How to Start Selling in the Chinese Market

The Chinese market is a big opportunity for any business. But, doing business in China is very competitive and challenging. Let's talk about some key points and strategies that are important for B2C businesses looking to start in China.

Entering the Market: Using Distributors

Understanding different ways to enter the market is very important. One of the most common ways to start selling in China is through a distributor. This means a local company in China sells your products for you. This can help businesses avoid the tough work of marketing, selling and managing the brand in a new market.

Working with distributors can seem great at first, but it can also be difficult. Keep in mind that finding a distributor willing to work with you can be hard unless your brand is already well known, or you're offering something really special.

The Chinese market is enormous, and there are many international brands trying to get in. Distributors have many options and might not be interested in your brand as they have many other options.

So, it may take more than just a lower price for your products to get a distributor interested. Businesses might need to offer extra help or incentives, like funds for opening stores or running advertising campaigns.

Starting Small: Baby Steps in a Big Market

Smaller brands often start with small distributors or online stores that sell multiple brands. These might not have a big impact on your brand's image in China, but they do serve as a first step for testing the market or making some initial sales.

This strategy isn't for long-term growth. Since these small sellers focus on growing their own brand, there's little chance of your brand growing solely through them. However, it can provide initial momentum and key data about how the market reacts to your product.

Finding a Distributor: Getting Ready

To find a good distributor, you could go to trade shows either in your country or in China. These events can provide a chance to meet potential partners interested in selling your brand in China.

Distributors might also reach out to you. But be careful - just because a distributor reached you first doesn’t automatically make them the best fit.

Examples of Brand Experiences From Collaborating With Distributors in China

Working with local distributors in China can sometimes be a wild ride. Let's look at four different examples of what can happen.

• Nightmare: Once, a brand from America trusted a distributor who bought many of their products. But over time, the distributor started to act sneaky. They registered the brand’s trademark in China without the brand’s permission. They even started making counterfeit versions of the brand's product. When the brand found out, they tried to sue the distributor, but lost the case. Due to a messy contract, they had to wait a long time to properly start selling in China again.
• Dream Team: Here's a happier story. A small company from Europe was approached by a big distributor from China at a business event. This turned out to be the perfect match. The brand's products quickly entered over 10 good shops in China without needing to do anything other than ship the goods to the distributor.
• High Hopes, Low Results: Then, there was a brand from Finland that put their hopes into a Chinese distributor. That person promised big sales, but they never really delivered. The distributor stopped selling the products after a few months. As it turned out, the distributor was just a student selling the products in a small online shop. This bad experience made the brand feel cheated, and they stopped doing business in China.
• Small Steps to Success: And lastly, a Japanese brand started with a distributor who ran an online shop. Sales were slow at first, but the brand noticed sales increasing over time. This made them believe there was potential in the Chinese market, and they decided to invest more.

It can be a bit of a gamble. It’s always important to do your research when choosing a local partner in China.

Doing It Yourself

If you can't find a distributor willing to invest in your promotion, you may want to consider doing it yourself. This could mean starting your own company and hiring local employees. But, this also takes a lot of work and might be better for bigger businesses.

For smaller brands, partnering with an experienced ally in China for support in advertising, legal advice, and design can simplify operations and maintain brand identity. In my experience, dividing tasks among multiple agencies results in high costs and communication challenges. Opting for a single full-service partner controls costs and streamlines communication across teams.

Partnerships may involve a fixed monthly fee, a commission-based approach, or a combination of both. Agencies working on commission have a vested interest in your brand's success.

Which To Choose: Agency or Distributor?

Deciding between an agency and a distributor depends on what each offers.

Agencies let you have full control over your brand's image and voice. They share customer data, help you make changes and show where your money is going. They can advertise your brand both online and offline. Full service agencies usually work with fewer brands, which means more focus on you.

On the other hand, distributors can do all that without your help, at least in theory. In practice, they may leave you with empty promises and waste years of your time. This is especially true for small to medium-sized businesses that will find it hard to attract top-tier distributors.

In summary, if you want to control every detail of your brand and be hands-on, then an agency might be right for you. But if you don’t care about control and trust your distributor, a distributor could be a good fit.

Remember, the best partner will put your brand first and cater to its specific needs.

Breaking into the Chinese market might require a mix of strategies. The best one for you will depend on your goals, product, resources, and how flexible you can be. It will take time, patience, effort and agility to move in the Chinese market. It won't be quick, but with a good and adaptable plan, it is possible.