{"id":10727,"date":"2024-07-11T06:30:03","date_gmt":"2024-07-11T06:30:03","guid":{"rendered":"https:\/\/focus.cbbc.org\/?p=10727"},"modified":"2025-04-23T08:58:44","modified_gmt":"2025-04-23T08:58:44","slug":"exporting-to-china-how-to-find-a-chinese-distributor","status":"publish","type":"post","link":"https:\/\/focus.cbbc.org\/exporting-to-china-how-to-find-a-chinese-distributor\/","title":{"rendered":"Exporting to China: The Dos and Don’ts of Choosing a Distributor"},"content":{"rendered":"

CW CPA<\/strong> offers a comprehensive ‘how to’ guide for finding a Chinese distributor and the key things you should consider when choosing one, from contracts to IP protection<\/span><\/h2>\n

So you\u2019ve decided it\u2019s time your company expanded into China. Inexperienced, unfamiliar with the market and concerned about high upfront costs, you are, however, not ready to take the plunge fully into uncharted waters. Working with a local distributor is often touted as an ideal first step, one that promises a soft landing. But is it? The apparent ease and efficiency of partnering with a distributor to kick-start your expansion in China may belie perils and pitfalls \u2013 if you are not careful.<\/p>\n

In a nutshell, a distributor is a middleman between a producer and another entity in the supply chain, be it a wholesaler, retailer or the end consumer. As a reseller of products, a distributor buys directly from the producer and sells the products to those further down the chain. The main advantage of this entry model is that you can ride on the coattails of a distributor\u2019s already established network of sales channels without a substantial initial outlay on infrastructure and logistics. Furthermore, since a distributor\u2019s scope of operation can be very wide \u2013 encompassing customs clearance, storage, shipping, sales and marketing \u2013 those opting for a more comprehensive service may be inclined towards this method.<\/p>\n

Distributors can be found, for example, at trade shows and exhibitions, through referrals or third-party specialist agencies, via introductions by chambers of commerce and on e-commerce platforms. While it may be tempting to choose the first prospective distributor that comes along, rogue distributors have the potential to break your business in China, so proceed with caution and circumspection.<\/p>\n

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Do conduct sound due diligence<\/strong><\/h4>\n

Before engaging in any kind of business with a distributor, you should vet them thoroughly via a meticulous due diligence process. In order to ensure that they are legitimate, you should check that they have been properly registered with the Administration for Industry and Commerce. Central to this verification are the registered name of the company, its unique identification number and the name of the legal representative. A credit check should be performed by examining, for example, debt records, bank statements, bank loans and mortgage records. In addition, a hallmark of reliability and credibility is the quantity of positive references from customers and suppliers that can be produced.<\/p>\n

Do have contracts in place<\/strong><\/h4>\n

It is essential that proper legal safeguards are in place to protect your company\u2019s interests from the very outset. Contract provisions should delineate the distributor\u2019s scope of operation and actions to be taken in the event of non-compliance or breach. The role of the distributor should be clearly defined: are they to act as an agent, whereby the contract of sale is concluded between you and the end customer with them pocketing commission; or as a mere reseller, purchasing from you directly and selling the products on?<\/p>\n

A partnership that involves the distributor adhering closely to your guidance, a transfer of proprietary knowledge and pronounced use of your trademarks and brands may \u2013 against your intention \u2013 slip into a franchiser-franchisee relationship. This can spell trouble if relative simplicity is your top-of-mind priority, as you may find yourself confronted with a slew of regulations governing franchise arrangements.<\/p>\n

It should also be noted that China\u2019s Anti-Monopoly Law forbids price control, which means you cannot stipulate that your products be sold at a specific resale price by the distributor to retailers.<\/p>\n