Doing Business with China

How to manage sales and distribution effectively “ selection of agents and distributors

As a starting point, companies should define an optimal mix of direct and wholesale accounts. The parameters should be first and foremost the cost-to-serve economics which determine optimal effectiveness in running one's own independent sales network versus alternative channels to market.

Markets can be divided into core and secondary by their level of importance to the company, location advantages and disadvantages and manageability. Generally, it is advisable to serve the core market with one's own sales force, while leaving secondary markets to agents and distributors.

To manage wholesalers properly, companies need to define their wholesaler selection criteria and performance measurement:

Selection criteria

Maturity

• company size

• age (history)

• previous experience

• technical capability (ability to lead technical personnel)

• management competence

• financial stability

Operating (serviced) area

• Local operator ( servicing only one market)

• Regional operator (servicing several neighbouring/ selected markets)

• National operator (servicing all key markets countrywide)

Terms and conditions

• payment terms

• volume commitment

• commitment to promotion and advertising

Other

• transportation

• feedback system

• warehousing

• after-sale service levels

• required skills of salespeople

When managing agent/distributor relationships, it is suggested that companies link performance with incentives and provide regular, scheduled training to the selected wholesalers in order to achieve optimal effectiveness.