Industrial Distribution Channels in the People’s Republic of China Market

This chapter examines the changes that have recently been introduced in the distribution channels for industrial products in the People’s Republic of China (PRC), and assesses their overall impact on organizational buyer—seller relationships in this environment. Data for the study were collected during the months of May through July 1996. The sample comprises 72 organizations (local and jointventure distributors/wholesalers) drawn from the Tianjin and Beijing areas, the sources of which were the following directories: Zhong Guo Zhi Ming Qi Ye Lu (A Shortlist of Companies in China), and Tianjin Zhi Ming Qi Ye Lu (A Shortlist of Companies in Tianjin). Industrial products handled by these distributors included the following: machines, materials, capital equipment, office equipment, parts, and hand/power tools. The study addressed itself to the following specific issues: the nature and degree of competition between private distributors and state-owned purchasing agencies, the extent to which private distributors have equal access to foreign exchange relative to the state-owned purchasing agencies, the extent to which industrial distribution channels can now be said to be shorter and more efficiently run as compared to the situation before the reforms, import licences, the degree of freedom foreign suppliers have in choosing distributors, and the degree of government control over the running of the channels. Analysis of this nature is important and has significant implications for industrial marketing strategy in this environment.