China Insights | Blog | What Does it Take for Software Companies to Get it Right in China?

What Does it Take for Software Companies to Get it Right in China?

ADG China

Written by ADG China


Expanding into China requires navigating through the initial entry, growth, and consolidation phases, each demanding specific GTM and reseller management strategies. Leveraging local insights for market access, engaging with specialized resellers for deeper penetration, and ultimately focusing on compliance and diversification are key to successfully navigating China's software market.

Success in China relies on a solid foundation, which includes several basic ingredients:

  1. A good product with at least niche awareness. New products can succeed in the China market, but building awareness and developing the market from scratch takes time and is costly. Many products already have a larger customer base in China than the companies realize, often through resellers or customers purchasing from outside of China.
  2. An official or authorized local presence. This could be the software vendor themselves or a local partner. Many companies mistakenly believe a reseller or distributor can fulfill this role, which is unrealistic. Distributors and resellers, focusing on their own business benefits, are not invested in your product and cannot effectively police IP or enforce export compliance. They may promise a lot, but software companies find out later that their expectations for their channels were unrealistic.
  3. A basic IP protection and piracy mitigation program. Without IP protection, partners will not invest in promoting your solutions, and customers will not see the benefits of buying authorized products. This is not just about getting basic legal protection in place, such as trademarks, copyrights, and patents, but also about showing your channels that you are monitoring the market and are there to protect their investment in your products. No one expects piracy to go away, but a basic monitoring and take-down process can be affordable and effective without resorting to costly or potentially market-damaging tactics.
  4. Effective pricing strategies that consider the needs of resellers and end customers. Essential recommendations include 
    1. Lead management protection for resellers pursuing big deals.  Ensure the hunters earn the rewards, and if you want to build a healthy subscription business, you will have to provide margin discounts on every renewal.
    2. Reseller discounts that do not give cross-border resellers a pricing advantage over local resellers, who are ideal long-term partners
    3. Pricing transparency to ensure customers feel their resellers are fair and not taking advantage of them. If you sell directly to the market, don’t offer discounts or compete with your resellers, bringing them attractive leads.

A Partner Mix for Success

Many ask about the right mix of reseller partners in China in the early years. We’ve seen in most situations the best results with the following mix:

  • 2 to 3 cross-border marketplace resellers to provide sufficient reach to customers already looking for your products but need to be aware of a local purchasing channel.
  • 1 to 3 VARs (Value-Added Resellers). VARs may generate few orders in the early days due to market immaturity. However, having at least one reliable partner for larger deals when local support or training is necessary can be invaluable. They also offer insights on market reception and various pricing models. Avoid giving exclusivity and having too many VARs, as this can lead to underinvestment in your business.
  • Local Resellers:
      • 3 to 5 local resellers set up as Preferred Resellers, whom you invest in and motivate to bring long-term ongoing business.
      • 10 to 20 local resellers with the potential to become Preferred Resellers. Continually source new ones and cut off the underperforming ones, as having a reseller who only brings in one deal per year is not valuable. Suppose a customer is interested, and you cut off an underperforming reseller. In that case, they can easily find alternatives, especially if you have demonstrated an authorized presence that can direct them to other resellers.


Entering China's software market involves more than offering a standout product and finding one or a few distributors or resellers. By executing the basics and carefully managing channels, companies are setting themselves up for sustained success and growth in China's competitive landscape.



Latest Resources

Navigating China's Software Market: The Guide to Channel Partnerships

Expanding to China: Clarifying How Recent Regulations Impact Business Decisions for Cloud Companies

(Editor’s note: This article originally appeared on SaaS Mag ) Companies looking to expand in China and deploy cloud architecture often grapple with how to enter the market compliantly. There have been frequent headlines in the past year about Chinese regulators...

SaaS in China: Build a compliant go-to-market plan by looking beyond the regulations

China remains one of the largest untapped markets for many global B2B SaaS/cloud companies. However, due to China’s complex regulatory environment there is confusion around the meaning of “SaaS” in China, and what is even possible for foreign companies. When SaaS...