It’s not as if the Chinese companies I’ve met with lack any understanding of good marketing principles. Nearly every company and everyone I’ve met in those companies have highly educated people that are focused on growing the sales of the company as well as entering new markets such as the U.S.A. It isn’t easy and often what appear to be marketing related issues are actually overall corporate strategic issues that are unsettled, in flux, or both.

To offer that product distribution is the centerpiece of any successful (or unsuccessful) market development strategy would be an understatement. While the Chinese companies that I’ve met seem to understand this concept in an overall sense, their lack of understanding of how things work in the U.S. marketplace can lead to taking what they see as the shortest and easiest route to success – using U.S. based distributors. This strategy is more likely to be unsuccessful than successful.

I’ve seen first-hand examples of how using a U.S. based distributor can be counterproductive. I’ve explained to my Chinese counterparts that distributors rarely offer product line representation in any exclusive fashion. This means that when a U.S. distribution partner is talking to or meeting with its potential customers (note that they might not always correspond with desired customers of the represented companies) they will try to make a deal that best suits themselves (the distributor).

In the U.S., independent of industry, distributors have a number of manufacturers they might represent (in the same discipline) at any given moment. Consequently this affords the distributor the choice of who they want to promote based on the customer need, AND the best compensation arrangement they have from within their network of companies they represent. If a manufacturer wonders why deals never get done on their behalf it could be that the deal set up is relatively unattractive for the distributor and they are promoting other resources. What makes it more frustrating is that the manufacturer will probably never know the real story.

So why do Chinese (and other non-U.S.) companies prefer to use distributor relationships? The biggest reason is that it’s so much easier for them to deal with and manage. Most of the smaller Chinese companies I have met with (I’m not referring to larger enterprises such as Alibaba.com, Huawei and Mindray for example) do not have the knowledge, energy or resources to truly set up an office in the U.S. in order to handle product shipments and distribute those shipments within the U.S. By the way there are similar issues for American companies (save for larger U.S. based enterprises) trying to navigate selling their products in China when it comes to understanding legal issues, duties, distribution etc..

What results is that the Chinese companies I talk to jump in with a distributor and too often become disenchanted and ultimately get rid of them. But those types of efforts to gain traction in the U.S. have made little or no progress and as the saying goes ‘it’s back to the drawing board’.

I advocate a direct approach to developing the market here in the U.S. and yes realize that it is a more challenging approach since it requires thinking on how to import and distribute product. The approach forces companies to carefully consider product lines and the placing of company personnel also which are not shortcut methods as in the case of the distributor approach. My question is, why continue doing the same thing over and over again and then expect a different result?