[Part 1]Distributor in China -----Game of Power in Wholesale and Retail in China

 
When talking about selling to China, the first big word come in the conversation is DISTRIBUTOR. The underlying logic is simple. I proudly have a good brand and good product, China has a huge market with great potential, all I need to do is to find a distributor to sell my products. I give him a good cut, say more than 50% of the gross margin, very generously, and he make the sell, deal with the sub-wholesalers, hire salesman in market, sell my product whichever way he sees fit, and take care of the loss.
 
当我们探讨把商品出口到中国市场的时候,对话中出现的第一个关键词就是“经销商”。这背后的逻辑很简单。我这里有优质的品牌和商品,中国有巨大的市场和消费潜力,我需要做的就是找到经销商来买我的商品然后卖到中国市场。我给他很好的分成,比如零售价50%的利润,然后他负责销售,对接下一级批发商和零售商,用他能用的方式销售并承担损失。
 
Perfect story, only question left is how to find such perfect distributor. This is really a game of power and political lobbying by core.
故事很完美,那么接下来需要做的就是找到完美的经销商。而核心问题是,这是一个关于权利和游说能力的游戏。
 
PART 1 Brand&Distributor Relationship
第一部分:品牌方与经销代理的关系
 
Let’s have a look into the mindset of distributors in China.
我们先来看一下经销商在中国的思维方式。
 
Say, I am a packaged food distributor in China, aiming to represent good brands, those with TV commercials and good public awareness. I have the money, the warehouse, the connection with end market, say big name supermarkets all over the province. I have staff and trucks deliver to supermarket, restaurants, CVS shops and my salesmen are always actively finding new shelves in new shops. How this work from the beginning?
比如,我是一个在中国做预包装食品快速消费品的经销商,目标是代理优质的品牌,有电视广告和辨识度的那种大牌。我有资金,有仓库,有终端市场的渠道,比如省内所有大型线下商超。我有员工和各类货车可以把货送到超市,餐馆,便利店,我的销售人员积极的寻找新的货架新的渠道销售我代理的品牌商品。那么这样的生意是怎样做起来的呢?
 
Because the brand is well known already, meaning the brand holder is actively marketing the products, meaning end customers will be looking for their products in the supermarket or any other channels to buy, at least when customers see the brand on shelves, they would feel recognition, em, I saw that commercial, I know what that brand is about. That is an easy sell for the supermarket, hence an easy sell for my salesman supplying the supermarket, hence a brand I as a distributor really want to represent. Better, to be the regional representative to control all supply to say several provinces if my money is not a problem.
如果这个品牌已经是广泛被消费者熟悉的品牌,这就意味着品牌方一直积极的营销他们的产品,意味着终端客户可能会主动在商超寻找这个牌子的商品,见到品牌会有认知,嗯,我知道这个牌子,知道他们做什么东西怎么样。这对于终端商超来说是非常容易销售的产品,对于我的销售人员来说,批量销售给商超也是很容易的。所以这样的品牌,是各大经销商积极争取代理的。如果资金充裕,最好是能拿到大区代理,控制物流预算合理范围内的销售。
 
The only problem in that story is that, there are many distributors like me trying to get that privilege. Therefore, I and my competitors need to bid over the right and actively lobby the brand owner using any method the brand may prefer, extravagant business dinners and entertainment, huge amount of deposit as guarantee, front payment of six month of supply without the products even leave the warehouse of the factory. Anything to beat my competitors.
唯一的问题在于,除了我也还有其他同行竞价想要获得代理的特权。所以为了在竞争中胜出,我需要积极的游说品牌方我的实力,使用各种手段比如豪华商务宴请和娱乐,在品牌方押大额保证金,在货品没有离开品牌方的仓库前就预付6个月,甚至更久的货款。用各种手段击败我的竞争对手。
 
But that is not the end of the story. Say I win the bid and pay big amount of money in advance, got the delivery stock in my warehouse and ready to place them on shelves for retail sales. Now my salesman and drivers are delivery the products to major supermarket where most of retail sales is made, do I get paid? No, on contrary, I have to pay extra fee to the supermarket to secure the best shelves and launch sales campaigns at good display area, all that is costly, but very likely a mandatory request in the contract I sign with the brand. Say I am loaded and I don’t really care about the marketing fee and the products well displayed on shelf, do I get paid for the stock delivered and displayed in the supermarket? No, not only they charge me to rent the shelves and take average 20% or more of the final sales price, they do not pay me by delivery, do not pay me after they made the sale on time, they keep my cut in their account payable for a month, a season, half a year and maybe more, and my accountant can only write my revenue in account receivable.
故事还远没有结束。待我赢得了区域独家代理权,预付了一大笔资金,货品到达仓库准备销售了。我的销售人员和司机把货运输到各大商超销售点的货架上,现在该收钱回款了吧?并没有,相反,我还需要支付额外的货架租金来争取好的货架位置,并搞促销活动,支付堆头费用。这些都是必须的开支,一方面为了争取更好的销量,另一方面这很有可能是代理协议里的条款,我必须这么做。如果我的资金非常充足,并不在乎这些营销费用,货品完美的堆放在最好的货架上开始卖出去了,我总可以回收货款赚到真金白银了吧?不,商超不仅收了我货架费堆头费营销费,还拿走卖价的20%或者更多作为佣金,他们并不会在我把货放到他们货架时就支付我货款,甚至不会在收货一个月内打款,有些要到一个季度,半年,甚至更久才能结款。而此时,我的会计只能把销售收入放进资产负债表的应收项目。
 
Now a few days later the brand starting to sell quite well as I predicted and money well invested, do my money finally start to roll in? It depends who has the bargaining power.
几天之后货架上的商品开始跟上预期正常销售了,正如我这个优秀的商人预判的那样,是门好生意。那么这时我的资金终于可以回笼了吗?这得看议价权在谁手里。
 
Say the products sold out quickly and the shelve is not well stocked all the time, meaning the sale is great and the supermarket would want more supply, then congratulations, they are willing to pay quickly, maybe one month after delivery, maybe by delivery, maybe even in advance just to secure my supply on time so that they won’t loss sales to other channels where customers can easily shift to.
假如商品销售火爆,超市仓库的货不够,货架来不及填满就被销售一空,那就意味着棒极了,商超会要求赶快补货。那么恭喜!这种情况下商场会积极结款,月结,货到结款,甚至提前预付给我货款锁定货源,以免因为缺货而被其他销售渠道抢走顾客,毕竟买东西换个地方对消费者来说非常方便。

Shanghai Wukong Integration (WKI) Center

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