For years now, we have been extolling the virtues of American and other foreign companies selling their products into China through distributors. Not saying that is the only way or even the best way to do that for many companies, but I am saying that it is increasingly a very good and relatively easy way to profit from China without having to incur the time and expense of setting up a company there.
For our prior posts on this topic, check out the following:
- China Distribution Agreements: Exclusivity Is NOT Required
- Getting Your Product Into China Via Distributorship. A Legal Piece Of Cake
- That’s Hot: China Distribution Contracts
- Exclusivity In China Distribution Agreements
This post focuses on how to find the right distributor for your China product, something which is easier said than done.
In my experience and that of the other China lawyers at my firm, the best China distributors typically share the following characteristics:
- They are relatively new companies, having been formed in the last 15 years.
- They are privately-owned
- They focus on a particular region of China
- They have achieved success with their own products, similar to that which you are seeking to sell into China
In other words, they are the exact sort of company that is not the least bit desperate about partnering with a foreign company. That being said, how do you find these sorts of companies and convince them to take on and sell your product?
My cop out answer on finding the right China distributor is that you hire the right China consultant to find eligible companies. Alternatively, you figure out the China market for your product and/or similar products and you see who is already succeeding at it.
You convince them to market and sell your product by having a product that can do well in China and by setting up a relationship with the distributor that will allow it to do well by selling your product. The good news is that China distribution contracts are quite similar to U.S. distribution contracts as the core of any product distribution business is the same. The distributor wants to know that if it spends the time and money required to succeed at marketing and selling the product, it will garner a substantial share of the profits from that.
Go forth and prosper.