Here are some tips for choosing the right distribution channels and not fail your implantation in China by choosing the wrong partners.
Western products are famous in China for their quality and the quality of service that accompanies them. It is important to ensure that the product reaches the consumer’s hands with the wanted quality.
Many companies have found themselves in difficult situations because they do not control their product Supply Chain in the Chinese market. We have seen cases of wine companies who had to go buy their own bottles of wine in Chinese supermarkets because they were not good, but had been sold by unscrupulous or ignorant distributors.
This is of course not inevitable; there are many tricks to avoid it and to sell the products through distributors in the Chinese while keeping the same quality.
Supply Chain management
The Supply Chain management is crucial in China. Bad Supply Chain management leads to an increase in operating costs, usually because of poor planning, poor management of the physical flow (logistics) or wrong storage choices.
The distributors carry and distribute the products. In China, we must not underestimate the time that will be needed to go through customs. The distributors must have a good knowledge of the logistics management and on rules of import. When you create a partnership with a Chinese distributor, make sure that he has already imported similar products and that he has a good knowledge of customs rules and transportation channels.
It is important to assist your partners to maximize the benefits of the distribution system and not create misunderstandings or bottle necks in the supply chain, in particular for food or perishable goods.
The choice of distributors
Working with different distributors is a smarter option than working with a single distributor. Every distributor knows his market and the region in which he operates. If you work with a national distributor, keep in mind that it necessarily has sub-distributors; it will be more difficult to control your image and know the end consumers of your product. It is impossible for a distributor to be present throughout the Chinese market, as it is large and diverse. In addition, having a lot intermediate distributors generally degrades the flow organization and storage, which leads to cost increases.
So working with several distributors who have a good knowledge of their area is a good option. This will allow you to optimize the supply chain and reduce the number of intermediates in order to have control on your products and brand image.
Working hand in hand with your distributors
Being physically present in the Chinese market will bring many benefits. Indeed, you will work hand in hand with your distributors, physically meet them and also keep control of your product image. Not to be on the market and letting the distributor handle the entire market is like letting your distributor have the whole control on your brand image.
Also, if you are in the market, it will be easier to find distributors and develop a trusting relationship with them. The development of a real trust relationship is very important when doing business in China.
You can also train your distributors regarding your products, support and advise them. They will know your products well and will be able to showcase their sales to end consumers. In supporting your distributors, you will keep control over your brand image.
If you want to know how to be present in the Chinese market without creating a legal structure, you will be interested in PEO Services.