Making sure you have the right distributor before you enter the market is essential to ensure your brand’s IP is protected and you won’t come unstuck further down the line. In the first of this two-part series, we explain what to do in advance of finding a Chinese partner
It’s no secret that the Chinese market offers immense opportunities for international brands. But engaging a distributor without thorough preparation can leave businesses exposed, misrepresented, or worse, locked out of their own success. Two experts, Zarina Kanji, Managing Director UK & Europe at WPIC, and Kristina Koehler-Coluccia, Head of Business Advisory at Woodburn Accountants & Advisors, offer a clear-eyed look at the key steps British companies must take before signing anything.
The first lesson: do your homework. “Due diligence is everything,” says Kanji. “Ask for case studies from the distributor of companies they have worked with before and speak to them about their experience with that distributor. Ask partners within the network for their insights. It’s a relatively small community, so introductions are possible. Speak to other brands about their experience—but be discerning. Some may have had a bad story, but that might be down to getting the price wrong, or targeting the wrong market.”
She recommends using networks like the China-Britain Business Council (CBBC) and the Department for Business and Trade (DBT) to get introductions and independent perspectives. But due diligence isn’t just about reputation, it’s also about understanding what’s actually being offered.
“Governance is important,” she says. “You need to know the breadth of services on offer. Is it an end-to-end service? Are they only running social campaigns, or are they also providing logistics, data reporting, and customer service? Some brands charge less, but do a lot less. You have to understand what’s required of you as the brand.”
For example, larger partners like WPIC may put 10 to 15 people on a single brand account. But smaller partners often require brands to provide considerable input, time and resources of their own. If your internal team can’t handle the load, the relationship may suffer.
Know your value…and your size
A common mistake, Kanji warns, is choosing a distributor that’s either too big or too small. “If your brand is under £10 million in annual turnover, don’t go for a giant partner like Baozun. You’ll be competing with Nike or Lululemon and you simply won’t get the attention.”
Instead, she advises finding partners at a comparable size. “You want someone who sees value in your business and is incentivised to make it grow, not just to hit quotas.”
Own your store. Protect your IP.
Perhaps the most critical red flag is giving away too much control, too early. “Make sure you own your store in China,” says Kanji. “The worst-case scenario is handing ownership of your Tmall or JD store to the distributor. Once they have that, they have the upper hand. That’s where the most costly and complex challenges come from.”
Koehler-Coluccia agrees emphatically. “There must be a clause in the distribution agreement that clearly states: all collateral belongs to the brand,” she says. “That includes the Tmall and JD stores, the inventory, all the digital assets. And if the contract ends, there must be a clean transfer of those assets back to the brand.”
In practice, she adds, this means spelling everything out in the contract—including an itemised list of what the distributor is setting up, and who owns what. Too often, British companies rely on UK lawyers for contracts that will be enforced in China. “Don’t do that,” she says. “Hire a Chinese law firm. You’re playing by Chinese rules—use someone who knows the game.”
Plan your exit before you start
One of Koehler-Coluccia’s most repeated mantras is simple: have an exit strategy. “There needs to be a section in the contract that says: if this doesn’t work, here’s how we unwind it. That includes transferring stores, assets, remaining stock. Don’t wait until things go wrong to figure that out.” It’s also worth accounting for the possibility that the distributor might lose money on the venture. “If they spend on marketing or logistics and don’t see ROI, what happens? That needs to be agreed up front—whether that’s clawback clauses or refund triggers.”
Understand the costs…and how to get paid
The Chinese e-commerce ecosystem is expensive and complex. Brands must factor in multiple layers of fees: platform deposits (for Tmall, JD, etc.), annual platform charges, partner fees, and campaign costs. All of these need to be fully itemised from the beginning.
“Get a full breakdown,” says Kanji. “You need to know what the fees are, what frequency they’re paid, and what happens if something goes wrong. Budgeting without this knowledge is asking for trouble.”
Remittance is another challenge. How will profits be repatriated? What’s the process for converting RMB back into pounds? These issues need to be clarified up front, with support from tax and legal advisors familiar with Chinese rules.
Stay involved from day one
For companies that assume the distributor will handle everything, both experts sound a stark warning. “Too many brands just want to delegate,” says Koehler-Coluccia. “They don’t have the internal capacity, so they assume they can just hand it off and watch the money roll in. That’s a fantasy.” Instead, she stresses the need for active involvement: “Set KPIs. Have monthly meetings. Monitor performance. If targets aren’t being hit, have that conversation early.”
It’s not uncommon, she says, for companies to ignore the setup process, then try to take control later, only to find the distributor has more leverage than expected.
“They’ll say: we put in the capital, the resources, the attention. And now you want to terminate us? If you’re not willing to pay attention from day one, what do you expect?”
Choose partners with platform access and influence
Relationships still matter in China, particularly when it comes to access and visibility. “Ask how long they’ve been in business, and how well integrated they are with platforms like Alibaba, Douyin, Xiaohongshu (RED),” says Kanji. “At WPIC, we have longstanding partnerships, so we get early access to marketing campaigns or new tools. That gives our clients first-mover advantage. Some agencies don’t have those connections., they can’t pull favours, they can’t get you in early.” That kind of platform integration can be the difference between a flagship campaign and being lost in the crowd.
Eyes wide open
Ultimately, both Kanji and Koehler-Coluccia stress the same thing: be realistic. China is not a plug-and-play market. It takes time, investment, clarity, and ongoing engagement. British brands that treat their Chinese distributor as a plug-in growth engine are almost always disappointed. But with the right preparation, the right legal safeguards, and a partner aligned to your scale and ambition, the rewards can be substantial. As Koehler-Coluccia puts it, “You can’t just hand it off and hope. This is your brand. Protect it.”
Read Part 2 here: What to do if your relationship with a Chinese distributor goes wrong
