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Trading and export are to use the intermediaries to export to China indirectly or directly. There are mainly four type of intermediaries: agents, distributors, wholesalers and retailers. 

 

Agents do not have the property rights. They are only entrusted to do whatever they need to do and agents can come in the form of exclusive agent and non-exclusive agent. A distributor buys goods on its own account and resells them to customers. The distributor takes on the financial risk of not being able to sell the product. Wholesaler refers to those bought large volume of stocks and then sells it in amount to various people. Retailers are those who purchase products from wholesalers or manufacturers and re-sell them to end-users.

 

Indirect export

 

Through indirect export, companies can sell its products to the intermediaries in China and these middlemen can help to bring the product into the market. There are many channels in market entry for indirect exportation such as Chinese importers, international trading company, and foreign companies situated in china that import the products back to their China market.

 

The advantages that a foreign manufacturer chooses to export its goods indirectly include the following:

 

* The time taken in market entry will be short and it is flexible.

 

* By selling to an export merchant, the manufacturers can receive payment for their goods much sooner, they will not be exposed to risk of foreign exchange and the various credit risks.

 

* The manufacturer does not need to set up its own export department hire an export manager, or support its own commissioned sales agent in China.

 

* The manufacturer can benefit from the export know-how and personal contacts with the export merchant or agent.

 

* The export merchant or agent, handling several different products or product lines, can achieve various scale of economies - for example, in the use of sales representatives, paperwork, shipment and communications.

 

* The manufacturer can find out whether its products will sell abroad without having to take great effort, risk, or financial investment.

 

* The manufacturers do not have to worry about all the problems involved in exporting. They merely follow the instructions given to them by the export merchant or agent with regard to packing, labeling, and transportation, etc.

 

However, as indirect export does not need to deal directly with China market, there are some disadvantages of selling through an export intermediary:

 

* The manufacturer has no direct contact with the foreign agents or distributors, and final users of his products, it is difficult for them to gain much experience in market entry.

 

* The manufacturer may find it difficult to get an export trading house to take on its products for the foreign market. As these firms may not prefer to take on products that may require a great deal of promotion.

 

* The manufacturer may lose control over the way its products are priced, advertised, and sold.

 

* The manufacturer will receive a smaller profit margin.

 

This method in market entry is like a double edged sword whereby it is the easiest and also the weakest. Its method is more suitable for small and medium sized companies, large companies may use this method as one of channels in their integrated channels for the market with high risk and less growth potential.

 

Direct export

 

If the manufacturer wants to export his goods himself, there are various ways for direct export. Basically, direct exporting has three channels: its own company employees traveling or stationed in China, Chinese import agents and Chinese distributors. Once this network is established, their products can be directly sold to the end-users.

 

The advantages that a local manufacturer may choose to export its goods directly as means in market entry include the following:

 

 * The manufacturer can be rid of the intermediaries and control the market more closely.

 

* Feedback of their products can also reach them sooner and thereby, and be able to come up with a more practical and feasible marketing strategy. 

 

* The manufacturer can enjoy a larger oversea market share and higher profit margin

 

* The manufacturer can establish its own channel network. As such, the international marketing level and experience of the enterprise can also be raised.

 

Direct export has its limitations as means in market entry as well. For example, the cost of this method is higher than that using indirect export. It may also require huge amount of capitals, employment of large number of talents. Setting up an overseas network would require lots of efforts.

 

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