Würth Group entered China in 1994. As per our assessment, Würth had everything in place to be successful in the China market. As a German company they already had a high-quality image. They also had a clear positioning among other fastener providers and had set up offices in China with Chinese staff.
From their entry in China, Würth had been pursuing a multi-channel strategy. But still most of their sales came through their own salesforce, e.g. directly to major car manufacturers. An important part of the market, for example service and maintenance companies, who used smaller volumes, was difficult to serve this way.
Alliance experts has done extensive research in the China market to find distributors that served a range of smaller customers, and who could take on part of the Würth portfolio. However, the Chinese business landscape is characterised by a large degree of vertical integration and a tendency to cut out any middleman. So the pool of distributors that were large enough to be a match for Würth was limited, and most of the candidates were reluctant to work with a company that also had its own sales, fearing channel conflicts.
The conclusion of our research was that there was a reason for the current limited sales through partners, and that selective acquisitions may be more fitting to the market.
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