There appear to be many ways to operate in China, but for brands with annual sales below US$15 million, some options are not worth pursuing. Traditional offline retail, for example, offers virtually no route in. Even if a brand somehow secures a listing, insufficient brand equity and product strength are likely to produce weak sales.
Other choices, such as the trade model, are determined by business objectives and the legal and policy environment.
Put simply, there are two principal operating routes: establish an official brand team or rely on a Chinese distributor, with specialist providers handling the remaining functions.
An official team usually means establishing a Chinese subsidiary or a China marketing unit within the Asia-Pacific organization, often led by someone of Chinese heritage. Its main role is marketing and the allocation and coordination of business resources, rather than hands-on execution. Local TP agencies and logistics companies provide support, and the brand’s own entity remains the seller in each channel.
With the distributor route, the brand entrusts the Chinese market to its distributor and interfaces only with that partner.
An in-house team provides stronger control and faster implementation of the brand’s priorities. A distributor lowers operating and trial-and-error costs while making financial and policy risks more manageable. Overall, distribution is better suited to small and medium-sized brands. With an efficient, cooperative distributor, sensible targets and technical controls, a brand can capture the advantages of both models. A distributor with exceptional access to specialist offline channels is an even stronger choice.
What does the distributor landscape look like? We will explore that next.