Silk Road International has an excellent post on importing consumer products into China, Q & A about Importing into China, that starts out discussing why importing Western products into China is so rife with opportunity. To grossly summarize, more and more Chinese will pay for the better quality and higher prestige Western goods offer.
The post then discusses the difficulties of importing product into China doles out the following tips:
• Read Xiao Lu’s book [Elite China] —no matter what you’re importing. [Bottom Line: Know the market]
• Find a trustworthy partner. Take the time (months) to do your due diligence on this one. This one person, more than anything else you do, could sink/steal/make your business.
• Pick one region or one domestic distributor to start. China is big, don’t get greedy.
• Build some serious guanxi with the port and regional officials that you’re going to be using.
• Plan on staying in the market for at least two CNY holidays to see if you can really make it—remember, 40% of all annual luxury sales happen over this vacation.
If what I am seeing among my law firm’s clients is a trend, the trend is definitely to sell foreign products into China, particularly food products. And Silk Road International is definitely right about how it is not easy. Our china lawyers are right now working with a number of foreign food companies that are starting to export their food products into China and they are all going about it in the following, pretty much similar way:
1. They spent nearly a year figuring out where to “invade” China and who to use for that invasion.
2. They are starting out in one China region, and they hooked up with distributors in their respective regions who know and understand their particular products and who know and understand the particular region. Most seem to start in either Guangdong Province or in the Shanghai area.
3. If their products are successful in China, they plan to produce their products in China, at least eventually.
4. They were very careful to register their trademarks in China, essentially before they went there. For more on why this is important, check out, “China Trademarks — Do You Feel Lucky? Do You?”
5. They negotiated and signed comprehensive distribution contracts (in Chinese) with their Chinese distributors. With help from their Chinese distributors, they have boned up on China’s food and distribution laws.
I mention food companies because I see that as even tougher than non-food consumer products.
What do you think? What should those bringing products into China know? I would particularly love to hear from those of you with direct experience bringing consumer products into China.