3 Reasons Why Your Distributors Shouldn't Be Your Marketing Solutions in China

Updated: Jan 12, 2019

With the fast growth of China’s health and wellness industry, increasing numbers of U.S. and European brands are trying to enter China’s market by working with local distributors and e-commerce platforms. Sport supplement, unlike everyday health supplements, is still a niche category which requires specialty knowledge and experience in terms of product marketing and consumer education. This results in overwhelming opportunities and business proposals presented to the few key distributors and online companies. Consequently, they are more selective with the brands they work with and expect exclusivity from day one.

Having Chinese distributors manage both sales and marketing seems to kill two birds with one stone. However, this actually presents challenges for your brand’s long-term strategy in China.

Challenges of Distributor-Managed Marketing Strategy in China

1: Distributors don’t invest in marketing for business growth

It all comes down to how much profit the distributor makes. Distributors invest in product registration, sales staff to establish distribution networks, and ultimately the inventory. Trade shows usually take a large portion of the marketing budget, so it’s not uncommon for distributors to do the bare minimum in terms of digital marketing as long as they can secure contracts with sub distributors and e-commerce stores. Subsequently, these channels will focus on capitalizing on the best-selling products, the low hanging fruit, rather than investing in creating demand for new products or categories. For example, your protein product might be very popular in the United States, but your distributor is more likely focus on marketing protein than creating demand for other lesser-known products like pre-workout and fat burner. Because of this, many distributors turn away from newer brands for fear of high up-front marketing costs, not guaranteed long-term exclusive support from the brand and short-term cash flow pressure. To a large degree, distributors’ marketing strategy is essentially to fulfill the market demand rather than CREATE and GROW the demand.

Moreover, when you switch distributors and establish new partnerships, the continuous of brand's digital presence is compromised, as brands have to create brand new Wechat and Webio pages and build a follower base starting at zero. This is the case with Muscle Tech’s Weibo and Wechat’s pages after change of ownership of Iovate.

2, Lack of marketing data transparency

Marketing data analytics has become a key component of digital marketing strategy. Understanding your online visitor traffic, consumer demographics, and reactions to online sales campaigns are valuable pieces of business intelligence. When brands give their distributors full control managing the brand’s social media platforms in China, rarely are distributors willing to share the data, and rarely do they have the experience and expertise analyzing and utilizing the information. In Harvard Business Review’s issue on international distribution, David Arnold pointed out that

“The reaction to a request for market data reveals a lot about a distributor. Most distributors, of course, regard data like customer identification and price levels as key sources of power in their relationships with suppliers. The willingness of potential distributors to provide such information was a prime indicator of whether successful relationships could be achieved “

3. Your brand gets lost among Distributors’ many offerings

As many international master distribution companies grow and evolve, business owners more than ever focus on branding and marketing their company’s expertise, platforms, and retail stores. The shift from brand-centric to platform-centric approaches further limit the resources and investments allocated to marketing each individual brand. Furthermore, many distributors have created private label brands to improve their profitability. If your brand doesn't have a China digital marketing strategy outside your distributor partnership, your brand is at risk because any change of the partnership will not only impact your sales but also consumers’ access to your brand's content in China.

Because of the Chinese government’s censorship on Facebook, Instagram, and Youtube, your brand is technically invisible to Chinese consumers. Whether or not your team is already working with distributors in China, it’s imperative to take control of digital marketing strategy.

Marketing Agency is the solution to China Market Entry

China has become a multi-channel market as different e-commerce platforms compete and dominate different industry segments. For example, WeChat, the largest social media platform, has its own payment service but doesn’t accept Alipay, which is created by Alibaba. More than ever, it’s difficult to work with one distributor and expect them to cover all channels. Then who is supposed to manage your brands’ social media strategy in China and make sure product translation and brand images are consistent across different channels and platforms? Glanbia and MuscleTech invested in building a team in China. Alternatively, a more cost-efficient way is to have your social media accounts managed professionally by a digital marketing agency.

Direct Access to marketing data and analytics in China

Having direct access to the data will help to build direct connection with your end consumers. Your brand can utilize the data to advance your branding strategy and marketing campaign, even launching products tailored to Chinese consumers.

Marketing your full range of products.

Often, distributors and channels focus on marketing the products they have the most success with or simply those they have available in inventory. By managing your digital content and social media platforms directly, you control the voice delivering your brand’s story and sharing information for each product. Even for products that haven’t been registered, you can start warming up the consumers with product information.

B2B Lead Generation

Especially for brands at the market entry stage, creating Chinese digital marketing presence also serves the purpose of marketing your brand and products to business opportunities. WeChat is a great tool for connecting with prospects, it is increasingly a “professional network” as well social media platform. For B2B business development, it presents product specifications and images. You can even create application forms for distributors to reach out.

Working with distributors is still an effective approach driving sales and introducing products to a new market in a fast and steady manner. For startup and small to medium-size sport supplement and functional food companies, establishing a long-term partnership with Chinese distributors and online businesses are critical to your brand's success in China. However, just like in the United States, even if you are seeing success with Vitamin Shoppe and Amazon, neither of them can do social media marketing for you. Your marketing team or your marketing agency should be the driving force of your digital marketing strategy in China. Within 6-12 months of launching a successful digital marketing campaign, you will be surprised to see how many distributors, online channels, and even investors come to you.

Tiger Social is a professional digital agency specializing in sport nutrition industry in China, please contact us for a free consultation.