Distribution Agreements In China

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Geo-exclusivity agreements limit distributors to certain geographical areas. Within a selected area, a distributor may freely sell the products, but is contractually obliged not to cross national, regional or other borders. NNN agreements are a hermetic NDA, including “non-use, confidentiality and non-circumvention”. Non-use prevents the manufacturer from using your trade secret or idea to compete with you. Today`s contribution focuses on some of the questions we often ask our customers who want to enter into distribution agreements with a Chinese company. It mainly consists of a merger of emails from our Chinese lawyers who seek more client information and provide additional customer support before entering into a distribution agreement with China. So what happens if distributors don`t stay in their tracks? What should brands do when their distributors start selling on the wrong e-commerce chain or if they reduce their prices of products online to prices significantly lower than the prices prescribed by the MAP guidelines? A technological solution is needed to enable brands to fully track the online actions of their distributors, so that brands can enter into future distribution negotiations with all the important information about how their products are sold online. The establishment of a WFOE in China and the subsequent operation of this activity in China is difficult and expensive. See z.B. Creating a Chinese WFOE: Ten things to consider, and also business in China with remoteness or worse, why a WFOE is a must when doing business in China. It is in this context that our Chinese lawyers are seeing more and more foreign companies choosing to sell their products in China through distribution relationships and not through a WFOE. In this edition of our china business activities series, we discuss a few issues that need to be considered before a foreign seller (the “Seller”) enters into a distribution agreement with a Chinese party acting as the Seller`s distributor (the “Distributor”) to market and sell the Seller`s products and/or services in the Chinese market.

A final important difference between the Chinese and American distribution agreements is the line of signature. Your Chinese distribution agreement should provide your Chinese distributor with a place to affix their corporate seal, otherwise a Chinese court could invalidate your distribution agreement.



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