The pursuit of the local distributor
Common themes in the pursuit of the local distributor
Nowadays, there are more than 12,000 private medical distributors in China. Although the Chinese medical device market is rapidly expanding, the distributor search process can be quite complex and risky.
Private Distributor Market Size:
Despite the huge increase in Chinese medical device distributors over the last decade, the number of honest and well-funded private medical device distributors is still relatively small. There are also very few existing private medical device distributors who can provide national coverage. The distributor’s obligations, the distribution network, and the key entities will help to get a picture of its true capabilities – ask for proven capabilities ie hospitals, strategic partners, etc.
Product Replication:
Replicating another manufacturer’s medical device is a common and rampant practice in China. Non-patented devices are especially prone to this risk. Strong knowledge of the market and due diligence during the distributor search will help prevent your device from being replicated The place of judgment agreed upon, the background of the company and its partners (“Tell me who your friends are and I will tell you who you are”) and the personal connection formed will testify to this.
Unqualified and Untrustworthy Distributors: Numerous local Chinese distributors are interested in Western manufactured medical devices;
Business Priorities:
Does the potential medical distributor in China understand critical business ideas such as “conflict of interest”? Do they share the same business philosophies as you? We ensure that these essential questions are answered to assist you in your China distributor search process. Note the first distribution contract draft, this will testify to the distributor’s worldview and what the distribution process will look like after the “wedding”.
Country Size:
Due to China’s large size and fragmented markets, multiple distributors may be required to sell your medical products to different regions of the country. Most of the Chinese distributors are distribute in one/two provinces or regions may not have any contacts or market presence in another region. Because many Chinese distributors operate on a provincial basis, Western medical device companies often need to partner with multiple Chinese distributors in order to obtain national coverage, a complicated and un comfort process. Public companies, state-owned or companies whose sister companies in some districts is evidence of a wide distribution network, individual or/and private distributors will probably testify otherwise.
Relationships (guanxi):
Relationships are the key to doing business in China. Find out what the distributor’s relationship is with key “players” in the industry. Photos, cooperation agreements, and proven activity together will testify to that.
Language:
In China, Less than 25% of the population speak English. Make sure the other departments and entities you will work with speak English or at least have a close interpreter for translating documents and conversations.
The pursuit of the distributor is very important, in most cases it is a long-term agreement that includes exclusivity and daily communication, and there will usually be cultural gaps between the parties, all of which can lead to great success or diligent failure. Good luck.
