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Working with distributors, agents and local representations are critical
the export strategies for the market in China. China's business
environment can be rather complex and very different from the United
States or other Western markets. Therefore, American companies need
strong in-market representation to enable them to understand the
idiosyncrasies of the market, marketing and distribution channels, buyer
identification, product support and relationships with key government
agencies in the market.
In general, most exporters will start by engaging a Chinese company to
be their agent or distributor. Chinese companies importing products are
required to have an import license. However, if local agents or
distributors do not have import licenses, American companies can import
through an import-export trading company. American exporters should
confirm with their potential business partners which import approach
will be used.
As the business develops, consideration should be taken to appoint
full-time employees in the market, preferably local Chinese
persons. This process will give an American company great local
representation.
It is particularly important to choose your local partners wisely, as
these decisions can make your business succeed or fail. Before making a
decision, it is imperative to thoroughly check partner’s business
background and credit history, and evaluate their abilities carrying the
duties that you are to designate.
American companies should be cautious of people and companies that tend
to promise the world, constantly saying they have good relations or
connections with senior officials; and overly pushing to reach a quick
arrangement to represent you.
The most important factor in seeking local representation is to find
someone who knows the market very well. You should aim at in-market
representation that has the best fit with your company’s business scope,
operating modeling and good alignment in business objectives for the
China market. It is critical that the objectives be mutually understood,
agreed and monitored in an ongoing manner.
Ideally, the Chinese local representation partner should be in a
position to provide a range of possible inputs to the business
partnership. They should have:
 A
physical site, office, plant, land for development, etc
Comprehensive local market knowledge in the area of business activity
Distribution networks, import license or access to import systems
Access to raw materials that your business involves
Reasonable commercial and political connections and relations
China is a very large and diverse market with various levels of economic
development across different regions. It is impossible for one Chinese
company to cover the entire market there. Therefore, you may want to
consider multiple representations covering different regions of the
market, such as north, east, central and south China.
Chinese business practice is heavily relationship based, so western
companies may need to spend some time in the market with their business
representation partners. You should also consider bringing such
representative partners to your home country so to develop strong
relationships and trust and to have your partners get familiar with
western style business operations.
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