Depending on the geographical region and the market segment, companies selling to China may need to engage several different distributors and sales offices in China. Since SMEs typically do not have sufficient resources to build an extensive sales network, it is advisable to use a two-stringed sales and distribution model, relying on local distributors in combination with their own direct sales force. The local distributors provide geographical and market scale while the internal sales force’s focus should be on the direct access to existing and new customers, as well as end-users.
In general, importers/distributors/agents in China fall within two large categories:
- State-owned and private importers which play a significant role in the import of food and beverages to China. These companies focus on volume, and look for products which are already accepted by the general population, like meat, wine, olive oil, dairy, seafood, etc. Price, brand and production capabilities are very important for them; there have been many cases reported of negotiations failed because of disagreement on decimal points.
- Smaller companies, sometimes set up by foreigners, who understand European products and cater to five-star hotels, foreign restaurants or gourmet stores specialised in imported goods. These operate mainly in first-tier cities and are usually more flexible on volumes and more willing to accept new products.
No matter which option is better suited for your business, it is not recommended to sign any exclusive agreement with one single distributor (unless it is linked to large volumes of sales), as this will limit efficiency and control, especially during expansion.
Finding the right distributors and partners is critical. A very straightforward approach is to ask customers and industry contacts for recommendations. Chambers of commerce and other supporting trade organisations in China are also good contact points: they can usually provide you with a list of importers/distributors. Trade shows offer the opportunity to meet both small and big distributors.