Before you start business in China, you should look for a reliable collaborative China distributor for your business. No matter how great your product is, you need to get it in front of Chinese consumers to make a profit. Find a China distributor for your business are a feasible and cost-effective method of getting your product to the widest possible customers. They will be responsible for conducting product sales and collecting report feedback from clients. Also, a China distributor is likely to get you excellent and valuable information about the Chinese market and about potential customers.
Yet it is not easy for foreign exporters to find proper China distributor. Given this, Jingle Office offers the below strategies you can use to help find a right China distributor for your product.
1. Search for Potential China Distributor
After you have decided to enter China market, you should have a sound knowledge of the market. It is recommended that if you plan to export to different regions in China, you’d better have a different China distributor in each region as there is not an efficient nationwide distribution system in China. Then where do you find?
The most common method is to issue a request through an organization, such as the bilateral chambers of commerce and regional associations, or via the export department of your government.
You can also get information by asking your friends or other exporters who have found their distributors in China. It can save yourself time and hassle as word-of-mouth referrals could be useful for finding a distributor.
A direct method is to visit China. To develop the necessary relationship with customers and distributors, it is important to visit China. It will help you get first-hand information. During your visiting, you can attend trade fairs in China, which is helpful to find potential distributors.
A less reliable methods is the internet. Screen the potential distributors you find through the internet.
When you are seeking distributors, you have to be patient, because it is a hard task to differentiate between legitimate and not-so legitimate distribution businesses, and at the same time to meet your business’ needs. Often, you can test out possible distributors in some way first, then develop a short-list and approach the short-listed companies.
2. Select Your China Distributor
First, you need to know the answers to the following questions because different distribution companies in China have different distribution networks:
Do you want them to market your product?
Which market segments do you want the product to reach?
What kind of retailers will want to sell your product?
What customs and local requirements will your product need to meet?
Then check the following information of your distributor: Sales and marketing capabilities, sales performance, knowledge of the local market, inventory handling capabilities, and management ability. And other qualifications include the company’s legal standing, the company’s current financial situation and information on the company’s suppliers, competitors and customers reviews.
Keep in mind that the quality of your distributor matters. You must want to be associated with the high quality partners. Ensure the partners you select have a strong local reputation in China.
3. Avoid Scams and Risks
Scams are not unique to China, but its distance from your home country, the impenetrable language and vastly different culture combine to make even the shrewdest businessperson liable to losing money through fraud. You can contact your nation’s embassy in a Chinese city for a list of reputable distributors according to their records, and look for particular attributes of the distribution company (such as good references, language capabilities, staff numbers, geographical coverage, sub-agent networks, knowledge of markets and market segments, familiarity with your product/s, financial stability, appropriate storage facilities).
In addition, have knowledge of local conditions and regulations in China. Some of the main risks are country, political and industry risk.
4. Reach an Agreement with Your China Distributor
Actually the negotiation process effectively starts when you make your initial contact with your potential distributor. You should be continually establishing your value throughout the process. Prepare a business terms document first which lays out the general business terms. The agreement must be to structure an alliance which will achieve both parties’ objectives. Don’t accept a deal which fails to achieve what your company needs. Ensure you fulfill all of your responsibilities under local law. Get legal advice so contracts with business partners are both valid and fair. Also, make sure all of your actions are legal in your country.
5. Manage the Relationship with Your China Distributor
Before you uncork the champagne bottle, realize that after the alliance agreement has been signed your work has just begun. You now need to work with your new partner to develop an alliance plan that outlines partnership goals/objectives, action plans, rules of engagement, and checkpoints, and you will need to assign an alliance manager to manage the relationship and execute on the plan. It is more difficult to manage a partnership than a single company. It is essential to establish excellent communication channels between the two firms. Have regular meetings. To overcome problems of distance, use technology as appropriate.
Related reading: The pros and cons of doing business in China