A China distribution relationship can provide rapid marketaccess without a local subsidiary, but it can also concentrate control over customers, registrations, inventory, and brand assets in one intermediary.
Careful diligence and contract design are essential.

Exclusivity is valuable and risky

A distributor may demand exclusivity to justify investment,but the foreign supplier can become trapped if sales are weak or reporting is poor. Exclusivity should be earned and measurable.

Define the scope narrowly

Specify territory, products, channels, customer groups,term, and whether online sales, key accounts, or direct sales are excluded. Avoid vague “China exclusivity” language.

Tie exclusivity to performance

Use minimum purchases, sell-through targets, launchmilestones, staffing, marketing obligations, and timely payment. Provide automatic conversion to nonexclusive status when objective conditions are missed.

Control subdistributors and online channels

Require approval, flow-down obligations, brand standards,and reporting. Unauthorized subdistribution can complicate pricing, regulatory compliance, and termination.

Plan the exit

Address inventory, customer handover, trademarks, domainnames, regulatory registrations, after-sales support, and use of marketing materials after termination.

Practical next step

Before appointing, expanding, or terminating a distributor, confirm the legal entity, trademark position, inventory, customer-control issues, registrations, and post-termination obligations. These facts should drive the agreement and transition plan.