The three main distribution channels are through cooperation with importers and, or, conducting direct business with retailers or e-commerce companies. Profits will be higher when dealing with retailers or E-commerce businesses directly, this is, however, a reflection of the risks involved.
For exporters viewing the Chinese market, it is important to know whether or not their specific products are allowed formal access. Achieving market access can be a lengthy procedure, that includes bilateral trade relations, typically done at a government level and with the involvement of the General Administration of Quality Supervision, Inspection and Quarantine of the People’s Republic of China (AQSIQ).
For a list of products that are allowed entry into China, one can consult the official English website of the AQSIC (http://en.ciqcid.com/Commodity/plant/68646.htm).
Buyers eyeing imported cherries on the Shanghai Huizhan wholesale market
Importers
The role of importers is multifaceted. Importers have the capacity to bring the product into the country and sell through their own channels, which could include wholesale markets. Typically these organisations operate as importers, wholesalers and distributors simultaneously. Official importers have the required licenses to import produce into China. They typically hold good relations with governing import organisations.
Importers are experienced dealing with China’s customs processes. They can either operate as exclusive partners or serve a number of exporters. They are likely to have their own distribution system and are able to negotiate cold chain challenges. As such they can provide valuable support to a business.
South African produce on the Shanghai Huizhan wholesale market
Retailers
Chinese retailers include domestic and international supermarket chains and specialised fruit and veg chain stores. Some retailers import directly, others source from wholesale markets and importers. If the retailer is looking for direct sourcing, and there is no need to employ a middle-man, margins can be larger. Some retailers have the capacity to maintain distribution networks and cold chain infrastructure. It can also be possible that these organisations will not have this, and will require this from their suppliers. This could be a problem if the supplier has no well-established presence in China. Supermarkets can become strategic partners for marketing and promotion, although they might require mutual investments for in-store activities.
“We want to work with distributors. If we go direct to supermarkets or online retailers, we could make more money, but we do not have the right structure to support us,” Italian kiwifruit exporter.
Shop attendant assisting a shopper
Chilean blueberries for sale in Shanghai supermarket
E-Commerce
There are a number of online retailers that provide O2O, online to offline, services. These companies are mainly present in China’s largest cities, and rely on a developed delivery network. Some online retailers specialise in the sales of fresh and imported fruits, such as FruitDay and Yiguo. Online retailers can source directly from abroad, or buy from importers and wholesale markets. The market is moving to conducting business online. However, this practise comes with own costs, and risks - some online retailers have had issues with profitability.
“Ecommerce businesses are often not financially stable and the majority are struggling to make money. We need to act responsibly towards our growers and are hesitant to deal with these companies directly,” European fruit exporter.
Relationships
Once having distinguished suitable distribution channels, it is important to note that building relationships is a ritual in China and key to success. It can be a delicate matter, that can take time to take shape. Chinese partners might require high levels of service, loyalty and attention before trust can be earned.