China will be the largest economy in the world in the 21st century, surpassing the United States. At this point, you may have to deal with complications to integrate its market. Indeed, foreign companies wishing to settle in this country face a dilemma because, to settle in, they need a network and more precisely a distributor or an agent. Indeed, foreign companies entering China must be able to find the right selling channels through distributers or agents.
What is an agent in China?
An agent is independent person or firm who negotiates cases and sometimes concludes them on behalf of a manufacturer or supplier. The use of an independent sales representative may prove to be not only useful but indispensable for exports to China. Your representative in China must be well established in your industry, be well experienced, and mostly have a useful address book. Generally, the agents operate their networks and sell for relationship. It is extremely difficult to find a trusted partner, which can really multiply your chances of success in China.
Why should you use an agent or distributer?
The use of a commercial agent is necessary when making business in China. In case you do not know how to distribute your product, having an agent or distributor is a good way to find selling channels. It allows the local experts develop your business network in China for you. Above all, agents and distributors have experience in the sector. This remains a good way to distribute its products, limiting the risks and the financial and commercial implications. China has many local sales agents who manage distribution and internal marketing. Localized agents have the knowledge and contacts to better promote products and to break down institutional, language and cultural barriers and can help to track policy and regulatory changes, collect market data and respond to changes quickly.
The concept of “guanxi”.
Chinese have an old adage: “One more friend opens one more route for you”. The trade in China is made first of all through network. The term “guan” means portal or and the term “xi” translates to network or link. For this reason, “guanxi” can be defined as a network that allows a person to open his or her system trough links to another person or firm. Hence, it is an advantage to be introduced by an intermediary who personally knows the entrepreneurs you want to meet.
How to find a commercial solution and what to look for?
No doubt, there are advantages and disadvantages using a distributer or an agent to contract out the sales process when selling in China. Distributers and agents have their own network and they can sell b2b or b2c in the local market. However, foreign company has lower control and visibility on sales and marketing and attention on distributers actions whereas with an agent that situation doesn’t occur, as company does direct sales and pays service fee and/or commission to the agent.
Communicating and building a relationship
• Competitive advantages of your product
• Can you provide support to the distributer/agent?
• Brand awareness in your country
• Where do you export?
• Have you exported/are exporting to Chinese companies (exclusive rights)?
• Long-term vision
• How to ensure win-win beyond goodwill?
Foremost, your distributors will only work with you if your products succeed and sell in the market. Get in contact with us and learn how we can help you.