△2018 China (Luohe) Food Marketing Innovation Summit and the 3rd Leisure Food Manufacturers and Distributors Precision Matchmaking Conference Free registration is in full swing, scan the code for details Event Review Tianyun Food Trading Co., Ltd. is the agent of C'estbon in Bengbu. The distributor collected over 1 million yuan in payments from terminal merchants, but since March this year, the distributor has stopped delivering goods to terminals. Why did they collect the payment but not deliver the goods? C'estbon distributor Guo Chuanjian said he has been the agent for C'estbon mineral water in the Bengbu area for seven or eight years. The reason for the current situation is that he was suppressed by the manager of China Resources C'estbon Bengbu Branch. Guo Chuanjian admitted that he collected order payments from retailers, but he is now unable to supply goods or refund money. Because C'estbon owes fees, the expenses from 2017 have not been settled yet, and he can only repay the terminal merchants after C'estbon settles the fees! Why have there been so many "runaways and collapses" in the past two years?
In February 2016, Liu Zhong, a Moutai distributor in Chengdu, lost nearly 2 million yuan in three years.
In February 2016, the general agent of Six Walnut in Binzhou ran away, involving nearly 200 supermarkets and millions in funds!
In October 2016, the owner of Daokejia Supermarket in Zhengzhou ran away, owing 300 employees one to two million yuan in wages and owing over 100 suppliers more than 14 million yuan.
At the end of 2016, the Yili distributor in Hebi lost 16 million yuan, and it is estimated that he will never pay off the debt even if he works for a lifetime!
During the 2017 Spring Festival, a Yili distributor surnamed Peng in Xuchang ran away.
In July 2017, a similar incident occurred with a distributor in Qinyang, Henan.
In September 2017, the wife of Xia Lisong, a former distributor in Tancheng County, Shandong, went bankrupt and incurred huge debts due to a dispute over advance payments of over 10 million yuan with Yili, and eventually jumped from a building, resulting in permanent disability. The truth, in the final analysis, is mostly caused by advance payments! For distributor friends, advancing various market expenses for manufacturers has become an industry practice. On some distributor service platforms, many cases of distributors complaining about manufacturers have been received, mostly involving long-term arrears of advance payments or payments after cooperation ends, which are not refunded, causing significant losses and risks to distributors' operations. In response to this situation, a reporter from New Distribution interviewed a distributor who once represented C'estbon products. He told New Distribution that the reason he terminated cooperation with C'estbon was also this. It is understood that C'estbon has always adopted relatively tough measures in managing distributors, setting too high tasks for distributors, and lacking clear strategies in the sales process, mainly through layers of pressure from the marketing team, causing distributors to bear great risks and excessive operational pressure. However, this cannot be generalized. It is normal for brand owners to have task requirements for distributors. During cooperation with manufacturers, especially large brand owners, distributors can basically only contact the company's managers or business personnel, with little communication with the manufacturer, leading to many problems of incomplete information transmission. Cooperation between manufacturers and distributors is based on the principle of mutual benefit, and no one wants to see a breakup. For distributors, how to avoid risks? In this regard, New Distribution has the following suggestions for distributors: 1. How to verify and reimburse advance promotional expenses? Currently, most brand promotional expenses are advanced by distributors and then reimbursed according to certain procedures. However, various contradictions and disputes always arise during the reimbursement process. The main reasons come from two aspects: first, there is no corresponding agreement in the cooperation contract; second, the verification procedures and processes stipulated by the manufacturer are too cumbersome. To address these issues, first, fully understand the manufacturer's policies, and for clauses with greater disputes, both parties should reach consensus through negotiation; and try to apply to the manufacturer for relaxation of certain conditions, such as appropriate flexibility in time limits; second, if the promotional plan needs to be changed, it must be reported to the manufacturer in advance and implemented after approval; third, require the enterprise to convey the guarantee procedures and requirements in written form, follow the requirements step by step, and if conditions are not met, choose not to invest, and try to report accounts within the verification period, only earlier, not later. Also, keep backups to prevent accidents; fourth, always pay attention to changes in the manufacturer's sales staff, especially city managers and regional managers, to prevent problems before they occur. 2. How to handle distributor-advanced expenses? Regarding advanced expenses, distributors always bear risks. To achieve smooth cooperation, distributors must consider comprehensively from the beginning. At the start of cooperation, a tripartite agreement should be signed to avoid situations where there is no invoice and cannot be recorded after advancing. When paying, it should be recorded as accounts receivable, credit bank deposits or cash payments, and then attach the tripartite agreement. After receiving the invoice, it is best to keep a copy and only destroy the copy after receiving the money from the manufacturer. This can ensure that distributors reduce certain risks. Although they still advance funds, they will not face the situation where the manufacturer refuses to verify. 3. How to handle the manufacturer's refusal to honor rebates after cooperation ends? The reason for such problems is still the low vigilance of distributors. When negotiating with the manufacturer's sales staff or business managers, they neglect to sign a written contract, which is also the reason why manufacturers dare to default on market expenses and rebates. In such cases, distributors must bypass the sales staff and business managers and try to directly contact the person in charge of the manufacturer. As long as the manufacturer has a certain reputation or wants long-term development, they will definitely handle such problems in a timely manner. Now, with the IOU from the salesperson as evidence, even if the manufacturer is unwilling to solve the problem, it can be resolved through legal channels. Distributor friends must be vigilant. For conditions such as rebate discounts and advanced market expenses proposed by the manufacturer's sales staff and business managers that affect the vital interests of distributors, oral promises alone are very unreliable. They must be put in writing, otherwise, they will only suffer losses. Summary Finally, in the view of New Distribution, the core of this incident lies in the handling of interpersonal relationships, especially the transition between old and new regional managers. "A new ruler brings new officials," leading to obvious market fluctuations in the relationship between distributors and brand owners as local regional managers change. Distributors advancing expenses to help brand owners with market promotion and distribution is the basic function of distributors; for situations where the verification period for advanced expenses is long, if it is very serious, distributors should evaluate whether it is due to subjective or objective reasons. Some brand owners have a consistent strategy of slow verification, which is objectively existing; however, some market sales managers want to use this means to control distributors and lock in their funds, which is not advisable. In response to such malicious means, distributors should try various methods to protect their interests. Undoubtedly, first-line brands still have incomparable advantages, especially in the past two years with fierce market competition. It is much easier for distributors to represent an excellent brand than to develop a new brand. As brand owners, especially regional sales managers, have turned the verification of advanced expenses into a tool of "carrot and stick" to control distributors. At this stage, the overall environment is not good. Brand owners will still intensify control over distributors to maintain sales performance, and long or overdue verification of advanced expenses is inevitable. The situation of excessive financial pressure on distributors also objectively exists. In this regard, distributors must handle it calmly. In principle, distributors should maintain good communication with the regional managers of brand owners and establish good manufacturer-distributor relationships. Going to court is the last resort, and giving up is not advisable! What are your views on this incident? Welcome to interact and discuss with us in the comment section below. -END-