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Working with distributors in China, good idea?

I've never met anybody personally that has had their technology and ripped off by a Chinese manufacturer and distributor but I've heard many horror stories. We have the opportunity to distribute our mini PCs optimized with our software through a distributor based in domestic china that also has connections in other parts of Asia, Europe, and Australia.

The optimist in me thinks this would be a great way to push our product into the market place asap, but there are potential downsides.

Worst case scenario is that we start to work with this manufacture/distributor and after all the document signing (NDA, non-compete, etc...) we send them a sample or shipments to start to selling and we never hear from the company again. We don't want our technology to be duplicated immediately but don't want fear to stop us from growing and scaling.

Any tips or relevant experience with working with tech. companies in China is appreciated.

1 Reply

Susan Luo, CFA
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Susan Luo, CFA Advisor
Principal of Scotch Pine Capital, a Management Consulting firm for Financial Institutions
All business partners are not the same, so my advice is to do your due diligence. There are many legitimate Chinese distributors who help US firms with access to a potentially large market. On the other hand, it is your responsibility to conduct proper due diligence. Where I see firms struggle is when parties come in with different assumptions. Do not assume what's said over dinner table is more or less legitimate than what's written on paper. Spend your time to get to know the people you'll be working with, speak with their customers and check out references (not just the names they provide, but what you can find out on your own). Relationship takes time, unless you can find someone through your existing network, with credibility.
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