Sales in China

There are many options available for selling and marketing your product or business in China. The suitability of each option will depend on the type of product you are offering. The most common method is to use agents and distributors, although online e-commerce sales are also becoming increasingly popular, due to lower risks and costs. Businesses should  perform due diligence, and to carefully research the marketing and sales strategies that will best suit their business strategy and objectives.

Agents and Distributors

The definition and responsibilities of agents and distributors can vary depending on the industry in which you are involved. It is important to have roles clearly defined and confirmed in the individual agreement you have with them. Do not assume they will take on all activities that an agent or distributor would perform in Australia.

Many Chinese agents and distributors work for trading companies that are authorised to deal in a wide range of products. Some of the larger companies have offices in other countries, along with a network of offices and affiliates in China. Be aware that large agents and distributors sometimes manage so many products that yours may not get enough attention. China's size and regional diversity also means you may need to engage several agents to cover different areas.

Note that payments can only be repatriated easily if the goods were imported into China. If goods are produced in China, agents can only repay funds after end-of-year tax has been paid.

See the agents and distributors pages for more detailed information about the topics. 

Online Sales

See e-Commerce

Direct Selling

Making direct contact with buyers and end users is another option for selling your product in China. Although low cost and relatively low risk, direct selling is not an easy route to market because of strict regulations that constantly change. Until recently, direct selling was illegal in China due to widespread pyramid schemes. Under the relevant laws that now permit the practice, only certain types of products can be sold directly. These include cosmetics, cleaning supplies, health and exercise equipment and small kitchen products. Seek professional advice if you are considering direct selling in China that can also assist you to understand Chinese tax and import duties requirements.

The benefits of doing it yourself include eliminating middlemen and gaining a better understanding of buyers’ or end users’ technical needs and an ability to customise accordingly. However, not having a physical presence in the market can make it difficult to conduct direct sales in China. Some Chinese clients will not always be prepared to do business with a company that has no local presence or representation.

Companies in China that have successful direct selling strategies tend to employ a high number of direct sales agents who cover diverse geographical areas. Be aware that selling directly to end users involves being responsible for all market research and marketing, distribution, shipment, warehousing and delivery, customer and after-sales services and the sales order, billing and collection processes from Australia.

Australian exporters may sell directly to Chinese retailers or retail chains when consumer products are involved. To do business this way, Australian exporters must travel to China and make contact with retailers. This should be supported by direct mail material such as letters, brochures and catalogues. There should also be follow-up contact with retailers to ensure they know your products well and can sell them effectively. The retailer may have input on the development of products, pricing and marketing. Selling directly to retailers generally reduces commissions, reduces travel and reaches the market more effectively. You can also use an agent or distributor to get your products to a retailer.

Franchising

For Australian brands looking to bring their goods and services to China, franchising is a popular and proven expansion technique. Franchising provides access to local capital and local knowledge of consumer habits, retailing practices and real estate opportunities. Franchising has become very popular in China, particularly in the food and beverage industries and in retail and business services. Franchising regulations are relatively new and are continually evolving, so you should seek legal advice before setting up a business as a franchise.

Australian businesses looking to franchise in China must:

• Be a business with a registered trademark or patent.
• Have two directly operated outlets running for over a year. This is referred to as the ‘2+1 Requirement’. The two outlets do not have to be in China.

Marketing

China is a complex and diverse consumer market, which means that it is crucial to tailor your marketing strategies to local demands. To do this, you will need to be aware of the local preferences and trends around brand awareness, price consciousness, demographic dynamics and logistics.

Given the size and diversity of China, it should be viewed as a series of markets, each with thousands of different outlets for goods. Reaching people in these markets is best done through trade shows and exhibitions, brand marketing, and adversitising.

For detailed information on this topic, visit the Marketing page. 

Want to learn more? Explore our other China information categories or download the China Country Starter Pack.