China software resellers: How to get them excited to work with you

Written by Chris DeAngelis

02/26/2021

To get China software resellers onboard with your product or platform, you need to build trust and excitement through a strong show of commitment and support on your company’s part.

While your technology certainly matters, in China, technological prowess from Western companies is both assumed, and not 100% an advantage: companies without the best technology have been very successful in China. Those successful companies understood that business decisions in China are strongly tied to relationships, deliver on the ground in China, and that putting partnerships and deals into a “China context” are key.

Since most China software resellers prefer to get to know you and negotiate the partnership in conjunction with a real opportunity, it is a huge plus if you can start by providing them with some existing leads or at least be willing to support them during their sales process. You will likely need to push them a bit, but whenever possible you want to speak with their own sales teams to get the word out to uncover some initial opportunities to pursue together. For example, introducing them to the China branch of a multinational that is using your product in other countries, can be a great way to show your willingness to work together.

Know your value

Do your homework on the China market by being prepared and showing you that you have some knowledge of the market and the value propositions that you believe will be attractive in China. Most companies are surprised to learn that the value propositions in China are often very different due to budgeting process, politics, internal non-business oriented KPIs, cost structures, competing alternatives, etc.

Sell through use cases

China software resellers like to learn how companies elsewhere around the world use your products. Case studies and use cases are very important. Many customer prospects may not have a technical orientation, so they will expect a clear value proposition on how it can improve their business. If you provide case studies, expect hard questions on how and why those customers choose your product, and use data driven methodologies to prove your points. You can leave your marketing documents with fuzzy numbers and hyperbole at home.

Product readiness

It’s not enough to prove how amazing your product and technology works outside of China, you need to provide China software resellers proof that it will work in China (and it almost never will in the way you expect). They can accept that you might not be ready on day one, but if your product isn’t ready, then you need to provide a plan that demonstrates you understand the problems and have a clear path to deliver. Special note: if you are a SaaS company then resellers will expect that you’re already educated on the technical, regulatory and political environment that may be associated with your product in China. Saying, “we run on AWS so it shouldn’t be a problem,” will only bring exasperation to China software resellers.

Local market integrations

China has an entire independent ecosystem of services that are typically embedded across products and websites. These could be payment gateways, customer service and communication tools, marketing tools, and other integrations applicable to your products. Partners won’t expect you to come to China with all your integrations working from day one, but will be impressed if you can discuss your plans with them and get, and try to implement, their feedback.

It will also be valuable to have tested your products in advance in China to understand which ones are going to be problematic due to issues with China’s Great Firewall. Keep in mind that many global platforms encounter problems operating smoothly in China – especially during politically “sensitive” times.

Know what you want from China software resellers

Many companies approach partners with an attitude of, “here is my technology, what can you do for me?” Western executives visiting China often walk out of meetings with partners disappointed because the executive didn’t think that the reseller grasped their technology or asked the right technology questions. The reality is, however, that resellers are not interested in learning the ins-and-outs of your product and technology: they see that as your job. What they see as their job is to deliver to a customer a product that is “good enough” to get the deal over the finish line.

While China companies are happy to discuss all the ways in the world that you can cooperate, in an ideal world it is best to be clear on your expectations in advance. Do you expect them to bring you opportunities? Host your infrastructure? Provide technical support? Co-market or independently market your products? The more you can share with them the more they are likely to have the right people in the room and respond to you directly so as not to waste time. We recommend using a straw man model or proposal whenever possible so both parties have a clear starting point to discuss what is possible and realistic. Open ended discussions almost never go anywhere useful.

Regulatory Compliance

While many China software resellers may not actually have a clear sense of the regulatory issues that impact foreign technology companies, they will want to know that you are generally aware of them. We generally don’t recommend that you put too much reliance on the opinions of lawyers on this topic. Laws in China are often open to interpretation and can be years behind industry practice. Lawyers will always lean towards very conservative interpretation in spite of overwhelming evidence to the contrary. We suggest you balance your advice with the opinions of advisors and industry insiders that are far more likely to provide you will practical insight on the real boundaries of the various laws and regulations.

Pricing Structures

Like it or not, perpetual licenses are how most Chinese enterprises purchase software. While subscriptions are gaining some acceptance (driven largely by Microsoft) buying a perpetual license is the norm in China for a variety of reasons, including that most budgets are project based, e.g. “use it or lose it.” Also, a perpetual license is deemed as an asset that can be capitalized, and is also considered as a way to cut down on corruption. The larger the deal and company, the more likely that they will only purchase a companywide license and not base it by seat. That said, software providers may still be able to gain recurring revenue through support and services. We will generally recommend, whenever possible, that providers maintain an open mind around pricing models.

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