Business in China is a tough thing. There are a lot of rules and customs that are present only in China. This is why you have to understand well Chinese distributors before doing business with them. Here is why Chinese food distributors will not invest in the brands they represent.
They just do their business
Chinese food distributors will only do what they have to do. They won’t try to do more than their business. It means that business has to be easy for them: if a brand want to be distributed it will have to be already famous in China, and it will have a good e-reputation. A good e-reputation is a must when doing business in China. Chinese people like to have reviews about products they want to buy, above all if it’s food. They search for it on internet and especially on the Social Medias. There has been some scandals about food in China, so now Chinese consumers are cautious. A distributor won’t help a brand to be known. The brand has to work well and to be appreciated by Chinese people. If the brand is not working well, the distributor will just let it down and find another. They won’t try to save the brand or to make huge effort to help its growth. If a product doesn’t make a lot of sales, the distributor won’t bother. The role of the distributor in food in China is just to put products in a place where this will be bought, not to market them or to invest on the brand they represent.
They have other opportunities
China is a growing market: there are more and more people on the upper middle-class and their power of purchase is high. Because of this growth, Chinese people are able to buy more things and they are thrilled when they can buy non-Chinese products, they have special demands like wine for example. Food are appreciated by the Chinese people because it’s so different from the food they have in their country. Some occidental food are considered as luxury food. It means that China has a huge market for imported food, moreover when we know that there is health problems due to the food. So food distributors have a lot of requests from brands all over the worlds that want to sell their products in China. If a brand is not working, the distributor can just let it go and find another waiting one. We don’t have to think that at the moment our brand is distributed it will be for a long time even if there is problem.
They are not especially loyal
They can distribute a brand for years and still let it down if a problem comes. A food brand can work well for years and suddenly can have problems for many reasons. The distributor won’t help it and will find another brand even if it was doing business with for a long time. They see short-time actions, and think about their own good before the good of the brands they distribute. Their main purpose is to sell products, not to help brands to promote themselves.
To reduce risks, you need a good digital marketing strategy!
When entering the Chinese market, should you absolutely need a distributor in China, you may want to invest yourself into a well crafted digital marketing campaign. This will ensure two things :
First, obviously bring you more clients.
Second, once your products are well advertised you may have an easier time with your distributor since he will look at the numbers. As said above : no sales on the short term, and you’re out of his network.
However there exists more convenient solutions like e-commerce platforms that do not require you to have a distributor, just to subscribe and be present on the right platform depending on your products and your positioning. Tmall, Jingdong, Taobao are a few names that comes often in that matter.
We are accustomed to support our customer with setting and promoting their e-shop, both inside and outside the chosen e-commerce platform.
Contact us about your project and we will see how we can help you setting foot the right way in China.