Distribution

Distribution tends to be one of the major challenges for medical device companies in the China market.  There are several reasons for this:

  1. China’s distribution is very fragmented – National distribution requires managing a network of distributors.  There are tens of thousands of distributors and their direct coverage is usually very limited to one or two departments of a hospital in the city or provincial level , sometimes even as small as a few hospitals.
  2. Chinese distributors are difficult to manage – Managing local distributors requires understanding how to deal with very local, non-professional entities that have very different ideas of the need for honesty, integrity and honoring agreements in their business practices.
  3. Relationships are key to distribution – Verifying which local distributors have the appropriate relationships in the appropriate regions for your product is a challenging task in and of itself.
  4. Chinese distributors have limited capability to successfully develop the market – As distribution is so relationship-based, Chinese distributors are typically focused on just leveraging their existing relationships and channels and are not interested in developing the market for manufacturers’ products.  Such a strategy might work for certain products but for many new and innovative products, with such a strategy one can expect sales to flatten out after one or two years.  Even if a distributor had the desire or incentive to do so, developing the appropriate strategies and carrying out the appropriate market development and marketing activities requires a certain level of human capital which distributors are unable to attract.

We take a two pronged approach to distribution in China.  We leverage our national network of distributors and distributor management system that we have built over many years in the medical device industry in China.  In addition, we augment this with our strategic marketing and market development capabilities that we developed at top business school institutions and honed over years of experience working for top Medical Device companies.

Product Distribution

We can offer a variety of solutions to help you with your distribution needs.  We are a licensed medical device distributor in China for Class 2 & 3 devices and can act as your main distribution contact for China or work with you in an advisory fashion.

For companies wishing to manage distribution by themselves, we can help build a strategy and system for overcoming the challenges listed above.  We can also help locate distributors and help build a distribution network for our clients.

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