What is the distributor actually responsible for?
I’m Adrian Liu, a PRC-licensed attorney in Xiamen. I advise international businesses on the Chinese-law side of distribution and other commercial agreements. Before reviewing the clauses, I clarify the roles: which entity buys the goods, which sells them, who controls the brand’s local accounts and which party undertakes the agreed documentation or regulatory work.
The right structure depends on your product and route to market. An exclusive distributor, a reseller and a service provider should not be described interchangeably. The contract needs to reflect how orders, payments, stock and customer relationships will actually operate.
Key terms for a China distribution agreement
- Products, territory and channels: the products covered, permitted sales channels, online sales and use of sub-distributors.
- Exclusivity and targets: whether exclusivity applies, how performance is measured and what happens if targets are missed.
- Orders and payment: order acceptance, credit, pricing arrangements, delivery and responsibility for unsold stock.
- Brand and information: permitted trademark use, marketing approvals, control of accounts and access to relevant records.
- Compliance responsibilities: the documents and actions allocated to each party, product changes, complaints and the handling of quality issues.
- Dispute terms: governing law, dispute forum, notices and the language versions intended to govern the relationship.
Pricing controls, exclusivity and similar restrictions require review in their specific context. A template used elsewhere may not address the Chinese-law questions raised by your arrangement.
Agree what happens when the relationship ends
The exit terms should address outstanding orders and payments, remaining stock, continued brand use, transfer of agreed records and accounts, and any transition work. Termination rights should be considered alongside notice requirements, an opportunity to remedy a breach where agreed, and the evidence needed to support the decision.
When a relationship is already in difficulty, I first assess the signed documents and the record of performance. A new agreement or termination letter should follow that assessment. See my commercial dispute service for disputes over payment, performance and the end of a business relationship.
What to send first
Tell me your product, proposed channels, whether exclusivity is being discussed, the stage of negotiations and your deadline. A non-confidential summary is enough for the initial enquiry. After the conflict check, I can review the draft, prepare terms or support negotiations within an agreed scope.
I explain the main risks and the decisions still needed from your business. Product-specific compliance, registration and foreign-law questions are scoped separately with the appropriate advisers; the distribution agreement is one part of preparing to sell.