So, you’re gearing up to unlock the vast potential of the Chinese market for your foreign brand. It’s an exciting journey, no doubt, but have you ever wondered if there are hidden traps and pitfalls you should steer clear of?
With over two decades of valuable experience under our belt, we’ve witnessed the incredible successes and unfortunate setbacks of numerous foreign brands as they ventured into this dynamic market. Now, let’s delve into this insightful guide, where we’ll reveal seven common blunders that often catch newcomers off guard when establishing their sales and distribution channels in China.
By learning from the experiences of those who’ve walked this path before you, you can sidestep these costly mistakes and position your brand for sustainable growth and success in one of the world’s most promising markets.
Ready to embark on this journey to ensure your brand not only survives but thrives in China?
1. Don’t Put All Your Eggs in One Distributor Basket
Imagine you’re a global smartphone manufacturer trying to break into the Chinese market. Instead of relying solely on one distributor to cover the entire country, you work with regional distributors based in Beijing, Shanghai, Guangzhou, and Chengdu. These regional partners are deeply entrenched in their respective areas and have a better understanding of local consumer preferences and market dynamics.
Keep Your Options Open in Diverse Markets
When entering diverse markets like China, don’t put all your eggs in one distributor’s basket. Instead, team up with local distributors who know their regions inside out.
By diversifying your distribution network, you’re not just reaching more customers; you’re also shielding your business from potential issues like supply chain glitches or market shifts. In a nutshell, having a network of regional partners makes you more adaptable and resilient in markets with lots of variations.
2. Neglecting Intellectual Property Protection in China
In a real-world scenario, a European fashion brand decided to expand into the Chinese market. They entrusted their Chinese distributor with handling the trademark registration for their brand in China, thinking it would save time and effort. Unfortunately, due to a lack of proper legal guidance and understanding, the distributor mishandled the registration process.
Consequently, a local competitor took advantage of the situation and began producing imitation products using the brand name. The brand found itself with limited legal recourse to stop this unauthorized use, leading to substantial financial losses and damage to its reputation in the Chinese market.
This situation serves as a clear example of the risks associated with not properly safeguarding your intellectual property when entering foreign markets like China.
Protecting Your Ideas Abroad
To steer clear of this problem, take a cautious approach when expanding your business internationally. Before diving in, familiarize yourself with the local laws and intellectual property regulations in the target country.
Equally important, hire a knowledgeable lawyer who understands both your home country’s legal framework and the foreign country’s laws. This legal expert can assist you in creating robust contracts and agreements to ensure your ideas remain protected as you venture into new markets.
3. Neglecting Research and Clear Contracts in China Partnerships
Imagine you’re a tech company seeking a distributor for your high-end electronic gadgets in China. You conduct thorough research, vetting potential distributors’ backgrounds and capabilities. Once you’re confident in your choice, you engage a local law office in China to draft a comprehensive contract. This contract outlines performance expectations, including sales targets and after-sales service commitments.
Later on, if your distributor fails to meet these targets or provides adequate support, the contract provides a clear path for you to address the issue, either through negotiation or, if necessary, contract termination. This proactive approach helps you maintain control over your brand’s reputation and ensures a smoother business experience in the Chinese market.
Succeeding in China
The important lesson here is that being proactive is vital when expanding your business in China. Start with thorough research to make sure your chosen distributor is the right fit for your high-end electronic gadgets and business objectives.
Next, create clear and detailed contracts with the help of a local law firm in China, specifying your expectations for sales targets and after-sales service. These contracts will be your guide if your distributor falls short, giving you a clear path forward, whether through negotiation or contract termination.
By following these proactive steps, you’ll set yourself up for success and maintain control over your business in China.
4. Losing Brand Control Due to Insufficient Support
A foreign coffee company ventured into the Chinese market with its innovative coffee brewing machine. However, their Chinese distributors lacked experience in selling such specialized equipment.
To tackle this challenge, the coffee company took proactive steps. They invested in thorough training programs for their distributors. These programs covered every aspect of the coffee machines, from intricate technical details to effective pricing strategies and how to highlight the machines’ unique features.
The results were impressive. The distributors transformed into well-informed advocates for the brand. They confidently conveyed the benefits of the coffee machines to Chinese consumers, enhancing the brand’s appeal and trustworthiness. This commitment to actively supporting and training distributors not only improved their performance but also safeguarded the brand’s reputation and message in the competitive Chinese market.
Empower Local Partners for Success
When taking your business into a new country, it’s essential to provide proper training and support to your local partners or distributors. The lesson is clear: empower your local partners, and they’ll help your business thrive in new markets.
5. Underestimating the Importance of Face-to-face Contact
When it comes to succeeding in China, it’s important not to rely solely on distributors for success. You can’t just hand everything over and expect things to go perfectly. It’s like trying to run a race without actually being on the track.
Instead, think about having someone on your team in China, like a business development manager. They don’t need to run a whole office; their job is to keep an eye on things and make sure everything is going smoothly. This shows your commitment to China and helps you understand what’s happening in the local market.
Here’s the thing: If you’re not there, it’s like letting your distributor take the wheel and drive your brand without you. But if you’re on the ground, it’s easier to find good distributors and build strong relationships with them. Trust is super important in China, and meeting face-to-face is the best way to build it.
Imagine you’re a small toy company trying to sell your toys in China. You work with a local distributor, but you also have someone from your team in China. They meet with the distributor regularly, visit stores, and talk to customers. This helps your brand succeed because you’re not just relying on the distributor; you’re actively involved in making sure things go well.
6. Neglecting to Build Your Chinese E-Reputation During Distributor Search
In the world of Chinese distribution companies, new brands often face an uphill battle. Distributors handle a multitude of brands, and if yours isn’t picking up steam as quickly as others, they might not pay it much attention. To overcome this challenge, you need to focus on building your online presence and reputation in China.
Here’s how it works: Distributors do their homework before partnering with a brand. They scour Chinese digital platforms to gauge your potential. They want to know if Chinese consumers like your products. They’ll check if people have already purchased your goods in China and what they’re saying about them.
Quality matters too. They’ll dig into forums and social networks to see what users are saying about your products.
Another sign they look for is your brand’s popularity on platforms like Weibo and WeChat. The number of followers indicates brand awareness.
To get the full picture, they even check search engines like Baidu to see how many media sources are talking about your brand.
7. Entrusting Your Marketing Campaign in China Solely to the Distributor
Picture this: You’ve got a fantastic product, and you’re looking for a distributor in China to help you sell it. It’s tempting to hand over everything, including how your brand looks and how people hear about it, to the distributor. But think about it: Would you let a big store like Walmart or Carrefour take over your marketing back home? Probably not.
Here’s a better plan: start with e-commerce. Use online platforms to sell your product, run social media campaigns, and show everyone how awesome your stuff is. This way, you’ve got a track record to show potential distributors that people love what you’re selling.
E-commerce also lets you introduce new products, try out special deals, work with popular influencers, and do all sorts of cool promotions. You’re in control, not just relying on what the distributor thinks.
So, the smart move in China might be to use distributors for your popular items and e-commerce for everything else – like launching new products and keeping your customers engaged. When distributors see you’ve got an e-commerce game plan, they’re more likely to back you up. In the end, these two ways of selling can work hand in hand to make your brand a hit in China.
Our Case Studies
Parfums De Versailles
OUR SOLUTIONS:
- Buzz marketing
- Online Game
- Poster design
DIFFUSION:
We organized a game whose goal was for girls to send pictures of themselves disguised as a princess. We received more than 200 hundred pictures and some of them became viral. 56 articles were published about the game.
The video was viewed by more than 1,72 million people.
RESULTS:
Export: 130 Distributors and more than 130 000 products
Chaton
Challenge: New Lingerie Brand in China – Find a distributor and start to sell in China
OUR SOLUTIONS:
- StoryTelling
- E-reputation
- PR
RESULTS: FIND A BIG DISTRIBUTOR
=> 20 000 units order
We Can Help You Find And Collaborate With Chinese Distributors!
Collaborating with a local distributor in China is undeniably crucial, given their insights into the market, established networks, and distribution channels. However, the intricacies of the sales and distribution landscape in China can be daunting for foreign companies looking to make their mark.
By keeping in mind the seven common mistakes outlined above, you can steer clear of avoidable pitfalls and ensure a smoother journey into the Chinese market.
Now, why should you choose our agency to assist you with this exciting venture? With over 20 years of experience in helping foreign brands successfully enter the Chinese market, we bring a wealth of knowledge and a proven track record to the table.
Our team is well-versed in the nuances of the Chinese business landscape, offering strategic guidance, tailored solutions, and unwavering support to ensure your brand’s triumph in this dynamic and challenging market. Choose us as your partner, and together, we’ll unlock the immense potential that China holds for your brand.
