---
title: "Distributors Say 'No' to Big Brands: Manufacturers Are Losing Control"
description: "Since 2016, some big brands have had to find new distributors as their original ones quit without notice, a trend that was unimaginable two years ago. This shift signals that manufacturers, especially big brands, are losing their dominance over distributors as sales decline and profits shrink."
author: "刘春雄"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2018-03-15"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/distributors-say-no-to-big-brands-manufacturers-are-losing-control-204be4df/"
markdown: "https://xinjignxiao.com/en/articles/distributors-say-no-to-big-brands-manufacturers-are-losing-control-204be4df.md"
original_source: "https://mp.weixin.qq.com/s/_z_49VvS0W9BxVTIBpkg6w"
translation: "https://xinjignxiao.com/zh/articles/%E7%BB%8F%E9%94%80%E5%95%86%E5%AF%B9%E5%A4%A7%E5%93%81%E7%89%8C-%E8%AF%B4%E4%B8%8D-%E5%8E%82%E5%AE%B6%E6%AD%A3%E5%9C%A8%E5%A4%B1%E5%8E%BB%E5%AF%B9%E7%BB%8F%E9%94%80%E5%95%86%E7%9A%84%E4%B8%BB%E5%AF%BC-204be4df.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/distributors-say-no-to-big-brands-manufacturers-are-losing-control-204be4df/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# Distributors Say 'No' to Big Brands: Manufacturers Are Losing Control

> Since 2016, some big brands have had to find new distributors as their original ones quit without notice, a trend that was unimaginable two years ago. This shift signals that manufacturers, especially big brands, are losing their dominance over distributors as sales decline and profits shrink.

**1**
**Distributors Say 'No' to Big Brands:
Manufacturers Are Losing Control**
Since 2016, some big brands have had to find new distributors in the market because their original distributors quit without notice, leaving frontline sales staff in a difficult position.
If it were just a few distributors, it could be seen as isolated cases. But as this phenomenon becomes more common, it is worth pondering.
Two years ago, this was unimaginable. At that time, the agency rights for big brands were highly sought after.
How fast times change!
There has always been a term that seems unique to China: "managing distributors." I have questioned this many times: Aren't customers the gods of manufacturers? We should serve the gods wholeheartedly, so how can there be "managing" the gods?
In reality, this reflects the abnormal state of manufacturer-distributor relations in China, where manufacturers, especially big brands, hold a dominant position.

**2**
**Why Are Big Brands No Longer Popular?**
In the past, big brands were very popular. Why? Because big brands brought huge benefits to distributors.
The benefits brought by big brands may not be direct profits, but they certainly bring indirect profits. Big brands often become "traffic drivers," and when paired with small brands, they generate both sales volume and profits.
What kind of era was that? I summarize it in two phrases: **blowout low-end consumption, endless sales growth.**
In that era, all Chinese enterprises, whether manufacturers or merchants, were growth-dependent. As long as sales grew, profits grew. All problems of the enterprise were masked by sales growth.
This era ended in 2013.
In 2013, most industries in China reached their historical peak in sales volume.
In 2014, the leading companies in most industries saw their sales decline for the first time. This decline was considered abnormal.
In 2015, the leading companies continued to see sales decline, and it was considered basically normal.
By 2016, people had become accustomed to declining sales.
When sales decline, what do manufacturers do? In 2014 and 2015, the normal work for manufacturers was "rescuing sales."
**How to rescue sales? There are roughly three methods:**
First, launch new products, but this was rarely done because new products "cannot quench immediate thirst," and the marketing system lacked the energy to promote new products;
Second, increase pressure to stock up, such as increasing promotional efforts, which most companies did;
Third, some grassroots marketing personnel, in order to save sales, opened new accounts and implicitly encouraged cross-regional sales.
These practices were tolerated by distributors in 2014 and 2015. First, manufacturers had been dominant for a long time; second, everyone thought the decline might be temporary.
**In the past, manufacturers and distributors believed in one principle: sales are squeezed out. Pressuring stock and promotions could always squeeze out sales.**
After 2014, manufacturers and distributors still hoped to squeeze out sales, and their work revolved around that. But gradually, they found that sales could no longer be squeezed out.
By 2016, distributors generally saw that the decline was not temporary but a turning point. Distributors could not see the future.
When distributors cannot see the future, some no longer tolerate the arrogance of big brands and have the courage to say "I quit" to manufacturers.

**3**
**Why Can't Distributors See the Future?**
In addition to the overall decline in sales, rising labor costs have also become unbearable for distributors.
Since 2003, China has been on the track of deep distribution. Deep distribution actually has two major premises:
First, channel fragmentation, which can only be solved by deep distribution because its essence is to get as close to the terminal and consumers as possible;
Second, deep distribution relies on a human-wave tactic. This is because labor costs were low.
When sales are growing, cost increases can be temporarily ignored because sales growth can dilute costs. When sales stop growing, distributors find profits squeezed by both sales and costs.
**Sales are not growing, promotional expenses eat into gross margins; cost increases further erode profits.**
In the past, the average profit for distributors in the FMCG industry was about 3%, and the average delivery cost was 7%-8%, not including promotional and management expenses.
With such low profits, a slight impact from sales or costs pushes them to the break-even point. For some price-transparent FMCG products, gross margins are already quite low.
Distributors can tolerate one year without making money, but it is hard to tolerate two years.
If there is no hope of making money after two years, distributors gain the courage to say "no."

**4**
**Manufacturers Begin to Compromise**
In the past, manufacturers rarely compromised with distributors. This time, when some distributors took the initiative to say "no," manufacturers actually compromised.
Because if manufacturers do not compromise, distributors can easily quit.
Initially, it was strong distributors who said "no," but now ordinary distributors dare to say "no" as well.
**If saying "no" becomes even more common, the manufacturer-distributor relationship will shift.**

**5**
**How Did Big Brands Dominate Distributors?**
In the past, big brands dominated distributors for two reasons, I believe:
First, big brands could indeed lead merchants in marketing progress;
Second, big brands could bring profits to merchants.
Roughly since 2010, Chinese manufacturers have been largely ineffective in marketing. In recent years, in the internet era, they have lost direction and no longer have the ability to lead merchants in progress.
Especially in the B2B field, I find that distributors are more sensitive to manufacturers. Many distributors have already taken action, but how many manufacturers have realized this?
In terms of SaaS applications, distributors are also ahead.
Losing the leading role in marketing and failing to lead distributors in progress is a major aspect of big brands losing their dominance. Of course, declining sales, falling profits, and manufacturers' inability to promote high-value-added products are also important reasons.
As the industry reaches its ceiling, both manufacturers and distributors now face a problem: how to achieve profit growth while sales decline?
If this problem is not solved, big brands will further lose their dominance over distributors.
Source: Teacher Liu's Forum (ID: liuchunxiong1964)
-END-


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671