---
title: "Food Lecture Hall | Distributors Operating Private Brands: Quick Money, Hard Brand Building"
description: "Distributors, as key links between manufacturers and consumers, are increasingly establishing their own brands to diversify profits and gain more control. However, experts debate whether this shift is sustainable, as it requires significant brand-building efforts and may face challenges in competing with established manufacturers."
author: "李娅"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-11-04"
language: "en"
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# Food Lecture Hall | Distributors Operating Private Brands: Quick Money, Hard Brand Building

> Distributors, as key links between manufacturers and consumers, are increasingly establishing their own brands to diversify profits and gain more control. However, experts debate whether this shift is sustainable, as it requires significant brand-building efforts and may face challenges in competing with established manufacturers.

**Source: China Candy Magazine, September 2016 issue**
**Reprinted from: Snack News (ID: candy-news)**
Distributors, as vital links connecting manufacturers and consumers, are dedicated to distributing good products nationwide. However, their role has expanded beyond mere distribution. With enhanced brand awareness, they are no longer satisfied with being product intermediaries; they are registering trademarks and building their own brands. On one hand, they can more accurately grasp consumer preferences and market demands; on the other, their long-accumulated customer base serves as an optimal distribution channel for their products.
This role shift indeed diversifies distributors' profit sources, reducing reliance on a single distribution channel and enhancing their resilience to market changes. However, many argue that specialization is key—professionals should do what they do best. They believe that distributors operating private brands is merely a quick money-making venture, lacking the professionalism and brand-building capability of manufacturers, and thus cannot sustain long-term growth. Opinions vary, and everyone has their own perspective. To explore the origins, current status, and future of distributors' private brands, China Candy Magazine invited several guests to discuss this topic.
Special Guests:
- Su Jinyao, General Manager of Qingdao Jinyao Wedding Store
- Xu Qingjun, General Manager of Anhui Suzhou Keke Trading Co., Ltd.
- Wei Jianjun, General Manager of Hebei Meifu Food Co., Ltd.
- Chen Yafeng, Chairman of Beijing Meisi Meiyu Management Consulting Co., Ltd.

**Establishing Private Brands: An Opportunity and a Necessity**
**China Candy**: Why are more and more distributors, not content with their intermediary role, starting to create brands and produce their own products?
**Su Jinyao**: From a small distributor to owning our own brand, Jinyao Wedding Store, our business has expanded rapidly, and we've become a renowned name in Qingdao. This shows the power of branding. As our business grew, we established our own factory to produce products under our own brand.
I am very confident in the candy industry. As a distributor, profits come from price differences, but becoming a manufacturer maximizes benefits. My confidence in the industry drives me to take on more roles. Additionally, after years of accumulation, we have channel advantages, allowing us to quickly distribute products through existing channels, achieving integrated production and sales. Moreover, operating a private brand enables us to produce products tailored to our channels, controlling category, quality, and other aspects. For distributors, building a brand is not easy, so we place great emphasis on brand maintenance—this is both a responsibility to consumers and a way to nurture our own brand.
**Xu Qingjun**: The initial motivation for producing our own brand was mainly the difficulties in the distribution business. On one hand, uncontrollable factors are increasing, such as manufacturers forcing inventory regardless of local conditions, leading to unsold stock. On the other hand, new products are hard to promote due to low awareness, while branded products have transparent profits and rely on volume.
Another factor we cannot ignore is the rise of e-commerce. More manufacturers are opening their own Tmall and Taobao stores, directly connecting with consumers. Distributors must adapt their thinking and roles to counter this impact. Establishing a private brand is my attempt to change this situation, hoping to reduce the disadvantages of being an intermediary. This gives us control over rebates and pricing, making us more flexible. Additionally, distributors understand the market well, so we can produce products based on our needs.

**OEM and Self-Built Factories: Pros and Cons**
**China Candy**: It's understood that operating private brands mainly involves OEM or building your own factory. How do distributors choose between these methods, and what are their characteristics?
**Chen Yafeng**: There are currently two main ways for distributors to operate private brands: building their own factory or OEM. Generally, when distributors first start with limited funds, they choose OEM. This method requires less investment and lower capital. However, it also brings problems. For instance, finding a factory that meets production requirements is not easy. Moreover, product testing is done by the factory, so quality may not be consistently stable or guaranteed, which is a concern for many distributors.
Quality is a core aspect of private brands, affecting sales and brand image. From the outset, distributors must prioritize quality and not compromise standards for lower prices. If cooperating with general manufacturers, it's essential to clearly define quality standards in the product order contract and strictly implement them.
On the other hand, building your own factory allows strict control over the entire production process, from R&D, raw material procurement, production, to final distribution. However, it requires greater investment, essentially transforming into a production enterprise—small but complete. This demands higher comprehensive strength and brand operation capabilities. If any link fails, losses are greater. Therefore, many distributors initially choose OEM to reduce risks.

**From Distributor to Brand Operator: More Than a Role Change**
**China Candy**: The transition from distributor to brand operator involves more than just a role change. What challenges do distributors face in this process?
**Wei Jianjun**: Producing products and selling products are two different business models. For manufacturers, making a good product is just one part; they also need to develop and promote new products. Candy and snack manufacturers are constantly exploring, let alone distributors who must step by step figure out what categories to produce, what packaging styles to use, and how to price. These decisions require market research; a wrong decision can be costly for distributors. Thus, the transition to brand operator brings changes in various functions, which is not simple.
Furthermore, even with years of experience to produce products that meet consumer needs, relying solely on existing channels is insufficient. At this point, attracting distributors is the biggest challenge because their products compete with manufacturers' products. Peers in the industry are more likely to trust manufacturers who specialize in production. Expanding the market becomes difficult. Unless you have outstanding, differentiated products or strong channel and network resources, such private brands are unlikely to grow large.

**Building Brand Value: Distributors Need to Step Up**
**China Candy**: What impact do distributors' private brands have on the industry? If they want long-term development and to strengthen their brands, do distributors have a chance?
**Chen Yafeng**: For enterprises, the future direction is definitely brand-oriented. When distributors produce and sell their own brand products, they transform into brand operators and need to manage the product from multiple aspects. Whether through OEM or self-built factories, the goal is to leverage existing advantages for easier profit, not to truly build brand value from a long-term perspective. So this model inherently limits brand development and enterprise scaling.
Additionally, for quicker profits, distributors' private brands often follow trends, producing whatever is popular in the market to make quick money. While they can earn some profit from these trendy products, in the long run, it's the major brands that endure. Without core R&D technology and brand influence, long-term development is difficult.
**Wei Jianjun**: Distributors' private brands can indeed be profitable in the short term, but for sustainable growth and scale, brand development is necessary. A mature, well-established production enterprise involves a series of processes from product development, raw material selection, production, promotion, to distribution. Distributors' private brands often skip many steps or lack professionalism in each, which is the main constraint on their growth.
Even so, they still impact the candy and snack industry. By building private brands, distributors can construct an influential marketing value chain with control over key resources upstream and distribution systems and terminal networks downstream. Enterprises will eventually realize that distributors are not just appendages but essential partners in market expansion. They will pay more attention to their relationships with distributors, including interests, personal connections, and market protection. This also forces enterprises to take responsibility for protecting the market while doing business. (The above statements represent only the guests' personal views and do not reflect the stance of this publication.)


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