Doing Business in China For Dummies®

Getting Ready to Deliver: It’s All about Distribution!

Distribution is the hardest part of selling products in China. It’s regional and highly fragmented, and you have to deal with a wide range of channels and multiple layers. The products that win in China aren’t necessarily the best ones; they’re the products that get to where they need to be.

Where your products get sold

The retail market in China has been a little bipolar — the formats that have been doing well are either large hypermarkets or tiny neighborhood stores. Although all segments are growing, specialty retail is really taking off now.

Hypermarkets in hyperdrive

Hypermarkets, such as Carrefour, Wal-Mart, Century Mart, and WuMart, are the largest force in retail in China. Because of their large size, they aren’t that convenient to get to; thus, they’re destinations. These stores offer better assortment and lower prices because they eliminate a number of distribution layers by functioning as warehouses that take deliveries directly from the port or factories. Hypermarkets often provide a mixture of well-known international and Chinese-branded products.

Spreading the word on distribution costs Distribution expenses in China are among the highest in the world. China’s logistics spending accounts for 17.6 percent of the GDP, as compared to 11.2 percent and 8.5 percent in Europe and the U.S., respectively. The following chart ...