How Distributors Can Prevent Manufacturers from Burning Bridges Nowadays, manufacturers are increasingly adjusting their distributor networks, and distributors often find themselves in a passive position. Although manufacturers have various reasons for making changes, distributors have invested time, energy, manpower, and financial resources, and have utilized their accumulated sales networks. When manufacturers replace distributors or switch to multi-agent distribution at will, it inevitably creates psychological imbalance for distributors. Manufacturer adjustments can cause significant losses to distributors. Therefore, from the moment a distributor obtains the distribution rights, they must consider how to maintain a long-term stable cooperative relationship. After all, when the manufacturer initially sought a distributor, they saw potential in them. Be a Rational Distributor Business is rational, but most local distributors operate on emotion. The following types of distributors are at risk:

  1. Those who rely on brotherhood. They make decisions based on rapport with bosses, managers, or salespeople, with everything agreed verbally. Remember, manufacturers are like a permanent camp with rotating soldiers; no profession has higher turnover than marketing personnel, and not all newcomers will become the distributor's buddies.
  2. Those who are moved by the manufacturer. Marketing consultants often train salespeople to move distributors emotionally. Manufacturers have their "spear," so distributors must have their "shield." We advise distributors not to be easily moved; always calculate the economic benefits and conduct a thorough investigation of the manufacturer. I do not advocate "love at first sight" between manufacturers and distributors; there must be a "courtship period" of evaluation. Be wary of manufacturers that are fickle and salespeople who are overly affectionate. Rely on Legal Protection for Distributor Rights Love is emotional, but marriage requires rationality, and marriage requires a marriage certificate. The certificate protects both parties, especially the weaker one. When manufacturers and distributors enter the "marriage hall," do not believe in vows like "till the end of time." Only the marriage certificate provides ultimate protection. The marriage certificate between manufacturers and distributors is the regional distribution agreement. Never sign the manufacturer's standard distribution agreement. These are crafted by countless "experts," including legal and marketing specialists, and are full of traps. For example, they may detail the distributor's responsibilities and obligations while only stating general principles for the manufacturer, and give the distributor only general rights while specifying clear requirements for the manufacturer. Some standard agreements are essentially "overbearing agreements" and should never be signed. Distributors should also note that manufacturers typically have comprehensive file management systems, while distributors do not. During the honeymoon phase, distributors might misplace the "marriage certificate." When it comes time for a "divorce," the manufacturer can produce the certificate at will, but the distributor cannot, making it difficult to protect their rights. Distributors often communicate with manufacturers by phone. I recommend using fax whenever possible and retaining the faxes for a certain period. For manufacturers that deny commitments later, especially after changing sales managers or salespeople, written proof can help protect you. Particularly for financial matters, such as when a distributor advances funds for the manufacturer, always have written procedures. Strength as Protection The game between manufacturers and distributors is not entirely unequal. Manufacturers use distributors because distributors possess resources that manufacturers lack. When manufacturers seek distributors, they value these resources; when they adjust distributors, they have higher requirements for these resources. The key to preventing manufacturers from "burning bridges" is to keep the "bridge" under your control so they cannot dismantle it. The "bridge" that distributors rely on is their customer base, especially end customers. Before a manufacturer "burns the bridge," they will try to control the distributor's downstream customers and establish connections with them. Otherwise, they would not dare to dismantle the bridge, as they would not be able to cross the river without it. Customers are the distributor's greatest asset. Distributors must invest heavily in customer relationships and build customer dependence. This is the best way to protect themselves. If the manufacturer finds a better bridge to cross, or if the distributor's bridge is a broken one not worth cherishing, then the distributor cannot blame the manufacturer. In this world, there are only eternal interests, not eternal friends. If the manufacturer believes the distributor has no value, the rational approach is to "burn the bridge." This is not the manufacturer's fault but the ruthlessness of the market economy. People still have emotions. When salespeople and distributors work together for a long time, feelings develop, making it hard to "burn the bridge." To solve this, manufacturers often rotate salespeople. Therefore, when a new salesperson arrives, the distributor must do something to build rapport, rather than relying on past seniority to challenge the newcomer. Reasonable Manufacturer-Distributor Relationships The manufacturer's ruthlessness is not only towards distributors but also towards salespeople and sales managers. Phrases like "Change thinking or change people" and "Better to replace people with new ideas than to change their thinking" are popular. Manufacturers often "burn bridges" with salespeople too. Chinese people tend to deny their predecessors to prove themselves quickly. In marketing, who is without flaws? So, every time a sales manager or sales team changes, distributors go through a period of hardship. The distributor's paradox is: they must build good relationships with sales managers and salespeople to gain support, but if the relationship is too close, they may be seen as "the predecessor's people" and targeted for rectification. Typically, marketing departments have factions. Overly close manufacturer-distributor relationships can become victims of factional struggles. Based on the principle that distance creates beauty, distributors should maintain a reasonable distance from manufacturers and avoid getting involved in internal personnel disputes. This is necessary for self-protection. Be a "Good Citizen" to Avoid Giving Manufacturers Excuses An old Chinese saying goes: "One should not have the intention to harm others, but must have the intention to guard against being harmed." This applies to distributor-manufacturer relationships and relationships with other distributors. Cheating and deception only bring small gains, not great wealth. Dumping at low prices or cross-region selling may earn some small profits but is not a sustainable foundation. Distributors should aim to earn "money for a lifetime," not "money for a moment." Many distributors are reluctant to sign contracts because they fear their "handles" being caught by others. The best amulet is integrity. This may be an old topic, but it is eternal. In simpler terms, be a "good citizen" and do not give the manufacturer an excuse to burn the bridge. Progress Together with the Manufacturer Changes in status often bring changes in interpersonal relationships, and this applies to manufacturer-distributor relationships. If both parties progress or regress together, maintaining the "brotherhood" is easier. Any unilateral progress or regression can create rifts. For development, manufacturers often use training, business guidance, and other methods to encourage distributors to progress together. Distributors should recognize that although manufacturers may not know the regional market as well as distributors, they typically have more human resources and access to new ideas and methods faster. Distributors usually have more to learn from manufacturers than vice versa. Distributors should adopt the mindset that the manufacturer's strict requirements and management are actually bitter medicine that promotes progress. Just as "a strict teacher produces outstanding students," strict management by the manufacturer helps distributors improve their operational and management skills. What Distributors Can Use to Bargain with Manufacturers Negotiation Position Determines Everything This is an era where position determines everything. Between manufacturers and distributors, whoever has higher status holds the power of discourse. If a small manufacturer comes to you, you might not pay much attention; but for a large manufacturer, you might have to go to them and accept their indifference. Generally, distributors are smaller and weaker than manufacturers, but "a strong dragon cannot crush a local snake." If a distributor cannot become a local snake, even a worm of a manufacturer can crush them. Some manufacturers stipulate that distributors cannot handle competing products. That is because they have not yet encountered a truly powerful distributor; otherwise, they would make exceptions. I know a distributor who simultaneously represents two instant noodle brands, which are exclusive in other markets, but both manufacturers make an exception for this distributor. Both manufacturers recognize that only this distributor can do the best job in the region. Without this distributor, others are only second-best choices. What Are the Distributor's Bargaining Chips? To bargain with manufacturers, distributors must hold chips. The chips vary over time. In earlier years, having a prime shop in a wholesale market in a central city (or regional distribution hub) and some capital was enough to attract manufacturers. At that time, the "purchase system" was common; as long as goods were displayed in the wholesale market, they could be sold. In those days, the prime shop was the distributor's chip. Many people still miss those easy-money days and are waiting for better times to return, not realizing those days are gone forever. A few years ago, whoever had more secondary wholesalers was more popular. By then, the "delivery system" had become common, and truly capable secondary wholesalers no longer came to the wholesale market. In those years, secondary wholesalers were the chip. Now, except for township secondary wholesalers, they have largely disappeared. Distributors face end customers directly; whoever controls more end customers has a better life. Now, end customers are the distributor's chip. Although many manufacturers talk about "winning at the terminal," reality has taught them that they still need distributors to do the terminal work. Distributors with bargaining chips can "hint" or clearly show them when necessary. But remember: do not threaten the manufacturer with your chips. Do What You Are Capable Of Like dating, the manufacturer-distributor relationship is a two-way selection based on one's own conditions. It must be a match of equals, and you must act according to your abilities. In the past, most distributors were full-service and all-capable; manufacturers handed everything to distributors except mass advertising. Now, manufacturers commonly use "embedded" management and no longer need all-capable distributors; they need distributors with limited service functions. Some manufacturers only use distributors' capital to complete purchases; in this case, distributors perform limited service functions. Some manufacturers only use distributors' distribution capabilities; then distributors serve as distribution centers, or third-party logistics providers. Some manufacturers (like baijiu companies) use a "borrowed shell" approach, only using the distributor's name while the manufacturer independently operates the market to reduce taxes and fees. Some manufacturers only want distributors to handle end customers. Some only want distributors to handle small retail stores. Some only want distributors to handle small wholesale. The emergence of limited-service distributors offers new choices for distributors with different conditions. Distributors who only talk about exclusive rights and policy conditions are becoming fewer, unless the manufacturer is small. How to Bargain with Manufacturers Successful bargaining is based on knowing yourself and your opponent. Distributors should at least know the following about the manufacturer:
  3. The authority of sales managers and salespeople at each level. Generally, higher levels have more authority. Do not ask salespeople for conditions they cannot promise.
  4. Find out the authority given to other distributors, then demand "national treatment"—equal authority. If your conditions are the best, keep quiet. Salespeople dislike distributors who "take advantage and act innocent."
  5. Understand the manufacturer's "bottom line" and "maximum requirements." Never propose conditions beyond the bottom line or do things beyond it, as that means the end of cooperation; also, try not to meet the manufacturer's "maximum requirements," as that means you lose out. Of course, when dealing with manufacturers, you must also have your own "bottom line" and "maximum requirements." Idea: Drawing a Pie to Satisfy Hunger The most important chip is the idea. Ideas are not everything, but they are the key to everything. When the substantive chips in your hand are insufficient to attract the manufacturer, learn to "draw a pie to satisfy hunger." Some people prove themselves with historical performance, while others prove themselves by planning for the future. If a distributor can present a feasible plan and convince the manufacturer that they can achieve it, that is the most important chip. However, most distributors are better at doing than speaking. They like to say: "Don't worry about the details; just trust me." If you were the manufacturer, would you be reassured? If things go wrong, wouldn't there be no chance to remedy? Sometimes, drawing a pie is useful and effective. How Distributors Can Gain Manufacturer Support Using manufacturer resources to develop the regional market is almost every distributor's dream, but most fail due to improper methods. Establish a "Good Citizen" Image Manufacturer support has prerequisites. They will not support distributors without potential, and usually not those who abuse manufacturer resources. Each time a distributor abuses manufacturer resources, obtaining the next support becomes harder. The first thing a distributor should do to gain support is to establish a "good citizen" image. Although some "rogue" methods can gain temporary support, such support is given reluctantly. Distributors often face this contradiction: they welcome generous policy support but fear the company may not last long. For poorly managed companies, occasional "rogue" methods may work; but for well-managed companies, being a law-abiding "good citizen" is the best prerequisite for support. To gain continuous, long-term genuine support, you must earn the manufacturer's respect. "Rogue" methods may gain temporary support but rarely permanent support. Influence Those with the Most Resources Distributors must understand the policy limits of each management level; beyond those limits, they have no authority to approve. Therefore, to obtain certain resources, you must approach the appropriate management level. Do not think that currying favor, gift-giving, or entertaining is the best way to influence powerful people. The truly effective way is to think from the manager's perspective. If you tell marketing managers that your support will be better utilized, achieve the best results, benefit their performance, promotion, and salary, why would they not support you? There are often cases where market competition is fierce, but manufacturer support is delayed. Why? It is like a matter of urgency: if it burns someone else's eyebrows versus your own, the priority differs. From my experience, distributors should regularly invite marketing managers to conduct field research, letting the market situation "burn their eyebrows." Then, proposing policy support is usually easier to get approved. Request the Best Salespeople Some distributors prefer less capable salespeople, thinking they are easier to fool and that if the salesperson cannot manage strictly, they have more freedom. I tend to recommend that distributors request the best salespeople. If the salesperson is excellent, the market will definitely be better. Excellent salespeople can make forward-looking plans, leverage the trust of top management to win greater support for distributors, and help distributors improve management. Excellent salespeople do not always take sides; they usually balance the interests of both parties. Excellent salespeople may have conflicts with distributors, even arguments, but only over work, not personal grudges. Excellent salespeople may not secure the best policies, but they can influence top management's view of the distributor more than less capable ones. Excellent salespeople are often promoted, and their promotions bring greater support to distributors. Focus on Input and Output How can distributors gain policy support? Some requests are often rejected, and some support budgets are drastically cut. Why? Distributors should understand the manufacturer's mindset. Manufacturers are not afraid to spend money, but they must ensure it is worth spending, i.e., the "input-output ratio." The better the distributor performs, the more the manufacturer spends. Because if the distributor does well, the manufacturer dares to invest. Excellent manufacturers are "snobbish": the better the distributor's market, the more they are willing to support continuously; poorly performing distributors, whose investments have gone down the drain, find it hard to get support again. The way to gain support is:
  6. Tell the manufacturer what good results will come if support is in place, or what bad results if not.
  7. Ensure every support from the manufacturer is fully utilized; otherwise, the next request will be harder. The Squeaky Wheel Gets the Grease Most Chinese companies lack systematic market planning capabilities. Manufacturer support is often squeezed out like toothpaste, and policies tilt towards those in the most dangerous market situations. This "emergency aid" policy will remain prevalent for a long time. The world is strange: good children are liked and easily supported; bad children are disliked and easily "bought off." Distributors must judge whether to be a good child or a bad child. The squeaky wheel gets the grease, and this is common between manufacturers and distributors. Since decision-makers are always skeptical of distributor requests, they rarely agree easily. If the distributor asks repeatedly, the manufacturer may eventually believe it. Do Not Easily "Go Over Heads" Some distributors can communicate directly with top management and prefer to go straight to the top when problems arise. This can solve some unsolvable problems but also create unnecessary ones. Going over heads puts pressure on all levels of marketing management. Salespeople and managers tend to hide problems or solve them themselves; if a distributor escalates to top management, it is extremely annoying for them. Top management's mindset is subtle. They need distributors who can go over heads to get market information from multiple channels and avoid being misled by subordinates. But if distributors always make excessive demands, top decision-makers also dislike it. For distributors who go over heads, salespeople or grassroots managers often give "special treatment," which may be beneficial or detrimental. My view is: even if you have the ability to go over heads, do not use it lightly. Solve normal problems through the management hierarchy, and use "going over heads" as a last resort or a pressure tactic. Reply with the following keywords to search and read related professional articles: Sales Supervisor, Secondary Wholesaler Management, Regional Manager, Distributor Management, New Channels, City Manager, Competition, 2015, Manufacturer-Distributor Game, Product Slow Sales, Terminal Visit Management, Route Management, Deep Distribution, Internal Management, Sales Skills, Profit Improvement, Recruitment, Distribution, Daily Management, Team Motivation, Trade Promotion, Sales Misconceptions, New Product Launch, Township Market, New Product Pricing, Sales Target Achievement, Closing Orders, Market Visit Inspection, Baijiu, Beer, Sales Increase, Agency Products, Cross-Region Selling, KA, Terminal Merchandising, New Market, Market Operation, Learning, Book Recommendations, Inventory Management, New Salespeople, Consumer Promotion, Execution, Old Products, Expired Product Handling, Model Market, Franchise Recruitment, New Media, Distributor Development, Performance Appraisal, Assessment, Annual Planning, Shopping Guide, Morning Meeting, Display, Transformation, Stock Pressure, Holidays, Distributor Cost Control, Channel Operation, Marketing Theory and Laws, Brand Truth, Order Meeting, Team Management, Training, Work Report, Work Report.