China presents a huge opportunity for international alcohol businesses, but selling to China is a long, rigorous process, from following import regulations and submitting the required documentation to locating the ideal local markets and consumers. So most producers prefer working with local agents or distribution companies to make exporting to China much more smoothly.
Why is Due Diligence Important?
In order to export to China, you want to make sure your sales partners are qualified, capable and suitable for your company and type of alcohol to deliver the best sales results. Large distributors have regional or national reach, but they also tend to focus on developing relationships with large producers who produce well-known brands and overlook small to medium sized producers. Small and medium producers are likely to find more interested partners in local or provincial distributors. While many such distributors are reliable and have well-established sales channels, many are not and confirming which is the case is difficult. Any records online which might exist, are likely to be solely in Chinese.
Conducting due diligence on prospective sales partners in China helps you verify their qualifications, making sure that they are trustworthy. Checking their distribution channels allows you to understand their sales capabilities and whether they will reach your target local markets and customers or not.
What are My Considerations in Selecting an Importer/Distributor?
Your ideal importer and distributor will help you get across your products to the Chinese consumers, so it is important that you choose wisely. Some of the factors you should consider are the company’s ownership type and size, geographic reach, sales channel and product(s) offered.
A local or foreign sales partner will have its own advantages and disadvantages. Importers and distributors that are Chinese may know the market and consumers’ taste more intimately, while the foreign ones have more familiarity with imported products.
Larger companies with regional or national distribution network have bigger market coverage. Meanwhile, those that cater to a single city or province tend to have greater control over the distributing process since they focus only on a specific location.
In China, on- trade and off-trade channels are where most consumers make purchases, but online shopping has become more appealing in the past years. If you plan to serve a wide range of consumers, you may consider distributors with access to more sales channels and have diversified offline-online strategies.
Meanwhile, those that specialize in imported foods and beverages are advantageous for foreign alcohol companies since they understand the value of the products you are selling. You may also opt for sales partners that only cater to your particular market segment.
How Do I Know if an Importer/Distributor is Legit?
There are hundreds of importers and distributors in a market as large as China. Our work is to determine who are legit and who are not for you. Aside from checking their qualifications, we look into their current financial situation and legal standing. We also check for important documents like licenses, certificates and insurance (e.g. public liability, cash-in-safe, property, etc., as well as visiting their facilities (e.g. warehouses and storage).
China may be an exciting market for exporters, but its vastly different culture combined with language barrier can make even the shrewdest companies lose money. Maneuvering in the region requires a local touch. While finding the right distributors or importers who can help you meet your goals in the market is no easy feat, carrying out due diligence will save you from scams and unnecessary risks.