/Distribution system in China: How does it work?

Distribution system in China: How does it work?

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There are foreign distribution companies in China

Until 2004, foreign companies were not allowed to take over by themselves the distribution of their product on the Chinese market, in retail sale as well as in wholesale.  But in January 2005 with the accession of China to the WTO (World Trade Organization), it has now become possible.

Importers manage the business relationships with distributors

All foreign products present on the Chinese market (supermarkets, hotels, restaurants, shops, etc.) are sold through importers. These import companies may be Chinese or foreign. Their main activity is managing commercial relations with distributors and issues regarding the promotion of the products and its communication.

Different types of Importers

Among independent importers, there are those with Chinese funds; as Bestill, Chinaplus , Califirst ; those with funds from Hong Kong; as Jebsen , Force 8 cellars , and finally, those with foreign funds: ASC , Montrose, and Summergate in particular are the three most important foreign importers in China; they own the best and largest portfolios , and they perform the best marketing efforts.

Most of the largest private importers / distributors are located in Beijing and Shanghai. Being increasingly sought, they are now becoming much more demanding and selective in the choice of their customers.

product-distribution-marketing-policySeveral distributors to cover the whole country

No distributor is able to cover the whole of China. Therefore, to sell a product on the Chinese market, it is preferable to adopt a local approach as a first step. A national approach can only be considered after a series of agreements with various regional distributors.

The existence of a third illegal distribution network so-called “parallel”

In theory, there are only the independent and private types of distribution networks. In practice there is also a so-called “parallel spinneret” located in Hong Kong and Guangzhou, which allows importers to circumvent the high taxes imposed by the Chinese government.

However, since the government has decreased significantly the rates of customs duty, the volume of smuggled products now begins to drop. It should decrease even further in a near future, given the government’s intention to apply more rigorously customs regulations.

Sources:

-http :/ / www.marketing-chine.com/analyse-marketing/les-principaux-canaux-de-distribution-en-chine

-http :/ / www.suddefrance-developpement.com/fr/fiches-pays/chine/vin/circuits-de-distribution.html

– http :/ / www.cairn.info/resume.php?ID_ARTICLE=MAV_021_0172

 

For more information on doing business in China, read also our article on staff management

2017-01-18T09:47:19+00:00 April 25th, 2014|

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