Long press the QR code or click "Read Original" to register. 30+ industry experts, 100+ B2B platform founders, and 800+ manufacturer and distributor friends will gather in Fuzhou to discuss the internet transformation of the FMCG industry. Understanding potential contract traps can help you see through them and protect your interests.

Trap 1: Beware of Vague Sales Policies

We often find phrases in distribution contracts such as "ship within 3 days of payment," "returnable if sales are poor," or "if Party B's distribution rate is above 45%, advertising and promotions are Party A's responsibility." Most distributors sign these contracts with great joy, believing these policies fully protect their interests. In reality, the opposite is true, and these are the areas where disputes most commonly arise. If a merchant requests returns due to poor sales, the manufacturer will delve into the reasons for poor sales and easily attribute them to the merchant, resulting in no returns or reduced returns. The concept of "distribution rate above 45%" is also vague, with the issue lying in the definition of distribution coverage. The contract does not specify which types of stores the distribution rate is based on. Both points lack clear definitions and can be interpreted according to one's own understanding, leading to disputes when problems arise. Also, does "ship within 3 days of payment" start from the date the distributor makes the payment or from the date the manufacturer receives and verifies the funds? Therefore, these terms should be clarified and specified when signing the contract. For example, define "poor sales" specifically, and specify whether returns are full or partial, and the percentage. It's best to make these details explicit.

Trap 2: Beware of Verbal Promises

The foundation of manufacturer-distributor cooperation is mutual trust, so making casual promises is a major taboo in sales. Many merchants often encounter unfulfilled verbal promises from manufacturers, such as promotional fees, publicity fees, advertising fees, store entry fees, and year-end rebates. These are agreed upon verbally but later "shrink"—either not paid or paid in reduced amounts. According to legal professionals: Article 10 of the Contract Law of the People's Republic of China states that contracts may be in written, oral, or other forms. Article 13 states that contracts are formed by offer and acceptance. An offer is an expression of intent to enter into a contract with another party, and acceptance is the offeree's expression of intent to agree to the offer. Article 22 states that acceptance should be made by notice, unless, according to trade customs or the offer, acceptance can be made by conduct. Thus, verbal promises are a form of acceptance, but due to the many variable factors, they are difficult to support legally. The best approach is "words are empty, write it down." Whenever a manufacturer makes a verbal promise, the merchant should seize the opportunity to document it on-site with notes, signatures, and seals. Handling verbal promises in writing is one method, but some verbal promises can be fulfilled immediately. For example, if the manufacturer promises a 2,000 yuan promotional fee for ordering 50,000 yuan of goods, the merchant can deduct the promotional fee from the payment when paying.

Trap 3: Beware of Fraud and Deception

Distribution contract fraud is varied and numerous. Many low-quality manufacturers "play the contract game" because many merchants lack legal knowledge, and some distribution contracts themselves involve many irregular operations, making them difficult to protect under the law, resulting in losses for the merchants. The most common frauds include the following four aspects:

  1. Some unscrupulous manufacturers, after gaining the merchant's trust, use the distribution contract to collect advance payments or market deposits, then ship only a small amount of goods, deliberately defrauding the full payment.
  2. Manufacturers exploit unclear contract terms, such as vague specifications, models, and standards, often relying on verbal agreements, and intentionally pass off small as large, inferior as superior, cheap as expensive, and old as new to deceive.
  3. Some manufacturers, after obtaining the merchant's payment, use the funds as shares to register a new company, immediately change the company address, affiliation, and enterprise name, transforming into a new company, while leaving a shabby storefront at the original location to deal with merchants, engaging in guerrilla warfare, avoiding contact until the merchant is exhausted and gives up.
  4. Exploiting merchants' low legal awareness, they deceive through the legitimate form of signing contracts, defrauding payments and deposits. For example, a manufacturer signs a distribution contract with a merchant, who pays a 50,000 yuan deposit and an initial 200,000 yuan payment, with an agreement to arbitrate at the manufacturer's location. Due to local protectionism, the merchant loses 250,000 yuan to the manufacturer.

So, how can merchants prevent being deceived when signing contracts?

Tips

To avoid being deceived in distribution contracts, merchants must thoroughly investigate the manufacturer's basic situation before signing, including the purpose of the contract, business qualifications, creditworthiness, and performance capability. Do not blindly sign and perform. Additionally, master certain signing techniques. When signing contracts, pay attention to several principles: First, break down large amounts to disperse risk. The risk probability of a large contract performed in several installments is absolutely different from a one-time transaction. Second, adopt the principle of simultaneous performance, dividing the contract's rights and obligations, such as delivery methods and payment deadlines, into several equal "sub-contracts," performed step by step and in a planned manner. If the other party fails to perform within the agreed time, you can promptly terminate or modify the contract. Third, adopt the principle of same-direction sending and receiving. When shipping goods to other places, the shipper and consignee should be consistent, so that even if the goods arrive at the other party's location, ownership has not transferred. If the other party breaches, the loss is only the freight. Similarly, when making payments, if using bill settlement, the remitter and payee should correspond, rather than remitting funds to the other party's account, to prevent them from withdrawing and fleeing.

Finally, firmly establish fraud prevention awareness. Strengthen training on contract laws and regulations to improve your own quality, master flexible signing techniques, and firmly establish a sense of prevention. Do your best to prepare in advance and prevent problems before they occur.

New Food Era · New Distribution

—— 2016 China "FMCG + Internet" Summit Forum ——

This is a grand event focused on how the FMCG industry's channels will transform under the trend of Internet+ transformation

Conference Agenda

08:00-09:00 Registration 09:00-09:05 Host opening 09:05-09:35 2016 China FMCG Industry Trend Analysis Report — Zhao Bo 09:35-10:05 FMCG Enterprise Transformation Strategy and Path — Liu Chunxiong 10:05-10:35 Opportunities and Challenges in FMCG Channel Transformation — Liu Zhao, CEO of Waiqin365 10:35-11:05 Alibaba Retail Link All-Around Empowerment — Guo Kunkun, Alibaba Retail Link 11:05-11:25 Channel Efficiency in the Internet Era — Fu Xiaoyun, Vice President of Benlai Holding 11:25-12:00 Roundtable Forum — Brand Transformation: Improvement vs. Reconstruction? Guests: Liu Zhao, Liu Chunxiong, Fang Gang, Chen Feng, Shi Zhengchuan, Deng Xia 12:00-13:30 Lunch 13:30-13:50 Distributor Transformation: City Distribution Trends — Wang Qi, CEO of Vchange City Distribution 13:50-14:20 Roundtable Forum — Why Distributors Should Do Logistics in Transformation Guests: Zhao Bo, Wang Qi, Liu Zhongmin, Tang Guangliang, Wang Cheng, Sheng Yan 14:20-14:40 How FMCG Enterprises Can Leverage the Internet to Take Off — Wang Hui, E-commerce Operations Director of Xijiu 14:40-15:00 Detailed Explanation of Zhongshang Huimin's "One Machine, Two Wings" Strategy — Su Xiaoxin, Vice President of Zhongshang Huimin 15:00-15:20 Category Value and B2B E-commerce Development Strategy — Wang Chaocheng, CEO of Yijiupi 15:20-15:40 Supply Chain Finance as a Lubricant for B2B Driving Traditional Business — Chen Xian, CEO of 51 Order 15:40-16:00 Zhanghe Cloud Factory Helps Upgrade FMCG Supply Chain — Yang Lixiang, CEO of Zhanghe Tianxia 16:00-16:30 Integrating Small and Micro Retail, Reconstructing Business Ecology — Miao Dong, Vice President of Quanshi 16:30-16:50 In the Next Decade, B2B is the Main Investment Battlefield — Well-known Investor (TBD) 17:00-17:30 Roundtable Forum — Who is the King of FMCG B2B Models? Guests: Fu Xiaoyun, Zhuang Jianzhong, Jiang Tao, Zeng Weiqin 17:30-19:30 Dinner

For manufacturers and distributors looking to transform, this grand event is not to be missed. Interested friends can long press the QR code below or click "Read Original" to register.

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