Foreign companies that want to export to China can work with local companies experienced in import and supply chain management in China using a common distributorship method. This is one of the safest and most effective methods of penetrating a foreign market. The trade continuity and the survival of your products in the market are much more robust with a local company that knows the Chinese market.
The use of distributors in exports to China is widespread and convenient. Considering the geographical size of China, working with different distributors in different regions is worth considering depending on product type. In this way, you also can divide risk, create a competitive environment with the sales quotas you will give your distributors, and compare their capacities. This of course assumes you have a product that distributors competitively want to distribute.
Services You Can Get From a Distributor in China
You may have different motivations for looking for a distributor in China. First of all, you should aim to enter the world's second largest market (after the US) with the right strategy. For a foreign company to enter the market by establishing a company in China is a really long, costly, and risky process. It is a more practical choice to initially set out with a partner who knows the Chinese market, has experience in distribution, and has a command of the product group and the sector.
· Being a registered importer
· Having storage facilities or local partners
· Inventory management experience
· Ability to distribute and deliver throughout China or in a specific region
· Secondary packaging, marketing, and advertising experience
Methods for Finding a Chinese Distributor
Finding a reliable and successful distributor in the Chinese market requires careful research and analysis. There are several ways brands should consider finding an agent or distributor. Companies may try different methods depending on their business capacity, the content of the service they are looking for, and their research budget.
You can follow a different roadmap to find a distributor in China. You can evaluate your options as follow.
1. Trade Shows, International Fairs
As travel is getting easier, trade fairs have traditionally offered fast and effective solutions to find trade partners in other countries. Fairs provide an opportunity to meet face-to-face with many companies in the same place to find a commercial partner.
Fairs such as Canton Fair and Yiwu Trade Fair are the largest such trade fairs in the world. By arranging a schedule for company visits right after the exhibition, you may be able to find a very suitable distributor in China within a few weeks.
2. Office of the Commercial Counsellor and Chambers of Commerce
Some chambers of commerce periodically publish research reports on export and foreign investment opportunities on a country basis. Check the current research reports on China of the chambers of commerce in your country. These reports may contain lists of companies in your industry that you can cooperate with and partner with on distribution. Chambers of Commerce also archive complaints and legal support requests regarding their members' overseas experiences. Sometimes you can identify companies that you should not work with and remove them from your list.
A frequently used method for companies that have just started exporting is requesting information from the Trade mission of your home country. You can ask for information support by mentioning your product groups and industry with a written request to your Office of the Commercial Counsel (or similar office) in China.
3. B2B Sites
Thousands of Chinese importers and wholesaler companies are registered on global websites such as Alibaba, DHgate, and Made-in-China. By examining these sites, you can do a preliminary study to identify suitable commercial partners for your product group. The records left on B2B sites consist of the company profile created by the importing companies.
Some B2B sites offer the "verified company" option, where the official authorities certify standard commercial data about the company. Focusing on companies with verified status and commercial records on the B2B site for many years reduces time loss and fraud cases.
After your first communication with the distributors, which you have identified through B2B sites, you can determine the right candidate by getting services from legal, information, and consulting firms on the company's physical presence, turnover, number of employees, and position in the Chinese market.
4. Consulting and Information Companies
Many organizations offer detailed information files prepared with up-to-date and official data to help you find the distributor you are looking for in China. These reports contain all kinds of information about the foreign companies that the companies are considering or are working with within their international commercial connections. The information in these reports provides a valuable resource for making the right choice.
International commercial information reports are the reports prepared with the latest information and data received by information companies from their contracted suppliers and advisors. Your information request may be related to several companies. Information organizations may also include a list of all distributors in China who are relevant to your industry.
5. Search Engines
It is possible to identify companies, suppliers, wholesalers, and distributors related to your industry in China through search engines. While some of this information may be inaccurate or misleading, you can often filter it through. You can send an e-mail to the companies you have identified, call them by phone, and make an analysis with first-hand information. The next step should be to research companies you see fit through a local advisor to help you vet through basic corporate due diligence.
Deal with Chinese Distributors
You have analyzed the options and decided to work with a distributor to enter the Chinese market. During the distributor search process, you evaluated all options, analyzed the most suitable candidates, and selected the most suitable company for you among them.
Before signing a contract with your new commercial partner in China, always get legal support. Evaluate all possibilities, such as your expectations from the distributor, your demands, the distributor's promises, disputes in customs, storage, distribution, and sales processes, collection of sales prices, profit sharing, and issues that may cause the breakdown of the agreement, after consulting with a law firm.
Another critical issue: you must secure your intellectual property rights with IP registration and include a clause in your contract stating that if the distributor violates these rights, the agreement will be terminated.
Expand into China without setting up a company, by employing or relocating key staff to take a first step in exploring the market. A professional employer organization (PEO) service can act as the official employer of record (EOR) for your staff in China while you expand your business. With the support of our trusted partner network, we can facilitate local hiring and employment without the time and cost of setting up a legal entity in country.
Contact us for more information at inquiries@ChinaLawSolutions.com