How to Establish Your China Distribution Network Effectively

Selling to the rapidly expanding market in China is a great opportunity for most global businesses.

While many business owners may be very excited by the market potential in China, it’s very difficult for them to start with the strategy and establish distribution channels in the Chinese market.

Sinostep had helped a variety of international companies develop and manage their China distribution networks in China with China market entry and business development services. we have gained valuable experiences in the process for overseas business entering the Chinese market.

Products including but not limited to the following

• Imported Food: Chocolate, Ham, Pecans, Olive Oils, etc.
• Nuts: Pecans, Pistachios, Macadamias, Cashews, Walnuts, Pine nuts.
• Wine: Red wine, Liquor, Whiskey, Beer, etc.
• Frozen Products: Pork, Beef
• Fashion: Women Apparels, Bags, etc.
• Baby Products: Baby shoes, Infant formula milk powder, etc.
• Medical: Medical Equipments, etc.

Below we offer a guide on the steps needed to effectively develop and manage distribution for your products in China.

Step One: Identify the Market

Market Potential

Your first step is to conduct an initial research and find out the potential demand for your product to see whether it’s feasible for your business to enter into the China market.

Choose your prioritized market suitable for your products, check China city tiers for your reference.

At this stage, you need to evaluate the market potential and further understand the competition situation in this market. => China Business Opportunity Analysis

Target Customers

Find our who are your target customers and study their consumption behaviours.

You should understand there are quite a lot of differences among different local customer types.

Step Two:Understand Regulations

Unlike the central planning for many products many years before, today, foreign enterprises may participate in distribution for most products in China.

However, there are still some industries which are not fully open to foreign companies in China.

It’s important to find out whether foreign companies are permitted to operate in your industry in China.

Also you should collect information about relevant policies to understand what required certifications are necessary and what legal procedures you should practice before your products can be sold in China.

You will need these in details to understand how it works legally and how long it will take for each step.

Step Three: Develop Marketing Strategy

Identify Key Players

You will need to find local partners after you have basic understanding of the China market.

Hire some professional consultants or get connections from your business or personal network to find the key players and potential distributors in your industry in China.

You will need to start studying them and contact them.

Approach the Key players

Actually you need to develop your marketing strategy when you start working on the study on the major players and distributors in the market.

Prepare your company profile, website, business presentation, Email pitch before you approach the industry leading players you have identified.

Talking to these potential key players will help you quickly and effectively understand the true market situation.

Before you can do this, you should have your rough China plan first, and possible cooperation benefits that could bring your counterparts to the table.

Develop Marketing Strategy

Sit together with you China partners and develop your local marketing strategy in China.

• Marketing Prioritization
• Local Investment & Company Structures
• Customer Positioning
• Sales & Marketing Plan
• Pricing Structre
• Products

Sometimes, you will need Chinese translated files to facilitate your negotiation process with local contacts.

We strongly recommend you to hire a reputable local China business consultant (not a lawyer) to help you with the meetings with the targets and it will help you avoid many mistakes.

Step Four: Local Team and Partnership

Now it’s time to have your own local team, it can be through the recruitment of your own staff or the cooperation of some key players you have approached earlier.

You will start working on quite a lot of things:

• Recruitment of staff
• Partnership contract
• Legal entity setup
• Branding for the China marketing
• Licenses and certifications
• Prepare Marketing tools: website, company brochures etc.
• Office, Ware house and Logistics

It will be important to have your own local team which can guide you through China’s unique business culture in the following operations to handle various tasks.

Since normal company set up will take a relatively long time, you will need to find some transition ways to solve the possible problems and continue your preparation work before the formal operation in China.

For Branding and marketing tools, make sure you hire someone who understand China culture to do this job since it’s quite different between the East and the West.

Step Five: Criteria and Qualify Distributors

Now you have most of the basic resources you need to start.

Your sales team will be necessary to visit potential distributors in person.

You will need to support them to attend trade shows, industrial gatherings etc.

Make some criteria and adjust them if necessary to make sure the distributors are qualified. Encourage your sales team visit the potential distributors on site to see their physical real operations to understand their capability, strengths and weaknesses, and learn their business model.

You will need various resources to double check the reliability and reputation of the company.

Step Six: Sponsorship and Sales

As long as you identified good distributors you can enter into the next stage and welcome initial results of sales.

However, you will face a lot of unexpected problems you might never imagine.

Be sure to keep an eye on your competitors and consult your local business network to solve them.

Understand the Chinese culture and understand your distributors.

Provide them sufficient support and encourage them to get things started.

Step Seven: Maintain the Relationship

• Keep your distribution policies stable
• Adapt to the Chinese culture
• Guarantee of service
• Sufficient technical and marketing support

You will need to grow and maintain your sales and distribution network in a healthy way.

Keep your own team communicate regularly with the distributors, provide sufficient technical and marketing support, solve product problems and ensure the logistics.

=> China Market Entry and Business Development Services

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