---
title: "How to Ensure a Smooth Market Transition When Cutting Distributors?"
description: "Chinese distributors are a diverse group that rose from grassroots beginnings. When cutting distributors, it's crucial to use caution, avoid unnecessary terminations, and follow a gradual, methodical approach to prevent conflicts and ensure market stability."
author: "黄润霖"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-05-11"
language: "en"
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# How to Ensure a Smooth Market Transition When Cutting Distributors?

> Chinese distributors are a diverse group that rose from grassroots beginnings. When cutting distributors, it's crucial to use caution, avoid unnecessary terminations, and follow a gradual, methodical approach to prevent conflicts and ensure market stability.

What kind of group are Chinese distributors?
Simply put, from the individual businesses of the early 1980s to the traders of the 21st century, they come from all walks of life, rising from grassroots and making their fortunes in the alleys. Chinese distributor bosses were once excluded from the system, without connections, background, or resources, and relied on starting from scratch. With changes in social attitudes and wealth distribution, the vast majority of distributors have accumulated wealth and changed their lives through their own diligence and courage, earning social recognition.
To put it more complexly, the distributor group is a mixed bag. Those who have been distributors know it well, and those who have managed distributors also have an idea. It's common for people to not follow rules or play by the book, and to resort to violence. A colleague of mine, over a decade ago, was beaten bloody and suffered a comminuted fracture of the radius due to a distributor termination issue, and still has three steel pins that can't be removed; another colleague was beaten so badly in a stocking dispute that he lost teeth and had bumps all over his head, and to this day he doesn't dare go back to that place.
Will there be conflicts between salespeople and distributors? Even teeth bite the tongue sometimes, let alone the manufacturer-distributor relationship where each represents their own interests! Some salespeople resort to deception, threats, and inducements, which is like planting a time bomb for themselves. Because even if you are hardworking and diligent, one day you might step on the wrong nerve, and the distributor might roll up his sleeves and say, "You dare to cut me? I'll make sure your people come in standing and leave lying down!"
## 1. **The most conservative strategy to avoid escalating conflicts when cutting distributors is to use the power of life and death sparingly.**
The highest form of manufacturer-distributor conflict is termination. Once you have to settle accounts, the distributor who used to invite you to dinner and drinks every day will no longer be warm. Why? Distributors live by trade; cutting them off is like taking away their livelihood. How can they still have revolutionary camaraderie with you? So, salespeople must be extremely cautious when cutting distributors. I often say: for you, it might be just a few percent customer attrition rate; for the distributor, it's a 100% death rate.
It must be emphasized that cutting distributors is a last resort. As Sun Tzu said: 'Those who win battles and take territory but do not reward their achievements are in danger, called "fei liu" (wasteful delay).' Whether to cut a distributor is a cost-benefit analysis. In daily distributor management, we too often use termination as the only solution, or exaggerate its role, leading to a dead end in distributor management thinking and also backing ourselves into a corner.
## 2. **How can headquarters sales managers avoid wrongful terminations when it comes to cutting distributors?**
I once managed over 10,000 distributors, and facing a monthly termination rate of about 5%, my hand trembled when approving, because that meant hundreds of distributors were parting ways with the company! Sitting at headquarters, you have no way to confirm whether a customer should be cut or not, or whether the process should be approved or not. Later, to comfort myself, I added a customer termination report form for regional staff to submit with their termination requests. But I found it useless; if you have a hundred thousand reasons to cut a distributor, they have a hundred thousand and one reasons to give you.
If this were a dead knot, the Chinese distributor group wouldn't have grown to its current scale. Every knot has a solution. In practice, I found two effective methods:
**One is to delay.**
When regional sales staff submit termination requests, don't approve immediately; wait and let the dust settle. Many salespeople haven't thought it through and are in a simple either-or mindset. Many salespeople lack the courage to face headquarters' questioning, so after submitting, they wait to see headquarters' attitude. For those that could go either way, over time, the salesperson will think it through and withdraw on their own; for those that are neither rejected nor approved, only those who have truly thought it through will dare to communicate with superiors and seek support. At that point, I use the second method.
**The second is to directly call and verify.**
To avoid wrongful terminations, I added a phone verification step by headquarters supervisors in the termination process. That is, when a request comes in, the supervisor will directly call the distributor being cut to confirm their awareness, including the termination matter, reasons, and the distributor's stance. If it's due to natural reasons like the distributor giving up or store changes, the process can be quickly approved. But if there's any discrepancy with what the salesperson reported, I either use the first method or directly reject it.
## 3. **For regional staff executing distributor terminations, I suggest adhering to the following three principles:**
**1. If you can avoid cutting, don't cut.** Many salespeople think that when adjusting regional markets, they must remove old customers to let new ones grow better. Of course, often they are also forced by promises to new distributors to clean up the mess. Any distributor failing to meet targets or sales volume also partly reflects on the salesperson. Before deciding to cut a distributor, ask yourself: Will this market definitely be better after cutting this distributor?
**2. Even if you cut, do it gradually.** In HR management, there's a concept called 'slow in, fast out.' What does it mean? When hiring, take time to evaluate; don't rush. If you decide to fire someone, make them leave as quickly as possible. Many apply this to distributor management, treating distributors like employees, but forgetting that distributors are not employees. Distributors have inventory, capital investment, and network operations. If you cut them off without warning, even a god would get angry. Unless the market absolutely requires it, allow time for rectification, inventory digestion, and follow-up. Goodwill often yields good results.
**3. Even when cutting gradually, use proper methods.** What's the harshest move salespeople use when cutting distributors? Cutting off supply, and doing so without explanation. That's directly hitting their vital point and forcing them to rebel. Some distributors are unreasonable, but most are legitimate businesspeople. If you're going to cut them, at least tell them: 'Mr. Zhao, I have no grudge against you, but you keep failing to meet targets, and the company is putting pressure on me. Now we're in a market adjustment period, so we're temporarily removing you from our core customer list. I won't set sales targets for you, but you'll also lose all market support! As long as you don't engage in cross-regional selling or price undercutting, we'll still supply you normally. But if we verify you're doing so, the company will blacklist you! That's all I can do for you.' For many non-exclusive businesses, as long as distributors follow market order, they don't have to be cut off completely. Downgrading and adjusting support is a way to let the distributor gradually fade out without igniting conflict in the short term.
## 4. **When regional salespeople execute distributor terminations, what should we do if we encounter a troublemaker?**
After doing all this, will distributors definitely appreciate us? Not necessarily, but most will face it rationally. If you're unlucky and encounter a 'Niu Er' type of rogue who threatens to break your limbs if you touch him, what then?
Headquarters staff have it relatively easier. The company operates nationally, not relying on one city or one pool. When facing such a rogue, you can choose to put that market on hold. If the distributor engages in cross-regional selling, issue a nationwide notice, especially to surrounding areas, saying anyone who secretly supplies to XX distributor will be treated as an accomplice and severely punished. Distributors also need to eat; making a fuss for ten days or half a month is normal, two to three months is tolerable, but how can they survive long-term by price undercutting and cross-regional selling? If they really make a fuss for half a year or a year, they'll exhaust themselves; few distributors can afford to wait. Once the distributor calms down and the market eases, the manufacturer can then re-enter the market; it's not too late.
Regional salespeople have it harder because they only have their own small territory. If they don't produce results for half a year, they might be done for. At that point, if you must make a choice, it's like pulling chestnuts from the fire. To successfully cut a local tyrant distributor, there are two methods to try:
**One is to find a distributor with even stronger local background to take over.** This is like fighting fire with fire. But there are still two issues: Is there a distributor willing to wade into this muddy water? And what if the new distributor also has problems later?
**The second is to find a distributor with official background.** Local tyrants may not fear 'black bosses,' but they usually steer clear of those with official connections. And having a distributor with official background is particularly advantageous in the building materials and home furnishing industry.
Some might say, 'I can't find a distributor with official background, and I still want to get rid of the original one. What should I do?' I say, then just 'mix it cold.' As I always say, in sales, nothing is absolutely necessary; if it is, it's 'man proposes, God disposes.' When forced to choose between two difficult options, it's no choice at all.
Huang Runlin, full-time marketing consultant, focusing on improving salespeople's skills and distributor operation upgrades. The related series of articles are being compiled into a book; stay tuned. Personal WeChat: hrlandhyx
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