In China, not all international brands are welcomed with open arms. In fact, some Chinese distributors only distribute between 40 and 200 different products because they can’t always predict which ones will be successful or have high revenue potentials in the long term. As a result of this uncertainty, most distribution companies don’t want to spend their limited marketing resources on your product unless it’s proven itself as an emerging market leader among the competitors. It can be tricky getting on the radar of any distributor with the sheer number of brands out there vying for attention… but there’s always a way to stand out from your competitors: willingness and motivation!
The Emergence of the World’s Second-Largest Economy
With 1.4 billion potential consumers, China is the world’s second-largest economy and has been an attractive target for exporters. As China’s growing middle class will lead to increased opportunities in a variety of industries, distributors are looking for companies with high potential in terms of creativity, innovation, and know-how.
China’s economy: A remarkable transformation
China is a vast and exciting emerging market. The once-impoverished China has been transformed into a global powerhouse, boasting the world’s second-largest economy. How did this happen? It’s only in the past two decades that per capita income among Chinese citizens rose from $3000 annually with people lifting themselves out of poverty during this time period.
Read: Export to China Guide
This was possible thanks to steadfast government policies for economic development which encouraged investment in domestic companies as well as international trade partners such as Japan, South Korea, Singapore, Germany, etc. On the other hand, it is also mainly linked to its own robust workforce capable of satisfying labor shortages due to aging demographics across developed countries around the globe, with China becoming at the time the ‘Manufacture of the world’.
Since 2008, the Chinese economy has been soaring, representing an incredible opportunity for international business owners wanting to expand their companies’ reach in the East. Currently, China’s import sector accounts for around 25% of its GDP – it’s huge! If you’re thinking about exporting your products or building local distribution networks there, then now may be just the time to do so as well; with more than half-a-million sales agents looking for employment each year here in China alone (and only 20% actually manage to find work), this country offers tons of potential customers waiting eagerly on our doorstep!
Thus, China is one expansive but immensely promising emerging market that many are eager to explore further given its recent rapid growth. With 1.4 billion inhabitants, the country’s disposable income is rising around 7,000 USD per capita. Over the years, Chinese consumers’ purchasing power has increased, contributing to the tendency of purchasing products from foreign brands, and seeking higher-quality goods.
Massive migration to urban areas has exacerbated the need to always consume and purchase more than before. The three most populous cities in China are Shanghai, Beijing, and Chongqing, and more than 58% of China’s population living in urban cities.
The Increasing Number of Foreign companies in China
The number of foreign companies in China has been steadily increasing over the years, with many more openings being seen these past 10 years. No matter what industry they’re in – the country is quickly becoming an ideal place for all types of businesses looking to grow and expand their reach into new markets.
In fact, internationalization is a process that many companies go through as they grow their business. The challenge for foreign businesses in China has been a common phenomenon in the last few decades. Moreover, new legislation will mean that some problems encountered by foreign companies will be soon alleviated. However, as foreign companies are trying every day to enter the Chinese market, it is becoming saturated and more competitive than before. Domestic companies are also reducing the gap with foreign companies, thanks to their localized strategies, higher-quality products, and the need for Chinese consumers to buy locally.
Some strategies for overcoming the challenges of culture and language barriers include hiring local staff to help with translation or finding an interpreter who can also offer advice on how to adapt to Chinese norms.
China: A Very Promising but Competitive Market
China is an expansive continent that has been developing and growing for centuries. China’s culture, history, population size, and density make it one of the most promising but also most competitive in the world.
What are the challenges when entering the Chinese market and how to overcome them?
Entering the Chinese market is no easy task. Before you can even step into it, understanding what awaits you there first and planning accordingly is key to your success in this country. China’s economic growth has been skyrocketing over recent decades which means that companies have to compete harder than before in order to have a chance to survive and attract Chinese consumers.
The Chinese market is very complex and international players utilize a multi-distribution route for better consumer accessibility. Its industry is characterized by a prominent services sector that operates in both the wholesale and retail sectors. Some retail brands have developed a wholesale distribution method in order to reach their customers quickly and easily. Apart from directly operated stores and franchisee ones, the warehouse-style supermarket is a popular option in China.
Finding the right distributor in China is kind of a difficult task, especially for a new brand without e-reputation and a low level of brand awareness. Distributors will be incredibly selective, seeking to see products and brands that have already made some kind of impact among Chinese consumers.
Working with distributors in China
Selling in China requires strong effort, so does collaboration with a Chinese buying agent. Your potential Chinese distributors also want to see your market research and promotion plans. A local intermediary will help you with this. Think of a distribution channel as one slice of the overall marketing pie. It is how a company gets its products or services to the consumers.
There are pros and cons to working with Chinese distributors, but you always need to keep in mind that any partnership is transactional, and both parties will be trying to get the best out of that collab and nothing comes for free.
What are the benefits of working with a distributor in China?
- Chinese Distributors have a network
- Can help with regulation and paperwork
- Distribution is taken care of, you can focus on other aspect of your business.
Working with a distributor in China can help you save money and time. If your products require certification, they will have to be certified by the Chinese government for safety before being sold domestically or exported abroad – this is an expensive process which many businesses are not willing to go through on their own. Partnering up with one of our distributors means that all certifications may already be completed. All you need do is ship them over once finished, and we’ll take care of the rest at no additional cost.
Also, for many reasons, there are benefits to working with a distributor in China, like trustworthiness and knowledgeability. It is thus more beneficial to work with distributors in China rather than trying on your own because you won’t be stuck if something goes wrong or doesn’t go according to plan. Moreover, our distributors have all been selected and are trustworthy.
The difficulties of dealing with Chinese distributors
- Hard to reach out to them with no network – mass mailing does not work
- Strong competition from locals and internationnal supplier
- Distributors are looking for the best deal, they are not your friend and want to make moeny
- Distributors look for easy brands/products to sell – they are not interested in marketing products
- Lack of clarity with their process
The first issue you’ll encounters when looking for distributors in China is the competition. You are not the only one looking to sell your product into china, and distributors are aware of that and will leverage this knowledge to their advantage. That is why you need to set yourself apart from your competition.
Brands need to know that some Chinese distributors are not invested in the long-term success of a product. They sell what is popular now, and will abandon it when trends change. Retailers who care about brands should work with them on branding for future sales potentials before distributing any products.
On the one hand, a distributor will almost never take the risk of putting forward a brand that hasn’t been proven profitable. He’ll choose an already profitable brand to make sure he can generate profit for himself quickly. As mentioned above, they are not lacking choice.
On the other hand, for foreign entrepreneurs just starting out on their business journey in this competitive marketplace where long-standing competitors dominate the field, branding strategies, advertising campaigns both offline and online, social media KOLs will all be at your charge and the distributor will take care of these.
How to find distributors in China?
Doing Market Research Beforehand is Key
The first step in finding Chinese distributors is to clearly define and explain the type of product you’re selling, the targeted audience, who might be interested in purchasing that particular item, the price of your products compare to competitors, etc. Doing market research will help you avoid the most common pitfalls, and help you increase your productivity and activities as well. It will also help you clearly define your strategies in terms of marketing and advertising.
Then, when it comes to finding Chinese distributors, it will depend on your field of activity, budget, if you have native speakers with you, if you are already in China or not, the cities you are targeting, etc. In order for us to be able to help you, do not hesitate to contact us directly, and we will tailor a strategy according to your needs and budget.
What are the challenges of building a distribution network in China?
The first question when you want to launch your business in China is “where do I want to start: in Hong Kong, with its more western law system? In mainland China, with its more easily accessible cities like Beijing, Shenzhen, and Shanghai, where competition is fierce? Or in second-tier cities, where you may find more obstacles to overcome, but less foreign competition?” The very big question for the newcomers in China.
According to the traditional model, the distributors take on the responsibilities of marketing the products and growing the business. The distributors establish partnerships with wholesalers and retailers, keeping them supplied with the latest lines, stocking their inventory, and in return can receive a margin upwards of 50%.
How many chinese distributors should I work with?
Depending on your strategy, reputation, and most importantly your budget, you will have to figure the number of distributors you will need. It will also depend on the city in which you want to sell your products, your competitors, etc. Therefore, it has to be tailored to your specific needs. You can book an appointment with us, in order to explain what you are looking for, and we will do our best to help you.
How to successfully work with distributors in China?
Defining clearly your project is essential for a fruitful collaboration
Defining clearly what needs to be done at any given moment is always important: without clear communication between you and the distributors, it will be more difficult to do business. Clear communication also makes sure all parties involved are getting their specific requests fulfilled as quickly as possible- so no one ever feels left out from being able not to contribute enough. Define your project early on before starting work and do whatever is necessary afterward when needed.
The more information that both parties have on hand before starting work together – be it in person or remotely – the smoother things should proceed overall.
Why you should hire an expert when searching for distributors in China
Your company needs to find a way to break into the Chinese market by looking for distributors. This is why you should an expert who knows how to navigate this new terrain so that your business can succeed in China’s ever-changing markets.
You know it will be tough searching for distributors in China because of its huge population, language barriers, low legal protections for intellectual property (IP), etc., but there’s no need to worry if you have someone on board who understands these challenges already. With our knowledge and experience working with companies like yours before entering the country successfully; we are able to guide your company through all those obstacles as well as give you some tips and advice on marketing your products to Chinese consumers.
What are the challenges when working with distributors in China?
First of all, it’s true that the distributors can help you sell, but they aren’t able to help you grow. In fact, the distributor has limited loyalty to the brand, particularly if its China sales numbers are modest or if it’s a brand that’s still relatively new to the market.
You can keep in mind, the fact that having a distributor just provides a sales channel, but it does not provide a long-term strategy. Many international brands are pleased with their distributors, but that’s because they typically have far more control over the marketing activities and can communicate on local terms.
They will often enjoy a stronger market position, long-term relationships with the distributors, and home market advantages of advertising and word of mouth. It is easier for the relationship to be a win-win.
Working with local Chinese wholesale agents or distribution companies is the first step for exports to China. Setting up your own subsidiary often turns out to be troublesome due to the many regulations. Because of the size of the country, your Chinese sales agent or distributor may be much bigger than your own company and require a different approach than you are used to.
For which categories of products should I work with a distributor in China?
There are many different types of products available through distributors – from electronics to clothing and toys
With different Chinese market eco-system and you need to understand what your selling point is from the perspective of Chinese consumers. Basically, what aspects and features will shift the product. Finding your selling point can take time and requires deep research: you need to look into your local and international competitors, how are they branding their product, managing communications, and what are their sales figures. This goes some way to establishing confidence in your product market.
Secondly, you can look into potential distributor companies, what brands are on their roster, and what has the success rate been? A key selling point for all international brands is ‘quality, in a nation typically associated with counterfeit goods ‘international’ has become a byword for high-quality goods. With changing consumer expectations and rising levels of wealth amongst China’s 400 million middle-class consumers the market is ripe for capitalizing on, even a small slice of this will obviously generate significant results.
- Communicating with your distributor will help you strengthen your collaboration
Finding the right distributor takes time, but it will be worth it when you’ll find the perfect match. Don’t hesitate to have an in-depth discussion about their expectations, etc. The more they will know about your story, the more they will be able to help you distribute your products using the appropriate channels of distribution. On the other hand, it is important to understand what they want in order to see if you can have a long-lasting partnership with them.
E-commerce platforms: An alternative to Chinese Distributors?
In recent years, being on e-commerce platforms has become a must-have for both Chinese and foreign companies that are ready to invest a lot of money in order to be present among the most popular names such as Tmall or JD.com. In fact, the majority of China’s population regularly purchases products online as it is easier and more convenient than before, even more following the Covid-19 pandemic. As a matter of fact, there were already 782.41 million online shoppers as of 2020. China’s digitalization and the daily use of smartphones connected to the internet have greatly contributed to this growth as consumers spend a lot of time on their smartphones.
Chinese e-commerce platforms
- Tmall: The Leading E-commerce Platform in China
Founded in 2008 under the famous Alibaba group, Tmall (天猫), is a subsidiary of the e-commerce website Taobao (淘宝网). Tmall stands out from its competitor’s thanks to its strict standards in terms of quality and renown.
Tmall greatly helped in pioneering social media and e-commerce platforms, big data analytics, and cloud computing technologies for global retail.
- JD.com / JD.Global: The B2C e-commerce platform killer
JD (which stands for Jingdong 京东) was founded in 1998 by Liu Qiangdong in Beijing, but at the beginning, it only sold magneto-optical discs. Over time they expanded to offer electronics, computers, and mobile phones as well. In 2004 JD opened a platform on which people could buy online and quickly became one of two massive B2C retailers with its competitor Tmall owned by Alibaba Group Holding Ltd., who also have a 20% stake in JD’s company stock.
As of 2021, there are over 470 million active customers using JD services worldwide so we advise you to consider using JD.com if you want to sell your products in China. JD.com is committed to quality, authenticity, offering a variety of products for its customers, with a fast delivery service.
- Taobao: One of the Most Popular E-Commerce Platforms in China
Launched in 2003 by the Chinese giant Alibaba, Taobao (淘宝网) is one of the most popular online shopping platforms. It has hundreds of millions of products and service listings that are really appreciated by consumers. As of 2019 it had 300 million daily active users and 668 million mobile monthly active users but accounts for nearly 60% of e-commerce sales in China
Taobao is the leading Chinese e-commerce website that stands out from its competitors with both low prices and a wide variety of useful features. Taobao, at least in China, has taken over as the primary online shopping destination for many people looking to purchase items without spending too much time or money on it. The company’s main asset is its comparatively cheap products which have caused them to become one of the top five most visited websites not just among Chinese consumers but also globally!
- Xiaohongshu: The Leading App in Terms of Cosmetics and Fashion
Xiaohongshu is China’s foremost shopping platform for beauty, fashion, cosmetics, and luxury goods. The social media company has over 300 million registered users with 85 million monthly active users as of 2021, making it one of the Forbes “Top 50 Most Innovative Companies in China”.
Xiaohongshu (aka Little Red Book) allows people to post product reviews, travel blogs as well as lifestyle stories via pictures or short videos- it’s a paradise for those who like sharing their lives and experiences online.
- Pinduoduo: A Promising E-Commerce Platform for foreign suppliers
Pinduoduo is an e-commerce platform that offers a wide range of products from daily groceries to home appliances. Consumers are able to buy products at a lower cost, so if you want to sell your products on Pinduoduo and attract Chinese consumers, the price will be a key factor for your sales ‘success!
The reason Pinduoduo can offer lower prices to buyers is its group buying feature, connecting suppliers directly to buyers.
Pinduoduo is also one of the cheapest platforms for merchants in terms of registration fees and commissions.
- Vip.com: Online Discounts at your Fingertips
Founded in 2008 and based out of Guangzhou, VIP Shop (唯品会 Wei Pin Hui) is the third-largest e-commerce company specializing in online discount sales. In 2019 alone they generated revenue of RMB 93 billion. Following its huge success, it was even listed on New York Stock Exchange (NYSE) back in 2012.
VIP Shop specializes exclusively in high-end fashion, cosmetics & beauty products as well as home items at discounted prices while being broken down into two segments: VIP.com – their Chinese operations; and VIP International which has warehouses all across China along with overseas locations too
- Kaola: China’s New Cross-Border Marketplace
Launched in 2015 by NetEase, Kaola.com is China’s second-largest cross-border import retail e-commerce platform selling ‘western brands. Kaola provides products for baby care, maternity care, beauty items such as healthcare, and cosmetics with fast delivery service to bring consumers ‘better living’ at low prices.
The success of Kaola can be attributed to the company’s focus on delivering high-quality international products in a variety of categories. Kaola has been able to find considerable success by focusing its efforts on providing authentic, quality goods from around the world that are otherwise difficult for Chinese consumers and manufacturers alike to obtain domestically.
Kaola is a good alternative to Chinese distributors as it runs as an online distributor. But just like Chinese resellers, you’ll have to convince the app that your product is worth it.
How get interested from distributors and start exporting to China?
Over the years, China’s import regulations and rules have eased up, even though it’s still a complicated and long process. Working with a local agent or distributor who can also take care of all administrative processes can also be extremely useful.
China is monitored all imported products through an Automatic Licensing System administered by the Ministry of Commerce. Imported Products that are restricted require permits or licenses while some others, such as wastes or toxins, are banned. Inspection and certification processes in China are detailed and rigorous.
China’s booming consumer trend, financially stable market, and innovative approach make it a viable import destination but with some tricky procedures. If you want more information on a specific industry, do not hesitate to write to us, and our experts will contact you according to your business field.
If you are looking for more information on how to Export to China, you can read our full article here
Leveraging Chinese Online Platforms to gain visibility
Now, whether you are going for direct selling, online distribution, traditional distribution, you’ll need to work on your visibility in China. Consumers and distributors need to be reassured that you are:
- A legitimate company
- have products that consumers are interested in buying
There is no alternative to working on your online presence and network in China unless you already have connections that have enough power to give you a significant push o the market. Unfortunately, for most, of us, that is not the case and we have to put in the effort to build a distribution network in China and reach out to distributors and consumers.
The great thing about working on your online visibility and awareness to appeal to distributors is that all this effort will play a big role in your success with consumers once you actually find a distributor to get started. One stone, two birds. All this work to build your distributions network will be relevant to increase your sales.
If you want to enter successfully the Chinese market and target Chinese consumers, you have to adapt to their habits. The apps and websites we use in western countries are not available in China, and Google, Facebook, Instagram, Twitter, etc are among them. Thus, you will have to rely on their alternatives, which are essential for any business in China. For example, when it comes to SEO, you will have to focus on China’s leading search engine: Baidu. For social media, WeChat, Weibo are indispensable for your communication and marketing strategy.
Here is a couple of reading you should have to understand Chinese channels:
Here is a list of posts on the expo taking place in china:
- Fashion trade Fairs
- Machinery & Industry Trade Fairs
- Furnitures Trade Fairs
- Cosmetics and Beauty Trade Fairs
- F&B Fairs
- Wines Fairs
NB: Email Marketing does not work in China
You want to sell your products in China and you are looking for Chinese distributors? Contact us and our experts will help you!
Working with an agency that has both western and Chinese points of view like Gentlemen Marketing Agency can help you overcome the pitfalls of the Chinese market. Our agency has accompanied many companies entering the Chinese market through Tmall, JD.com, Kaola, Vip.com, Taobao, Pinduoduo, Xiaohongshu, etc. We have also helped them connect with distributors in China in order to successfully distribute their products to Chinese consumers. Proud of the success of the companies that have contacted us, our experts are ready to help any company willing to do business in China. So, if you are interested in doing business in China, do not hesitate to contact us and we will reply within 24 hours.
Why should you choose GMA?
Distribution channels management includes wholesalers, e-commerce websites, catalog sales, consultants, direct sales, and retailers. Advertising and other marketing methods would then appeal to the buyer’s awareness. However, even though you put your best in the promotion and marketing of your product, if they are not distributed well, your sales will not increase. At GMA, we help you navigate through the best channels of distribution, as well as finding appropriate and trustworthy distributors and partners.
The importance of Chinese E-commerce platforms
Chinese E-commerce platforms can be used to resolve distribution problems. In fact, Chinese e-commerce channels allow you to increase your visibility and in the long term, your sales, providing a structure for social media and advertising campaigns.
Finally, e-commerce can also allow you to gain a better margin than working through a distributor. That distributor might charge a 50% margin, but Tmall and JD both take single-digit commissions. There can be other fees, and advertising can also easily be 20% of your gross revenue. Even when all these costs are tallied up, a brand’s bottom line in China can become more appealing through e-commerce than if it were totally reliant on a distributor.
The channel’s choice is an important step in the marketing strategy for a digital plan. We know the Chinese digital world and we will be able to choose the most suitable for your branding. Our experts understand the Chinese market and all the tips to get the best of it. They can help you register on e-commerce platforms, plan with you the marketing strategies and
Consulting Agency: What are the needs of your customers?
An online strategy is a matter of ROI (return on investment) in terms of increased sales, brand improvement, or improved loyalty. It also hinges upon detailed knowledge and understanding of the best innovations that are available via networking platforms. We analyze the competitive scenarios for clients, measure their strengths in order to get rid of their weaknesses before proposing changes that are truly effective, tangible, and measurable.
At GMA we believe that the success of every company depends on the effectiveness of its online presence and its digital strategies.
Creating a clear and attractive Chinese website
With the over billion people who speak Chinese and a rapidly expanding middle class with more disposable income than ever before, it’s clear that having at least a Chinese website is essential if you want to enter this market. But beyond that obvious reason for success lies two other reasons:
- You’ll be able to reach a wider audience of consumers since many can only read Mandarin
- Having your site appear on Baidu search engines will help drive traffic as well
Having access to an increasingly lucrative worldwide marketplace means being available across multiple channels like English and Mandarin websites – just make sure they’re maintained properly! Therefore, in addition to being the first showcase for the company, it is the ideal tool to maintain a relationship with customers. A clear website adapted to the Chinese netizens, easy to navigate, with content written and displayed correctly, is crucial for every company wishing to enter the Chinese market.
We know how to develop a flawless website, reinforcing your brand image, and bringing a good user experience. We will also design and adapt the website in order for it to rank among the first results on Baidu, China’s leading search engine.
Baidu Marketing & Baidu SEO
In China, the most famous search engine is Baidu, a browser that allows you to search for websites, news, images, and audio files. However, Baidu is not just a search engine like Google but is indeed a company putting at the core of its strategy entertainment, education, marketing, innovation, etc.
At GMA we can put this into practice from keyword research and analysis to index your website in Baidu, in order to have an excellent ranking on this platform.
Some of our Baidu services are
- Translation of your website into Simplified Chinese.
- Hosting your website in China or near China for faster website speed
- Optimization of your website for the Chinese internet.
Building a Strong E-Reputation
China’s booming economy has a lot to do with its burgeoning e-commerce sector, and an online reputation is crucial if you want Chinese consumers as clients. In China, it’s all about having the best reputation possible as Chinese consumers are heavily influenced by a company’s reputation. A bad e-reputation can be detrimental and affect their trust toward your brand.
GMA takes care of your online reputation, in fact, we create strong strategies that increase its positivity. Whether you are a big or a small company, we always manage your e-reputation in order to show the best to Chinese netizens.
How can we help you develop your e-reputation in China?
- Customers Review Campaigns: Customer feedback and reviews is an entire part of good customer service.
- Online Monitoring Brand: Online Monitoring brands is essential to be able to respond quickly to both positive and negative comments.
- Responding to Comments: Our team helps you stay on top of all the channels that these can come through.
- Responding to Negative Review: we can fix your image by removing bad comments as well as discussing with consumers in order to give them a better consumer-experience. Using a mixed approach of content marketing and digital PR, GMA will seek information online that reassures potential customers about the value your business can offer.
Developping your presence on social media
Weibo Marketing
Weibo offers a huge variety of activities that you can carry on to promote your brand. In the first place, it can help to implement brand awareness of your brand through an official channel, and collaborations with KOLs, or with targeted campaigns. Designing and publishing customized and user-friendly Chinese content is also essential for any company.
At GMA we know exactly what Chinese consumers are looking for when it comes to advertising campaigns. We use Weibo search engine promotion, Fan Headlines, etc. in order to make international brands visible to Chinese people and gain their trust. Creating a long-term relationship between your brand and your clients is our priority and goal.
Our Weibo services:
- Setting up an official Weibo account: We manage all administrative procedures to provide a certified account.
- Publishing content on your page and keeping it up-to-date: We create an authentic graphic according to your brand spirit by adapting it to the Chinese market.
- Management of your Weibo page: Content management is very important if you want to keep your fanbase very attached to your brand. We update your content regularly and optimize it
- Monthly report analysis: We will send you a monthly report and an analysis of the results in order to show the axes of ameliorations as well as the number of people reached, etc.
WeChat Marketing
For every Chinese citizen and business, WeChat has become an indispensable app. In addition to being a messaging service with more than 900 million monthly active users, it is now also the most popular social app in China as well as a powerful tool when it comes to communication and marketing.
As specialists in this field, Gentlemen Marketing Agency’s experts can create eye-catching WeChat accounts with impactful H5 e-brochures for your brand. We know all the subtleties of the Chinese market and how to engage an audience. So, contact us to discuss your projects in China and we will help you create an official Wechat account that will give you more visibility and boost your business.
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