Criteria one should use to select one or more distributors in China.

Essay by dolphi_darrenUniversity, Master's March 2005

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With the dramatic development of the Chinese economy over the last 20 years, more and more multinational organizations are eager to establish a presence in this great potential market opportunity. To be able to distribute the products or services in China would be a significant market expansion for any company. The one way to immediately gaining access to and ultimately capturing this sizeable market is by selecting a right distributor who already has the experience and is intimately familiar with this business environment. Since the distributor directly affects the success or failure of the business, it is vital to that the distributors be chosen based on strict requirements and in accordance to the products and company needs.

This essay is a discussion on the criteria one should use to select one or more distributors in China. These guidelines are highlighted based on the unique business environment in the country.

Specifically, following key aspects in the selection of a distributor are discussed in detail in the following sections, the geopolitical situation, personal and business capabilities, financial strength, and business reputations.

The Geopolitical Situation

China, with 30 provinces and over 500 cities, has a population of 1.3 billion and is geographically the third largest country in the world. Therefore, where to find a distributor is the first factor to be consider in China. Despite its geographical size, most of its populations are concentrated in the cities that also is the most educated and with considerably higher income than the rest of the country. Among all the cities, the coastal, or harbour cities have developed the most in terms of absorbing foreign investment and are closest to the western living standards following close to twenty years of "open-door" policies in the late 1970s by the Chairman Deng Xiaoping. It is because...