---
title: "Business Perspective: How Distributors Can Break the Curse of Operations"
description: "A recent viral article about a veteran dairy distributor suffering huge losses and owing 19 million yuan has sparked discussion. Marketing expert Liu Chunxiong noted that if such cases are isolated, it's the distributor's fault; if widespread, the company or industry has problems. Due to economic pressures, channel fragmentation, consumption upgrades, and overcapacity, FMCG distributors are struggling, many facing financial ruin after years of hard work."
author: "醉行者"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-12-26"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/MYotG6eHqMWJWVQ-ACxgaQ"
translation: "https://xinjignxiao.com/zh/articles/%E7%BB%8F%E8%90%A5%E9%80%8F%E8%A7%86-%E7%BB%8F%E9%94%80%E5%95%86%E5%A6%82%E4%BD%95%E7%A0%B4%E8%A7%A3%E7%BB%8F%E8%90%A5%E4%B9%8B%E9%AD%94%E5%92%92-c4c4dfd8.md"
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# Business Perspective: How Distributors Can Break the Curse of Operations

> A recent viral article about a veteran dairy distributor suffering huge losses and owing 19 million yuan has sparked discussion. Marketing expert Liu Chunxiong noted that if such cases are isolated, it's the distributor's fault; if widespread, the company or industry has problems. Due to economic pressures, channel fragmentation, consumption upgrades, and overcapacity, FMCG distributors are struggling, many facing financial ruin after years of hard work.

A recent article widely shared on social media, titled "A 19-Year Veteran Distributor of a Well-Known Dairy Company Suddenly Suffers Huge Losses, Owing 19 Million Yuan," has sparked discussion. Setting aside the reasons, as renowned marketing expert Liu Chunxiong said, "If it's an isolated case, it's the distributor's behavior; if it's a widespread phenomenon, then the dairy company has a problem; if dairy distributors all face this issue, it proves the industry's operations are flawed." Regardless, due to the economic environment, channel fragmentation, consumption upgrades, and overcapacity, FMCG distributors are having a tough time. Many face the situation of "years of hard work, overnight back to square one," with mixed feelings of joy and sorrow. I'll share my personal views on the problems and ways to break through.
**The problems mainly fall into the following categories:**
1. Under coercive inducement from manufacturers, distributors blindly advance expenses, and later the manufacturer delays or even refuses to reimburse.
2. After investing heavily in market development, the manufacturer "dismembers" them—shrinking their territory or directly replacing them with direct operations.
3. Due to poor product selection, dazzled by options, they confidently charge into battle for the manufacturer, only to find the "unit" disappears—the manufacturer goes bankrupt due to mismanagement, leaving a host of problems.
4. Due to inexperience, swayed by the manufacturer's silver-tongued promises, they extend大量 credit in the early stages, but later the manufacturer fails to help with distribution, leading to sluggish sales and widespread complaints, leaving distributors in tears.
5. Excessive financial costs, constant borrowing, robbing Peter to pay Paul, until there's no money left to fill the hole.
In these situations, both manufacturers and distributors have their own arguments. Of course, if distributors violate regulations, it's reasonable for manufacturers to impose constraints. Distributors who fail to improve their business awareness and suffer losses must bear the consequences without shirking responsibility. The following views are from the perspective of FMCG distributors, assuming they comply with manufacturer rules and contracts, on how to avoid market risks and how to truly cooperate with manufacturers to grow stronger.
**1. Choice Matters More Than Effort; A Big Tree Provides Good Shade**
**First, choose a good product.** In my view, a good product must have strong product power.
1. High visual appeal: Good packaging design is like a beautiful woman, pleasing to the eye, instantly standing out among competitors, satisfying consumers' initial curiosity and prompting trial purchases.
2. Guaranteed quality: This is a cliché, but quality must address consumer pain points, such as Yunnan Baiyao toothpaste for bleeding gums or JDB herbal tea for reducing internal heat.
3. Innovation and selling points: With supply exceeding demand and severe homogenization, products without innovation will struggle to break through, yielding half the results with double the effort.
**Then, choose a good company.** In my view, a good company is one that matches words with deeds, is honest, pragmatic, not radical, crafts products with dedication, and builds the market solidly—not one that makes empty promises, deceives, acts inconsistently, speculates, or is aggressive and money-grabbing, stepping over distributors' "corpses."
**Choose a good brand.** Especially with mobile internet, information is easily accessible, and with the rise of the middle class, consumers are becoming more discerning, with stronger brand loyalty and sensitivity. For distributors, brand cultivation and building are always the manufacturer's responsibility.
In summary, distributors should adjust their product category choices based on their product structure, operational strength, stage of development, and changes in the internal and external environment, rather than being rigid. Additionally, visiting markets in operation and selecting trending products is a relatively safe approach.
**2. Play Within Risk; Enjoy the View from Inside and Outside the Wall**
**First, don't easily let the manufacturer put a golden hoop on you. Second, don't be seduced by the manufacturer's sugar-coated bullets. Finally, don't waver in negotiations without a win-win outcome.**
Specifically: 1. When operating in the market, resolutely avoid blind credit sales. Even if credit is extended, it must be within controllable limits. Credit is poison; cash is the antidote. Many manufacturers require distributors to offer credit to quickly increase market coverage. The drawbacks of credit sales: 1. High financial risk, leading to bad debts and defaults; terminal credit is like opium—once started, it's hard to quit. 2. Terminals have no inventory pressure, leading to slow movement or even stagnation. 3. If the manufacturer doesn't follow up with specific sales promotion actions (atmosphere creation, consumer events, market promotion), the more outlets with credit, the more zombie terminals, and the more leftover problems.
2. Act according to your capabilities; don't bite off more than you can chew; avoid excessive debt beyond expectations.
3. Don't covet discounts for high targets, nor hope for channels with high profits but slow returns and large receivables.
4. Proceed while observing; the manufacturer's reimbursement rate and existing customers' reputation determine how much you advance expenses for market development and promotion. Also, monitor the company's overall development trends.
5. Don't think that colluding with manufacturers, intercepting or falsely reporting market expenses, and getting something for nothing will lead to shared wealth. Usually, the result is losing both the bait and the fish.
**Don't be killed by the manufacturer, but also don't kill yourself. The market is a goldmine. How to reasonably and correctly develop and consolidate this goldmine, achieve a magnificent transformation, and become a brand service provider or operate your own brand—that is the right path!**
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