Question

How is an agent for a company from the US important to have in China when the product is being made there?

Answer 1

There are many competitive factors for a business deciding whether to choose an agent or distributor. Agents are usually a cheaper option and allow for more oversight than sales. However, there are frequent tax consequences and there is no guarantee that the agency will not sell the product to a competitor.

Agents are usually based in China and often represent several services or product lines. They can work on an exclusive basis as the sole representative of a company’s goods or services in this market or as one of several agents. It is necessary to make sure that the role of your Chinese agent is clearly defined and specified in the individual agreements (contracts) you have with them. It can not be assumed that they will carry out all the activities that an agency would normally carry out in Australia.

An important practical step in completing the fact-finding mission in China is meeting with all potential agents to determine their capabilities and credibility. An in-country assistant can be hired to connect you with the right agent. Establish close working relationships with a high level of trust and regular communication. Pay special attention to Chinese business culture. One of the best ways to determine the credibility of an agency is to meet them in your own market and track their knowledge and market presence. Ask them to make a business report and consider using a professional credit review agency to verify your financial stability.

Some important considerations to consider before choosing an agent include:

Do they have good network and communication? Do they have the gongs (relationships) with the right people?
With their experience in this field? Are they knowledgeable and have they ever represented a similar product? Can they help with marketing?
A well-established company with a good network of contacts may not be flexible or open to the way you do business.
An energetic young company will tend to be flexible, creative and try to prove its worth. The downside is that it can have limited experience or relationships.

Many Chinese agents work for commercial companies that are allowed to trade in a variety of products. Some large companies have offices in other countries as well as a network of offices and branches in China. However, large agents and distributors sometimes manage so many products that you may not get enough attention. The size and diversity of China's regions can also mean that you have to hire a lot of agents to cover different regions. For more information on contracting with an agency, click here.

Potential agents will also look to evaluate you as a business partner. That is why it is important to ensure that your website and other primary marketing collateral are informative and engaging - do not contain too much information but are clearly defined with interesting graphics. If applicable and possible, use customer or client testimonials to showcase your product or service. Make sure your contact information is easy to find and use - a live email with pictures of your staff and your website in Mandarin. Know about the National Firewall in China and make sure your website is suitable for it, ensuring that you do not rely on links to sites like Facebook, Twitter as it is not available in China. Some web domains and email accounts are not allowed.