Got an email this morning from an experienced China consultant based in China. The email included this article on Why Foreign Companies are Shutting up Shop in China and asking us what our China lawyers are doing in response. My quick answer was that China retail has always been difficult for foreigners to do directly, but our China lawyers just keep writing distribution agreements that work. And we are doing it for the widest range of products you can possibly imagine.
Our China distribution contracts typically provide for the following, among other things:
- An exclusivity provision, or not
- Whether the distributor can subcontract out distribution, or not
- The geographic and market territory given to the distributor
- The term of the distribution agreement and what must be done to renew or terminate it
- The specific products covered by the distribution agreement
- The methods the distributor can use to sell the products
- The pricing the distributor can use for the products
- Payment terms
- The distributor’s performance and sale requirements
- Ordering and shipping procedures
- Who is in charge of what when it comes to such things as defective products, advertising, warranties, technical support, obtaining permits, marketing materials, etc.
- Rights regarding new or modified products
- Whether the distributor can or cannot sell the products of others
- All sorts of things relating to intellectual property (trade secrets, trademarks, patents, copyrights, etc.)
- Non-competition during or after the term of the distribution agreement
- FCPA compliance. Anti-corruption compliance
- Damages for breaches
- Dispute resolution (venue, choice of law, etc.)
And as noted in our recent post, China Trademarks and Your Chinese Distributor, our China attorneys also intensively focus on protecting our clients’ intellectual property even before the agreement is signed.
And the above is only part of what sometimes goes into such agreements), but for lawyers who do these agreements all the time, they become at least somewhat standard.
For more on what it takes to distribute your product in China, check out the following: