When brands aren’t ready to enter China, they find partners. The more successful the partner, the more leverage they have..at first.
Relationships are TENOUS. Most brands are unprepared for what it takes to build a sustainable presence in China. Distributors know that taking brands to market is expensive and high risk.
If they are successful, brands try to take the business in house. So they are LEARY. They don’t trust brands…and why should they?
Smart partners create stickiness with exclusivity, relationships, infrastructure, IP and scale. But those walls aren’t impenetrable.
Knowing this, Chinese distributors can be diabolical in how they set up relationships with brands to protect their equity in the commercial value of the business.
For brands, setting clear expectations on who-controls-what is key. Often brands get caught in these traps and lose control…which is SO HARD to fix.
Two active cases: (1) dissolving a partnership and (2) transferring rights. In the first case, a long term partner is squatting on IP and digital channels. It’s a big relationship and NOT easy to unwind. And the second is nearly resolved but took 8 MONTHS to negotiate.
If you are considering partnerships, understand the game and get help. Prevention is cheap!
#ChinaBusiness #eCommerce #Partners #ChinaEntry #Distributors #Tmall #ChooseYourPartnersWisely