Distributor
Most foreign brands entering China default to finding a distributor. It feels safe and low-risk. But after more than a decade of working with brands in the China market, we have seen the distributor model fail far more often than it succeeds. This page explains why — and what the alternatives look like.
We hear this from brands every week. It makes intuitive sense: find a local company, let them take the risk, collect the purchase orders. No investment needed, no China expertise required.
The problem is that this rarely works the way brands expect. Distributors in China operate on their own terms, not yours. They control your pricing, your branding, your customer relationships, and ultimately your reputation in the market.
This is not about every distributor being bad. Some are excellent. But unless you are a globally recognized brand, you are unlikely to attract the good ones. The distributors who approach mid-sized foreign brands tend to be small operators who sign ten brands and wait to see which one sells. The other nine get neglected.
This page compares three entry models and explains why, for brands in categories like cosmetics, fragrance, health supplements, and premium consumer goods, a first-party presence is almost always the smarter path.
Why distributors fail foreign brands in China
Not every distributor is dishonest or incompetent. But the ones you are likely to attract — smaller companies, sometimes individuals — will promise everything and deliver the bare minimum. Here is what we see happen, repeatedly.
They sign many brands and invest in none
A typical small distributor will sign distribution agreements with ten brands simultaneously and see which products sell on their own. Most won't. Nine out of ten brands end up neglected — locked into a contract, waiting for orders that never come. The distributor only puts effort behind the one or two products that show early traction.
No brand building, no identity
Distributors rarely open a dedicated store for your brand. They list products on an existing multi-brand online shop, upload a few photos the brand provided, and write product descriptions in poor Chinese. No localized design, no brand story, no social media, no content strategy. The result is a low-quality presence that actively damages how Chinese consumers perceive your brand.
They demand exclusive, long-term contracts
Every distributor wants exclusivity for as long as possible. They will promise aggressive sales targets — but those targets are rarely binding. The distributor only needs to place a first order to activate the contract. After that, there is no obligation to buy more. You are locked in with a partner who has no incentive to perform.
They destroy your pricing when things end
When the relationship ends — and it usually does — the distributor still holds inventory from their initial purchase. To clear it, they dump it at steep discounts across any channel they can access. If you try to start fresh with a new partner or your own store, you will be competing against your own products being sold at 50-70% off. We have seen this undermine brands for years after the distributor relationship ended.
They overstate their capabilities
Many distributors present themselves as larger and more established than they actually are. They claim to sell through major retail channels they don't control, inflate their network, and show case studies from brands they no longer work with. By the time you realize the gap between promise and reality, the contract is signed and the first order is shipped.
Your trademark and IP are exposed
Even if you have registered your trademark in China, you are probably only protected in the product categories you filed for. China's trademark system allows anyone to register the same name in other categories — and distributors, who have the highest investment in your brand and know your market best, are the most motivated to find these loopholes. We have worked with a bicycle brand that had a registered trademark for bicycles in China. They assumed they were protected. Then they discovered clothing, helmets, and protective gear being sold under their name by someone who had registered the trademark in those categories. The brand had no legal recourse because those filings were legitimate under Chinese law. This is not a rare edge case. It happens regularly, and it is the people closest to your brand — distributors, former partners, local contacts — who are most likely to exploit it.
No reporting, no visibility
Distributors rarely share meaningful sales data. You will not know which channels your products are sold through, how they are priced at the point of sale, who is buying them, or what the actual sell-through rate looks like. When you ask for reports, you get vague spreadsheets with top-line numbers and no granularity. Without visibility, you cannot optimize your product mix, learn what resonates with Chinese consumers, or make informed decisions about whether to invest more or pull out. You are making strategic decisions about one of the most complex consumer markets in the world while flying blind.
The typical distributor lifecycle
This is the pattern we see repeatedly. The early stages feel promising. The problems emerge later — and by then, the damage is done.
Real scenarios from our experience
These are composite examples based on real situations we have encountered working with brands that previously used distributors in China.
A first-party flagship store is not the right model for every product category. If you sell commodity food products or low-margin consumer goods, a distributor or multi-brand channel might work fine. But for high-margin, brand-driven categories where Chinese consumers care about authenticity, trust, and brand story, a first-party presence is not optional — it is the foundation everything else is built on.
Whether you set up your own subsidiary or work with a Tmall Partner agency, the critical difference is the same: the store, the social media accounts, and the customer relationships belong to your brand. Not to a distributor who may or may not still be around next year. The entry model does not have to be the forever model — it is a starting point. But choosing the wrong starting point can cost you years.
When a distributor actually makes sense
The hybrid model: online flagship + offline distributor
Some brands use both channels simultaneously. You own and control your online presence while using a distributor strictly for offline retail placement. This can work — but only under specific conditions.
Which categories belong in a flagship store
What you get with a brand-operated presence
Whether you set up a subsidiary or work with a Tmall Partner agency, the key difference is the same: everything belongs to your brand.
Questions to ask before signing with a distributor
If you are still considering a distributor, ask these questions before you sign anything. If the distributor cannot answer them clearly, walk away.
How to transition from distributor to first-party
Already working with a distributor and ready to move to a first-party model? This is the process we follow with brands making the transition. It typically takes three to six months.
China distributor vs. first-party: common questions
We work with foreign brands across cosmetics, health supplements, fragrance, consumer goods, and other categories. Whether you need an agency to run your Tmall store, manage your Chinese social media, or help you set up a local company, we provide a single point of contact in Shanghai.
If you have been told you need a distributor and you are not sure it is the right path, talk to us. We will give you an honest assessment of your options — including whether China makes sense for your brand right now.
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