Terminating China distribution deals: Key steps and risks

In most cases, termination projects are far more contentious and frequently lead to disputes. The best time to plan for termination is before signing the distribution agreement. Distribution arrangements rarely last forever - especially in China's fast-changing consumer market. Over time, a brand may wish to take back certain sales channels or appoint new distributors that better align with its strategy. When negotiating a distribution agreement, consider the following key terms:

Expiration date

Chinese law does not recognize the concept of goodwill indemnity. Setting a fixed term allows the brand to restart the relationship cleanly upon expiry - provided there is a proper handover and that intellectual property ownership remains secure (see below).