Understand the market – before diving into distribution, it’s essential to understand the Chinese market, its geographical vastness, cultural diversity and magnitude. Conducting market research and knowing the regional differences across China and consumer preferences is important. What works in one region or city may not work in another. Identify your target audience, their preferences and purchasing behaviours. A visit to China is always recommended in this earlier phase of set-up, so you understand the enormity of the market, how distribution channels work, and have an opportunity to understand your competitors in the market. While we at PTI China can provide you with some market insights, it often pays to validate your findings by engaging an in-market research agency to conduct professional research for you. This will help you to tailor your distribution strategy to meet local demands.
Choose the right distribution model – China offers several distribution models. In a market like China where product distribution is complex, the most common market-entry method used by export businesses is an experienced third-party distributor. In recent years, other distribution channels have developed very rapidly like ecommerce has now become an increasingly important part of product distribution in China. Platforms like Alibaba, JD.com, and Pinduoduo are ideal for reaching a wide audience.
Select reliable partners – it is important to look for distributors with a strong local presence, good reputation, and experience in your industry. Conduct due diligence to ensure they have the necessary licences and capabilities. Forming joint ventures with local companies can also help navigate regulatory hurdles and provide local market insights. Many foreign companies work with local partners who already have established relationships with local retailers and other key players in the distribution chain, to get their products into the market.
Navigate regulatory requirements – China has specific regulations for different industries, and we recommend that you familiarise yourself with local regulations and compliance requirements. This includes import/export laws, product standards and business licences. Ensure your partners have experience with customs and import regulations, to avoid delays. Failure to comply with these regulations can have a huge impact on your market entry.
Warehousing and distribution – efficient logistics are key to successful distribution. Partner with reliable logistics providers to ensure timely delivery and manage warehousing needs. Consider using bonded warehouses to streamline customs processes.
Leverage technology – use technology to enhance your distribution strategy. Implement supply chain management software to track inventory and shipments. Ecommerce platforms often provide analytics tools to monitor sales and customer behaviour.
Monitor and adapt – continuously monitor your distribution channels and gather feedback. Be prepared to adapt your strategy based on market changes and performance metrics. Flexibility is key to long-term success in the dynamic Chinese market.
In-market promotional initiatives
Exporters should work collaboratively with the distributors and offer support with market activities and promotions including product endorsements, provide product samples for promotion and marketing collateral for media exposure.By following these steps, you can establish effective distribution channels in China, ensuring your products reach the right customers efficiently. Good luck with your venture!
For further information on distribution channels in China, or if you have any specific questions, please contact Yolanda Jiang, Export Manager, Pacific Trade Invest China.
