How to manage a Chinese distributor? — Update 2020

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The emerging countries such as China are eldorado to foreign companies for its sky-rocking economic growth. International and multinational companies want to get more profits by establishing a presence in China. However, the road is long and full of obstacles. Indeed, settling on the Chinese market is difficult so that companies have recourses to China’s local distribution channels.

It is necessary to point out distributors are merchants, of which the only goal is to make money. They don’t care about how to boost your brand awareness, your reputation or anything else. Thus, they only choose those brands who have already brand awareness so that they can sell products easily.

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The brand is in charge of the product, it must take care of marketing strategies successfully in China in order to have more leverage in negotiation with local distributors.

how can you manage your Chinese distributor?

Choose a reliable Chinese distributor

Finding a good partner to work with to distribute your products is not an easy thing, and it is particularly true in China. It is always the same case in this distributor-cooperation: increasing sales in the beginning, but after a while, stagnation sets in and sales plateau. Even worse situation can happen: poor sales, loss of operating license, breach of contract, counterfeits…

It is thus very important to choose a correct distributor and maintain a good partnership with your distributor to create an efficient distribution channel.

Our agency can provide you with a list of reliable distributors and give your suggestions on how to manage your distributors efficiently.

Frequent problems you’ll encounter with Chinese distributors

Local distributors are necessary in your market entry

Foreign firms partner with local distributors to master local business practices, meet regulatory requirements,  or gain introductions to potential customers.

For those companies who want to enter the Chinese market and at the same time want to minimize risk. Very often, they do this by hiring Chinese distributors and investing very little in the undertaking. Thus, the companies cede control of strategic marketing decisions to the Chinese partners, much more control than they would cede in home markets.

Beware of beyond-control cooperations

As a result, the local distributors have too much power over the brand’s strategy in the market, and they don’t care about the  image and the reputation or any other factors which are important for the brand to stand well in the market, because they only care  about their profits. When they lost interest in a brand or there are another products more profitable, they abandon the former one.

For many foreign companies, it’s a foregone conclusion that local distributors have merely been intermediaries for entering the market, temporary partners incapable of sustaining growth in the long term.

Since problems exists, the management and control of this partnership should be allocated enough attention in order to ensure everything goes well.

Boost your brand awareness before distribution. 

Tmall global—China’s largest cross-border platform

If you have made up your mind to work with Chinese distributors, you’d better take control of your marketing strategy and before looking for a cooperation with local distributors, create your brand awareness and reputation, separate the distribution and the marketing, because it’s the key factor to get an efficient and reliable partnership.

The brand has to spread its image on Chinese e-commerce platforms and social networks to gain popularity among Chinese consumers and to provide the maximum of information on products. The brand has to work on its digital strategies and show Chinese distributors that the product attracts already customers in China.

Brand Awareness with Wechat H5 Brochure to attract Chinese Distributors

If the mark is not yet installed in China, it can play on this leverage by introducing its product through cross-border trade. Indeed, if the brand has not a distributor yet, it can already start by selling to Chinese consumers through the cross-border and when it will introduce its product to the distributor, he will know that the product is already popular among Chinese consumers.

Maintain control over your Chinese marketing strategy

The foreign company need to maintain control over marketing strategy in the beginning. The firm should lead the strategy about which products to sell, how to position them, and which budget to apply.  If brands provide solid leadership for marketing, they will be in a beneficial position to exploit the full potential of the Chinese market rather than be fooled by local distributors.

The cooperations can also have employees on-site by sending a few employees to work full-time or part-time in Chine with Chinese distributors to keep a close eye on both distributor performance and customer needs.

Set goals for your Chinese distributors

Top 10 e-distributors in China in 2019

Chinese distributor wants to sell products that will profit quickly. They will not sell a product if they know the Chinese consumer will not buy. Chinese distributor seeks a brand with a certain reputation in China. We must therefore propose an easy product to sell. Chinese distributor expects its suppliers to deliver a quality product with good packaging, precise positioning and a good reputation.

After choosing a Chinese distributor, the brand should lead the process. He must ensure that the Chinese distributor remains focused on product distribution. It will not involve in other actions, such as marketing strategies or invest in the product does not fit into his role.

The company should not conclude a contract with Chinese distributors and then sit by doing nothing. You need to engage in your distributor’s actions by setting goals and keeping in contact closely with your partners. Try to create an agreement with strong incentives for appropriate goals, such as customer acquisition or new product sales.

Adjust commitments accordingly

Once you have found your collaborate distributors and you have entered the market, you need to adjust your commitments accordingly. As your business grows in Chinese market, your brand position, reputation and the distribution scales may change, the distributor’s business may fit best at the beginning of market entry.

However, as time passes, the fit deteriorates. The distributor may be less able to follow companies activities or companies need to make some changes in the cooperation with local distributors.

Communication with your distributors in China is very important

On the one hand, the brand needs to communicate as much as possible with its distribution teams, help them to know as much as possible about the brand. Try to train its salespeople to present a very good image about your brand because they are people who are directly in contact with your targets. Make them engaged in your brand, and well-motivated so as to increase your sales. 

On the other hand, make sure your Chinese distributors provide you with detailed market and financial performance data. You should be all-around informed about your products situations in China. Through this two-way communication, can misunderstanding and ambiguity be averted.

To conclude on managing a distributor in China

In any way, the international distribution can never be easy, especially for a foreign company in Chinese market, due to the different mindsets and cultures. That’s why a smart strategy is a key point to your success.

An external assistance is very helpful in the beginning of market entry. If you want to know more about how Chinese distribution works and how to choose a good Chinese distributor, feel free to contact us, we have unique expertise and knowledge of the market thanks to our international marketing specialists.

SEO China Agency, is an expert in Chinese marketing, is always beside you, ready to help.

Further readings  on distribution in China:

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2 Comments

  1. We are searching distributors in China ?
    What are Good Agents and distributors in china

    how to find sales agents in china?

  2. Hello,
    I am a Chinese distributors, we are into healthcare products, and we are searching for good western brands to resell in China.
    contact me , give your wechat (We Chinese love to use wechat to chat)

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