidance
- Select entry option:
Short / Long-term Goals, Takeover/Merger, Consolidated? Is a local partner needed? Joint ventur
e?
- Target a rapidly growing middle class with rising disposable incomes
- Understand and utilize regulations within food industry
3.3 Barriers to Market Entry
 New operators to the industry are restricted by their ability to raise an appropriate
amount of capital, the market power of existing operators, especially the large global
players that control over a significant share of the industry's market share, as well as the
ability to provide a range of complimentary services other than foodservices.

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 Capital intensity
o Low level of CI because companies only need to supply staff, food and
beverages to serve their clients
o Full-service tenders
o Food safety is a big issue in China.
o The cost of complying with these requirements further increases the barriers to
entry into this industry
4.0 Strategies
4.1 Strategies
The strategyrecommendedistoenterthe foreignmarketisthroughthe creationof a jointventure
partnershipwithalocal grocerystore that specializesinexpatriatecentralizedimports.Thismarket
wouldallowyoutodirectlypenetrate the marketinChinacentralizedaroundthe westerners.
4.2 Joint Venture Partners
Jointventure partnersare necessaryforforeigncompaniesenteringthe Chinese marketbecauseof
governmentregulations. Itisalsohighlyrecommendedbecause of the Chinese company’sabilityto
speakthe language,negotiatewiththe governmentandabilitytoreadthe domesticmarket.
Our recommendationforcreatingaJointVenture Partneristocreate a partnershipwithalocal grocery
store or distributor.The bestgrocerystorestocreate partnershipswithwouldbe those withinthe
expatriate communities.The partnerwouldtake care of anygovernmentregulationsorrestrictions.
5.0 Finances
5.1- Channels
When talking about Channels of distribution, this includes all aspects of how the product
is bought and sold or who handles the product before it reaches the consumer. This
includes wholesalers, jobbers, retailers, 3rd parties, joint venture partners, etc. In the
case of Freddie Lee’s American Gourmet sauce we look at it from a standpoint of being
manufactured domestically in the US then shipped to China. So in this case we only
require a distributor or wholesaler that we can ship straight to and they will purchase
the product and from there it will go to retail stores such as expatriate markets.
Distributors:
 Made for China
 Mitsui Foods
 Alibaba

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 Anchor Foods
5.2 Pricing
Pricing is the discussion of the pricing model chosen for the success of the enterprise,
this includes value based pricing, and cost plus pricing which are all variables to
consider. When partaking in going international one most take into consideration
including the cost of manufacturing raw materials and labor, VAT imposed, import tariffs
and shipping costs due to the fact that in the case of Freddie lee’s Gourmet Sauce, it will
be manufactured domestically in the USA then shipped to a distributor in China.
When considering Price-based Costing which is what people are willing to pay for the
product, keeping in mind that domestically one could compare to a competitor’s price
but in a foreign market that may not always be the case.
In most of the stores/ markets where similar sauces and potential competitor’s products
can be found. Their shelve price is approximately 31 Yuan equivalent to about five or six
USD. All things considered the variables that go into the following pricing model is as
follows:
Product Pricing:
 Base Price (US shelve price): 3.99 USD = 25 Yuan*
 VAT (17%) : 0.68 USD = 4.30 Yuan*
 Import Duty (15%): 0.60 USD = 3.78 Yuan*
 Shipping Fee: 3.00 USD*= 18.90 Yuan*
Totals: 8.27 USD = 52.10 Yuan*
5.3 Pricing (continued)
8.27 USD/ 52.10 Yuan is what the product would have to be sold for in order to keep the
same profit margins that the sauce is making on a domestic level. Now this is only what
the distributor would be buying it for. Then it goes to the retail stores where it will
eventually acquire its shelf price.
 Distributor Markup ( 20% ): 1.65 USD = 10.42 Yuan*
Cost-based Price: 8.27 USD = 52.10 Yuan*
 Distributor Price: 9.92 USD = 62.50 Yuan*

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Retail Markup (20%): 1.98 USD = 12.50 Yuan*
 Shelf Price: 11.90 USD = 74.97 Yuan*
This is the price that it would be priced at sitting on the shelf all variables considered
from the standpoint of manufacturing domestically however there may be cheaper
models to explore from a standpoint of manufacturing in China however at this time it
would be too expensive to manufacture domestically.
5.4 Financials – Profit and Loss
When developing a five year financial projection for Freddie Lee’s American Gourmet
sauce we take the profit and loss statement, balance sheet, cash flow statements and
owner’s equity into consideration.
Profit and Loss Statement:
 “Profits = ( Revenues – Costs)” or E(P = R – C)Mthe E representing the
economy and the M represents the market.
In the case of Freddie Lee’s Gourmet Sauce the equation would look like this keep in
mind this is only per unit and not bulk.
 $3.99 = ( $8.27 - $4.28 ) per unit*
Now projecting a five year plan one looks at the equation that includes the market and
economy factor. So in the case that Sales are up but Profits are down we look at several
factors including:
 Less Disposable income
 High Petro Costs
 Product Mix
 Industry Rev Trends
 Competitors
 Supply of Raw materials
When determining which of these is the case, one must start by spelling one’s take on
the current economy especially the parts that would affect the company or the industry
overall. Currently the economy in China is for the most part doing very well and is

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excelling socio-economical. The middle class is growing at an increasing rate which
means that there is and will be more disposable income in the economy in the years to
come.
However, more money to be spent on products such as Freddie Lee’s the more
incentives for potential competitors to enter the market. Upon research, we have
concluded that there are eight different expatriate grocery stores in Shanghai so for a
start. The approach would be to gain access to shelf space in all eight of those stores
selling approximately two cases of twelve jars per month. The numbers for the
projected year one are as follows:
Year One (Twelve Months):
 ($3.99 X 12 jars)2cases = $95.76 per store per month
 $95.76 X 8 stores = $ 766.08 per month
 $766.08 X 12 months = $ 9192.96 per year
Now moving onto year two the goal would be to expand to another large city such as
Beijing and have a presence on the shelves of expatriate stores in Beijing. Obtaining the
shelf space in another eight of Beijing’s major expatriate stores would double the
business during year two.
Year Two ( Twelve Months ):
 ($3.99 X 12 jars)2cases = $95.76 per store per month
 95.76 X 16 stores = $ 1532.16 per month
 $ 1532.16 X 12 months = $18385.92 per year
Year three we will have the same approach by moving to another city and gaining the
business of another eight stores, however the next target city will be Hong Kong which
was colonized by the British so there is more of a presence of foreign products. Just for
projection purposes we will shoot for selling one case per store.
Year Three ( Twelve Months )
 ( $3.99 X 12 ) = $47.88 per store per month
 ( $47.88 X 8 stores) = $383.04

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 $383.04 X 12 months = $4596.48 + $18385.92 = $ 22,982.40 per year
Year four presents us with another opportunity to expand to another city of possible
business, however all variables held constant we must first target the next market and
that would be to expand west to Chengdu in the Sichuan Province which is known for
being more eastern and not as open to foreign markets. However, they do exist but our
target goal should be in five store selling only one case per month and the numbers are
as follows:
Year Four ( Twelve Month )
 ( $3.99 X 12 ) = $47.88 per store per month
 $47.88 X 5 stores = $ 239.40
 $239.40 X 12 = $2872.8 + $4596.48 + $18385.92 = $25,855.20
Year five presents us with the opportunity to expand further into China but by now the
product will have copy cats that are selling for cheaper so the focus of our plan in year
five should be to maintain the business that we have in the stores that we have already
established business in:
Year Five ( Twelve Month )
 $2872.8 + $4596.48 + $18385.92 = $25,855.20
Freddie Lee’s American Gourmet Sauce
Profit and Loss Statement
For period Ended Dec. 31, 2021
Income $ $
Sales 211,894.62
Total income 211,894.62

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Expenses
Shipping $3 per unit ($3 X 25,632 Units) 76,896
VAT (17%) 17,386.19
Import Duty (15%) 15,340.75
Total Expenses 109,622.94
Profit/Loss 102,271.68
*Profit

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5.5 Balance Sheet
Assets Liabilities and Shareholder’s Equity
Current Assets: Current Liabilities:
Cash 211,894.62 Shipping: 76,896
VAT: 17,3896.19
Total Current Assets: 211,894.62 Import Duty: 15,340.75
Total Current Liabilities 109,622.94
Shareholders’ Equity
Retained Earnings 102,271.68
Total Shareholders’ Equity 102,271.68
Total Assets: 211,894.62 Total Liabilities and Shareholders’ Equity 211,894.62
Net Present Value (NPV)
The calculationof the NPV iswithan interestrate of one percentandthe initial
cost of goods soldduringthe firstyearthenitis followedbyusingthe projected
cash flowsof eachyear forfive years withanexpectedcashflow foreach
respectable year.
NPV: $ 170,304.76
Balance Sheet for Freddie Lee’s
As of Dec. 31, 2021

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PV of ExpectedCash Flows:$180,165.88
9861.12 9192.96
18385.92
22982.4
25855.2 25855.2
INITIAL COST YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
NPV