Finding Distributors in China

Since 2009, China’s import and export figures have been growing rapidly, with an increase of 7.6% on 2013’s total value of imports and exports growing to USD$4.16trillion. Upon analysis of market research data, it can be predicted that China’s total value of imports will continue to rise to USD$3trillion by 2020, providing ample opportunities for businesses to take advantage of exporting to China. Recent figures show that most small foreign businesses in China use a Chinese distribution company in order to expand their offerings internationally to Chinese consumers. Finding distributors in China is usually not a hard task if you’re looking on websites and international trade lead boards. The hard task is differentiating between legitimate and not-so-legitimate distribution businesses, and then selecting an appropriate distributor for your business’ needs.

Select the right distributors in China

Entering any new market is a risky task if you don’t have a sound knowledge of the market. For this reason, many businesses seek out a distribution company that has already-established long-term relationships with retailers and large sales networks in order for their product/s to reach the market more efficiently. This will also allow your product to reach a wider market than if your company were to export directly.

Using a distributor does have some disadvantages, too. Firstly, since distributors receive some share of the profit margins, the price competitiveness of your products may be undercut. Additionally, distributors handle numerous companies’ products. This means that distributors are not able to give the same amount of attention to a product as the suppliers (you) can, and may even be handling your competitor’s products.

Do not let the disadvantages and risks of working with distributors in China turn you away from finding distributors in China – there are good and bad distributors in all countries. But how do you pick the good ones from the bad ones? Many western governments offer support and services in locating an appropriate distribution company in China for your business and these services are a good place to start. Before you use these services, get an idea of what you’re looking for in a distributor. 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 my product need to meet? You need to know the answers to these types of questions because different distribution companies in China have different distribution networks.

Finding distributors in China should guide you on the market

A good distributor in China may not only get end-users or retailers to sell your products, but may also help you with understanding the ins and outs of doing business in a particular foreign area, from dealing with customs to meet local safety, labelling and packaging standards.

It is important to note that China is still a developing country, and so does not have a distribution network as advanced as that of many western societies. For this reason, distributing dairy products, fruit and vegetables, and other perishables can sometimes be difficult due to the lack of refrigerated storage facilities and distribution vehicles in China. However, distribution and logistics in China is improving at a steady pace, and is keeping up with the rising demand for frozen foods in China.

Finding distributors in China: avoiding fraud

Another concern for foreign businesses seeking distribution companies in China is that of fraud. To avoid this problem, 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).

When finding a distributor in China, foreign companies should think of China in a regional framework, dividing cities and provinces into separate markets, as many Western governments promote investment into particular regions of China rather than all areas of China. For most western companies, coastal cities and provinces (such as the regions of Bohai Gulf, Yangtze River Delta, and Pearl River Delta. It is recommended that if you plan to export to different regions, that you have a different distributor in each region (as there is not an efficient nationwide distribution system in China), and even develop different market and pricing strategies.

How to contact distributors in China

There are numerous ways of contacting potential distributors in China. The most common (and most beneficial) include attending trade fairs and exhibitions in China, recommendations from other foreign companies, and interacting with consulting firms within China.

Having a sound market entry strategy, and a thorough knowledge of Chinese customs, regulations and controls in terms of imported goods are vital to acquire before exporting your product/s to China. Through research and interaction with other foreign companies and consultancies with a presence in China, you can find a well-suited distributor for your company and begin growing in this international market.

Daxue Consulting Expertise

Daxue Consulting can provide you support in entering the Chinese market. We conduct all the market research and consulting services you may need, such as potential analysis, cost analysis, implementation feasibility etc. To know more about finding a distributor in China, do not hesitate to contact our dedicated project managers by email at dx@daxueconsulting.com.