The Chinese cosmetics market is the 2nd largest in the world with spending of up to $ 26 billion per year. So there are a lot of opportunities in this market. To locate in China, finding distributors allows your business to sell your products to a brand so that consumers can buy them. Chinese cosmetics distributors have a special way to function. For example, they don’t have the same relationship with their suppliers at all: this is the reason why it is very important to be well informed.
Where can you find traditional Chinese Cosmetics distributors ?
- Cosmetics fairs and exhibition
Trade fairs exist all over the world with the main theme of cosmetics. In these shows, it is possible to find suppliers, brands, and distributors from all over the world. Why find distributors at a trade show? Quite simply because if the distributor is at this show, then he is looking for suppliers, companies to work with. Since many companies want to locate in China, they are looking for distributors. Some distributors have more demands than they would like, but others can still distribute, and it is at trade fairs that you will be able to find such distributors, for example, Cosmoprof Asia in Hong Kong. (More Cosmetics fairs in China + Tips on how to optimize your ROI when participating in fairs)
- Lead Generation & Prospection
A combination of online leads generation and prospection is one of the most effective ways of successfully landing a comfortable deal with a Chinese distributor. Through the process of lead generation, you’ll increase your brand awareness and online presence in China which ultimately will help you convert when doing prospection. The goal of a good lead generation strategy is to pick the interest of Chinese distributors for your cosmetics brands through diverse online channels: Baidu/Wechat/ Pr and so on.
This work on your online presence, will not only encourage distributors to contact you and help with your prospection conversion rate but also increase your sales with actual consumers once you start selling. Keep in mind, it is one thing to have a store in China and another one to actually get sales in China. So, 1 stone, 3 birds.
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Type of distributors in China:
- Hypermarkets and supermarkets such as cosco or Lianhua.
- Specialized Hypermarkets and Supermarkets: Watson & sephora
- Convenient Store: such as familly mart and 7/11
- Department stores & Mall Centers
- Online Markeplace: typically para-pharmacie store on ecommerce platform such as Tmall and JD.
Chinese distribution can be state-owned or private companies. In the case of private companies (which have been growing over the last decade) the bureaucratic process can be daunting and this companies will only work with suppliers they can trust 100% to ensure everything goes smoothly. This post describes in details the different kind of distributors you may deal with in China.
Benefits of collaborating with distributors in the Chinese beauty cosmetics world?
The biggest advantage of working directly with Chinese distributors is that you’ll be able to benefit directly from their networks and resources in the country as well as letting them take care of pretty much everything. While you’ll be losing control of your cosmetics brand as well as autonomy in the country, you won’t have to worry about logistics and distribution and if your distributors have the right network, it will definitely open doors to your brand such as Watson China.
Furthermore, Chinese distributors are familiar with locals regulations and processes as to selling and distributing cosmetics and beauty products in China. If your goal is to simply sell your products in the country, with no specific marketing goals and you are alright with giving up on a good chunk with commissions, then this model is definitely for you.
Ensuring that you and your distributors are on the same page is always important. Without a clear understanding of what needs to be done at any given moment, it will be harder for everyone involved to get their work completed as quickly as possible—and no one wants that! Before starting work, define your project and outline all necessary steps so nothing falls through the cracks when the time comes for action.
Challenges of working with a Chinese Distributors for Cosmetics brands
The main challenge of distribution in China is simply to get enough interest from Chinese distributors to sign a deal. Chinese distributors are highly solicited by foreign brands that want their slice of the market giving them huge leverage. When you have so many options for collaborating, you choose the option that makes more sense, in this case meaning the option that can make more money the fastest and require less working is paramount AKA a brand that is already present on the Chinese market with good results. In short, with the many request distributors gets, they won’t take risks and the quality of your products does not matter.
NB: and also, emails are not a great way of reaching out to distributors in China.
The lack of involvement of the Chinese distributors with Beauty brands
- Why the lack of involvement by Chinese Cosmetics distributors? While doing business in China, it’s important to remember that distributors are there purely for results. They won’t invest themselves into their brands, they will distribute, their job is not marketing. The “it’s not my job mentality” is common among Chinese distributors. Not ony that, but promoting a brand require a totaly different set of skills and ressources that distributors are often not willing to put in. Chinese distributors typically have strict criteria when it comes to doing business with companies. They want quality products, good packaging and accurate positioning of their brands in China’s marketplaces. There is no reason for them take a risk on one brand if they can get ten others that meet their standards at the same time.
Before even thinking of beginning a discussion with Chinese cosmetic distributors, it is essential that you have an established social media presence and good reviews on Baidu SERP. It helps to know your brand has some sort of reputation in China because these beauty product manufacturers need to make sure what they are distributing is legitimate.
Distributors are not especially loyal in China
- When a brand’s performance takes a turn for the worst, or it experiences any kind of supply issues, distributors won’t hesitate to drop them. If one of their suppliers needs investment in order to improve business prospects they’re not going to be the ones offering aid. The Chinese Cosmetics market follows trends. Brands often disappear as quickly as they came, and the next minute everyone is thinking about something else! Sometimes a bad product ruins an entire brand’s reputation – if one product isn’t good enough for consumers to buy again, then distributors may stop selling that brand all together. The fact that these brands were distributed by them or associated with this supplier since their beginning won’t make any difference.
- Without a “no registration” clause, you can risk losing ownership of your intellectual property. In China, product registrations do not protect international trademarks and legal agreements should include the rule that excludes protection in case it is issued domestically.
- The compliance issue can be a huge problem for foreign companies who don’t understand the terms of their agreement, and how distributors often change these agreements to better suit themselves.
Chinese Distributors are not Marketers
So, let’s talk about branding and distribution. First of all- they’re not the same thing! Branding is a crucial part in any business; it makes your brand unique to other brands so that customers can recognize you easily at stores or online platforms. You want people to know who you are when they see one of your products on Chinese supermarket shelves? When someone sees this product closely for the first time, would he/she continue looking if there was no information detailing what kind of lotion it is? Of course not: Consumers need an immediate interaction with their favorite brands before making purchase decisions because these days competitive market forces make them choose quickly – either by price comparison or just going through names from A-Z. If your product go unsold, not only distributors will lose profits but these lost dollars will be yours too as this goods will go to waste.
So marketing is necessary but why can’t you relies on distributors to take care of it? To put it simply, branding takes time and distributors think about short-time actions and quick profits. If your company products are brand new on the market, there will be much to do and a lot of ressources to be invested (Ressources you’ll be paying from your own pocket and time).
Direct Selling over Chinese distributors for selling cosmetics in China?
Direct selling is a form of retail in which products and services are marketed directly to customers. It consists of any marketing that relies on direct communication or distribution to individual consumers. If you are going to have to market your products in any case, why not selling directly to consumers instead of going through a third party and getting full control over your brand?
Direct selling is the model that many brands have chosen in China, although most international brands still have some distribution agent in the country, most of their sales are done through their own channel or channel were that has near to full control such as Tmall or JD.
Ecommerce, a good alternative to the distribution model in China?
Why do we think adding an eCommerce store to your china strategy could be a better option than strictly sticking with cosmetics distributors?
- More visibility by having your brand added on more channel.
- Interact directly with customers and get insights.
- More control over your brands reputation and pricing
- Just like with a distributors, you won’t need a physical store.
- You can use the logistic services of the online market place of your choice.
- Take advantage of all the chinese shopping festivals
- Store can be linked to chinese social media
- With Crossborder you do not need a chinese business license
Direct Selling or Distributors: Cosmetics brands in China need to:
- The first step is to research the market. Indeed, it’s important before starting out that you have a good understanding of what this market entails and if there isn’t any competition already in place. It’s essential that you verify whether or not this growing sector has reached its peak yet because China holds interest for many brands so they compete fiercely against each other here which means researching trends within the country are vital such as: age group of consumers, type of city located (urban/rural), current influences on them including media and how wealth distribution goes among these citizens. Informed market research will help you understand your potential in the region as well as determine goals and elaborate a business and marketing strategy.
- Properly register your products and trademark. To be able to export it is necessary to go through legal questions. In particular, you will need to apply for dedicated licenses, or even designate a Chinese REP and declare it to the SFDA. (Read this post about legal requirements to sell beauty products in China)
- Baidu SEO: To be successful in the Chinese market you’ll need to use Baidu SEO Marketing. You will also want a website that is written entirely in Mandarin and has an active chat function on it so users can contact you easily. Make sure your business’ name, address, phone number, etc are all visible for customers. Your website is also a great place to redirect visitors through channel they are confortable with using such as Wechat. Having a Chinese website also opens opportunities for paid advertising which is great to attract initial traffic and promote occasionally such as when we’re releasing new products.
- Social networks are a great way to build community and visibility among Chinese consumers. Anyone can view the news easily, and perks such as private sales or deals may be set up by brands on social media platforms like WeChat Moments. Social communities consist of people who follow brand-related news regularly, making them loyal customers that will likely buy products again in the future. Having regular customers is good but having loyal ones means businesses have greater certainty of selling their product for quick returns!
To conclude, for Westerners, launching a brand in China can quickly become a headache. It is therefore essential to study the country and its commercial practices in order to know which path to take and which aid to use. To find your distributor, if you are looking for one, prepare yourself, optimize your networks, make yourself known and appreciated by the public. Once engaged, stay focused on your work, not forgetting that everything can be fleeting and works for short-term results with Chinese business-mans.