Setting Up a Distribution Network in China
Why Set Up a Distribution Network in China?
First and foremost, setting up a distribution network in China is one of the most efficient ways to access the Chinese life science market. This is where businesses utilise a Chinese distribution network is to sell their products via national and local distributors. This network removes the need for setting up your own China based entity. Setting up a China based entity comes with substantial benefits but also requires both large financial and time investments. Therefore, setting up a Chinese distribution network is certainly worth your consideration.
What Do I Need to Know About Distribution in China?
The familiar western distribution model of 1-2 distributors to cover a territory does not suffice in China. Distribution in China is complex, with over 10,000 distributors and sub-dealers available to suppliers. The top 10 national distributors hold a market share of less than 15% of the total sales in China. Instead of using their own sales teams, national distributors rely upon local distributors to cover most of the national market.
Therefore, choosing the right distributor combination whilst building up a close working relationship with them is paramount. Furthermore, when choosing the locations of your distributors, Pivotal Scientific recommend covering the cities of Beijing and Shanghai. This is due to data derived from Biomart.cn which states that out of the top ten biological research institutes in China, three of these institutes are in Shanghai and four are in Beijing.
Moreover, once you select your distributors of choice, you will need to work on establishing a proactive relationship. Your main contact at the distributor may speak English fluently however, the sales team could find it difficult to understand promotional materials. We recommend translating your promotional materials into Chinese, hands on training and regular updates with your new distributors. This is to help build up a rapport with them to ensure promotions of your brand and products.
How Pivotal Scientific Limited Can Help You
Pivotal Scientific will work with you to establish or upgrade your distribution network in China. We will do this by using our knowledge and expertise of both the national and local Chinese markets. To carry out a successful market penetration strategy into China, multiple distributor partnerships are required to achieve sufficient market coverage. We will work closely with you to develop a tailored distribution network plan to ensure you will be introduced to the distributors. Furthermore, these distributors will not only work for your product types, but collectively will ensure full market coverage.