How to choose a distributor in Vietnam: what to check before you sign

Search for how to find a distributor in Vietnam and most of the first page comes from businesses that make introductions for a living. Some do it well. All of them are paid by someone, and the advice reflects which side that is.

The useful work starts after the names. Which candidate fits the job you need done, what each will send back to you every month, and what the contract says about the stores, the accounts and the exit: these are decided in the weeks before signing, and they are much harder to change afterwards.

This article assumes the route has been chosen and a distributor is the answer, at least for some channels. If that decision is still open, distributor, partner or direct covers what each route does to your marketing.

Write the brief before you meet anyone

A distributor search without a written brief turns into a comparison of presentations. Each candidate describes what it does well, and the brand ends up choosing the best presentation rather than the best fit.

One page is enough. It should state:

• The channels the distributor must cover: supermarkets and convenience chains, traditional shops, pharmacies, specialist retail, marketplaces, or a named subset.
• The regions, in order. Coverage of Hanoi and the north is a different network from Ho Chi Minh City and the south, and a candidate strong in one is not automatically strong in the other.
• What the distributor will run, and what the brand keeps. Marketplace stores, advertising, the Zalo account, key retail accounts: write down who holds each.
• The data the brand needs back, in what detail and by which day of the month.
• The first-year marketing support the brand intends to fund, and how it expects to approve and verify it.

The brief does two jobs. It makes candidates comparable, and it tells a serious distributor what kind of principal it would be working for.

Where candidates come from

The best source is the shelf. Visit the stores where you want your product to be sold and look at what sits next to it. Imported goods sold in Vietnam carry a Vietnamese supplementary label that names the organisation responsible for the product here, usually the importer. A morning in three or four stores produces a list of who already moves comparable products through the channels you need.

Other sources add to that list:

• Your country's trade office or the commercial section of its embassy, which often keeps lists of local importers by sector.
• Chambers of commerce and business associations with members in your category.
• Trade fairs in your sector, where distributors attend looking for new lines.
• Retail buyers. A category buyer at a supermarket chain knows which distributors deliver on time and which do not, and will sometimes say so.
• Non-competing brands in adjacent categories, whose experience of their own distributor is the most candid reference available.

Introducers and matchmaking services can save time. Before relying on one, ask who pays them, how, and whether the candidates they present are clients of theirs. A recommendation is worth exactly as much as the incentives behind it.

What to check on the shortlist

Three candidates make a workable shortlist. Each should be checked against the same criteria, and each claim against something you can see.

The last row is the one most often skipped. A current principal will usually be polite. A principal that moved to another distributor will tell you what the relationship was like when it was under strain, and that is the version you need.

Financial standing and legal checks belong with your accountants and lawyers. They matter as much as anything in the table, but they are a separate piece of work with its own advisers.

The data questions most briefs leave out

A brand that sells through a distributor sees the market through the distributor's reports. The quality of those reports therefore matters as much as the quality of the sales team, and it is far easier to settle before signing than after.

Ask each candidate, in writing:

• Which systems record its orders to retailers, and can a report be produced by product, outlet, channel and region?
• What does it count as sell-out: deliveries to retailers, retailer sales to consumers, or an estimate built from either?
• How often can it deliver the report, and on which day of the month?
• What does it know about prices at the shelf and on marketplaces after promotions?
• Which figures are measured and which are estimated, and how is the estimate made?

The second question deserves a precise answer. For many distributors, "sell-out" means what they delivered to retailers, which is still one step away from the consumer. That can be the right figure to use, provided both sides call it what it is and nobody reads it as consumer demand.

One practical test separates candidates quickly. Ask each for a report it sent another principal last month, with that principal's name and figures removed, and note how long it takes to arrive. A distributor that already produces a usable report will send one within days. One that needs to build it from scratch will say so, which is also useful to know, because the brand will be paying for that work one way or another.

Accounts, stores and the customer record

If the distributor will open marketplace stores, a Zalo business account or advertising accounts for the brand, the agreement should say who owns them. The workable arrangement is ordinary: accounts in the brand's name where the platform allows it, operated by the distributor under a written mandate, with administrator access for the brand and a list of what transfers if the agreement ends.

Where a platform requires a local entity the brand does not have, the distributor may have to register the account itself. That is common with Zalo, for instance, and the Zalo guide sets out how verification works. The answer then is a clause, not a refusal: the account is held for the brand, and its followers, history and message templates move with the brand.

The general principle is set out in the route article; the practical point here is timing. Ownership terms cost nothing to agree while the distributor is competing for the brand. They become a negotiation once it holds the accounts.

Exclusivity: scope it, then make it earn renewal

Most distributors will ask for exclusivity, and there is a fair case for it: building a brand in a new market costs the distributor time and money, and exclusivity protects that investment. The question is not whether to grant it, but how much, for how long, and on what condition.

The last row is the one to aim for. Targets for renewal should be measured on sell-out and distribution, not on what the distributor bought, and the data that proves them should be the same data pack the brand receives every month.

What happens when a target is missed deserves a sentence of its own. Termination is rarely what either side wants after one bad quarter. A more workable clause gives the distributor a written correction period, then narrows exclusivity to the channels and regions where it is performing, so the brand can bring in a second partner where the first has not reached, without ending the whole relationship.

KPIs and marketing money in the contract

What a contract measures, the distributor will manage toward. A contract that measures only sell-in volume rewards moving stock into the channel, which looks like growth for a quarter and then stalls when shelves are full.

Better measures are those that describe the market. Four or five are enough; more than that and none of them governs anything.

Marketing support needs the same discipline. Whether the brand pays a contribution per unit, funds promotions directly or shares the cost of campaigns, the agreement should state who approves each activity, what proof of execution is sent afterwards, and how much of the money goes to trade incentives rather than to reaching consumers. Several of these clauses work the same way as in an agency agreement, and what belongs in a marketing agency contract in Vietnam covers the ones on ownership, reporting definitions and exit in more detail.

A worked example: scoring three candidates

A European personal-care brand wants pharmacies and modern trade in both main cities, plus marketplaces. It shortlists three distributors. The candidates, weights and scores below are illustrative, invented for the example; each criterion is scored from 1 to 5.

On this brief, the three are almost level, and the largest is not ahead. The scores do not make the decision. They show what it turns on: whether the brand values A's coverage more than B's attention, and whether C's marketplace strength could be bought separately while B covers the shelves. That is a conversation the board can have with the trade-offs in front of it, rather than a choice made on which presentation impressed most.

Working together after the signature

The first ninety days set the habits of the relationship. Three of them are worth agreeing in the first month:

• A joint business plan, revisited quarterly: targets by channel, the promotion calendar, the marketing support and who approves it.
• A monthly data pack on a fixed day, in the format agreed before signing, read by the brand before the monthly meeting rather than presented during it.
• A quarterly review that sets sell-in against sell-out, checks prices in stores and on marketplaces, and compares activity against the plan.

Some signs that a relationship is drifting are visible early. Sell-in rises while sell-out stays flat. Promotions are requested every month, each one deeper than the last. The data pack arrives later each time, or in a different format. None of these proves bad faith. Each is a question to raise at the next review, with the numbers on the table.

The brand should also keep one source of its own. A small number of store visits each quarter, in both main cities, and a monthly look at how the product is listed and priced on the marketplaces, cost little and give the brand something to set beside the distributor's report. When the two agree, trust grows on evidence. When they differ, the difference is the agenda for the next meeting.

Where this work stops

MWY builds the partner criteria and the shortlist as part of Go-to-Market Strategy, with how to judge each candidate's pitch. Where a distributor is needed, MWY puts forward three vetted options with the criteria used to judge them, takes no commission from any distributor, and can oversee the one chosen. Running a full distributor selection, with visits and negotiation support, is quoted on its scope.

Once the brand is selling, Vietnam Marketing Advisory & Oversight covers up to three agencies or local partners, which can include the distributor: reading its data pack each month, checking prices and activity against the plan, and reporting to head office in English.

MWY does not draft or review contracts, which belong with a qualified lawyer in Vietnam, and does not assess a distributor's finances or legal standing. It does not import, hold stock or sell, and warehousing, delivery and returns sit outside its scope.