---
title: "Manufacturers Have Started Cutting Clients—Where Do Traditional Distributors Go From Here?"
description: "Recently, news that a company cut distributors with annual sales below 3 million yuan sent shockwaves through the FMCG industry. While some understand and others worry, distributors mostly complain. In the current stock competition, not just XXHa but almost all major FMCG manufacturers are proactively seeking change. Through communication with multiple manufacturer personnel, the author learned about changes in manufacturer distributor strategies."
author: "金名"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2025-10-11"
categories: "Dealer Operations"
language: "en"
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markdown: "https://xinjignxiao.com/en/articles/manufacturers-have-started-cutting-clientswhere-do-traditional-distribut-afe90014.md"
original_source: "https://mp.weixin.qq.com/s/je6xhkeM-C6QJ43wEkeYcg"
translation: "https://xinjignxiao.com/zh/articles/%E5%8E%82%E5%AE%B6%E5%B7%B2%E7%BB%8F%E5%8A%A8%E6%89%8B%E7%A0%8D%E5%AE%A2%E6%88%B7%E4%BA%86-%E4%BC%A0%E7%BB%9F%E7%BB%8F%E9%94%80%E5%95%86%E4%BD%95%E5%8E%BB%E4%BD%95%E4%BB%8E-afe90014.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/manufacturers-have-started-cutting-clientswhere-do-traditional-distribut-afe90014/"
citation: "金名. “Manufacturers Have Started Cutting Clients—Where Do Traditional Distributors Go From Here?.” New Distribution, 2025-10-11. https://xinjignxiao.com/en/articles/manufacturers-have-started-cutting-clientswhere-do-traditional-distribut-afe90014/"
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---

# Manufacturers Have Started Cutting Clients—Where Do Traditional Distributors Go From Here?

> Recently, news that a company cut distributors with annual sales below 3 million yuan sent shockwaves through the FMCG industry. While some understand and others worry, distributors mostly complain. In the current stock competition, not just XXHa but almost all major FMCG manufacturers are proactively seeking change. Through communication with multiple manufacturer personnel, the author learned about changes in manufacturer distributor strategies.

Recently, news that a company cut distributors with annual sales below 3 million yuan sent shockwaves through the FMCG industry.
Some understand, some worry, but from the distributor's perspective, there is more complaint.
"The manufacturer has no conscience. Back then, I built this market from zero, and now they eliminate me without hesitation," a distributor said with resentment.
In fact, in the current stock competition, not just XXHa, but almost all major FMCG manufacturers are proactively seeking change. Through communication with multiple manufacturer personnel, the author learned about changes in manufacturer distributor strategies.

Manufacturers are adjusting distributors
Facing sales growth pressure, manufacturers are actively seeking change, and improving the efficiency of connecting distributors to end terminals is a major trend.

1. Integrating traditional small distributors
Currently, major manufacturers are gradually integrating small clients, especially those without any competitive advantage in the local market. Manufacturers do this mainly for three purposes:

1\. Improve the efficiency of implementing company strategies to the terminal
Many small clients do not have a sales team, so the policies formulated by the manufacturer cannot be fully implemented at the terminal or are not executed properly.
At a client exchange meeting, a small client from a certain market frankly said: "It's not that the company's policies are bad, but we lack personnel and vehicles, so the policies can only reach half of the target terminals."
"Some distributors have many blank areas in their jurisdiction, and market share has been at a low level for years without improvement. We will proactively reduce their area or eliminate them to improve terminal service efficiency and drive sales growth," said a manager from a major manufacturer.

2\. Curb market price chaos
A regional manager from a manufacturer told the author: "In a certain prefecture-level city, in previous years, our product continuously split the market and added clients, at one point exceeding 50 clients, all with very small volumes. Two clients were separated by just one street, leading to inevitable price competition between clients. Now the prices are completely chaotic."

3\. Better respond to competition
Most critically, when facing attacks from competitors, small clients lack the ability to resist, watching helplessly as market share is eroded.
This year, when visiting a client with declining sales, I asked the main reason for the decline. The client replied: "Competitors increased promotional intensity and took away some sales."

2. Finding clients with stable terminal cooperation
Looking back, in the past, as long as a market expanded its client base, it could basically achieve phased results.
But in recent years, this approach has become increasingly ineffective because the demographic dividend has disappeared, capacity has declined, and the market has entered stock competition. New clients find it hard to survive, let alone grow.
Now, manufacturers are adjusting their distributor strategies, especially in weak markets, proactively seeking clients who control terminals to break through market bottlenecks.
The underlying logic here is: leveraging client resources (capital, team, local social relations, stable terminals, etc.) to quickly open up the link from factory to terminal. Expanding one client is equivalent to expanding several hundred terminals, improving terminal expansion efficiency.
If, as in the past, they sought ordinary clients, they would have to negotiate with terminals one by one, which is time-consuming and laborious. Clients cannot endure it, and manufacturers cannot wait.

3. Finding clients with suitable sales channels for differentiated products
In the past, manufacturers basically used a "distributor + product" distribution model.
All company products were given to existing distributors to operate. Distributors blindly pushed them to terminals, but many products were not suitable for certain terminals, resulting in poor sell-through, near-expiry returns, and affecting terminal and distributor confidence in certain products.
"This product doesn't sell well," "Consumers don't buy it," are common market feedback.
Additionally, major manufacturers have long product lines, and existing distributors have limited energy and resources. Besides main products, they often treat other products as tasks from the manufacturer, doing them incidentally. If they naturally sell, good; but once terminals encounter obstacles or near-expiry products arise, they retreat to best-selling products.
Under the "distributor + product" sales model, most products are easily killed at the distributor or terminal stage.
The rich product lines of major manufacturers become a burden, and R&D advantages do not bring practical value.
In response to the above, some manufacturers have begun to shift to a "product + distributor" model: based on the target consumers and suitable scenarios defined by product positioning, they seek distributors who specialize in operating such channels.
Thus, products can more precisely reach target consumers, and distributors specializing in such channels have more professional tactics, with more focused energy and resources, making it easier for products to survive and develop.
A salesperson from a soda water manufacturer said: "During sales, we found that distributors dealing in alcohol grew faster than those dealing in beverages, because the value of our soda water matches drinking scenarios. After that, we adjusted our strategy to specifically seek alcohol distributors, focusing on scenarios like hotpot, barbecue, and crayfish where drinking crowds gather, driving rapid product growth."
In summary, the core of changes in manufacturer distributor strategies is to integrate distributor resources, improve the efficiency of product landing at terminals, and enhance product competitiveness at terminals.

How can traditional distributors break through?

1. Build your own channel barriers
1\. Control a certain number of channels
Even if you switch brands, you can quickly and smoothly transition.
This year, I visited multiple distributors with sustained sales growth. They all said that in recent years, they have become more refined in terminal operations. They evaluate terminals based on sales, product structure, payment terms, etc., classifying them into high-quality, ordinary, and poor outlets. Especially for high-quality outlets, distributor owners personally maintain them.
Establishing stable supply relationships with terminals is core to starting from the terminal's business, doing a series of actions such as product selection, resource investment, and terminal service.
A large distributor operates products from multiple leading brands, covering both beverages and alcohol, doing a mix of business, but he has over 5,000 stable cooperative terminals.
I asked: "Why are terminals willing to source from you? Will they compare prices online?"
The client replied: "I select products suitable for the terminal's needs and target customer needs, rather than pushing any product to terminals. Additionally, I provide pre-sales and after-sales service, solving their worries, so my supply relationship with terminals is very stable."
Product selection requires patience, and serving terminals requires even more patience. Many distributors lack patience; they don't personally maintain core terminals, don't deliver to ordinary terminals promptly, and are even less willing to exchange goods.
The client added: "To better deliver and serve terminals, I have established three warehouse distribution stations."
Moreover, when you control a certain number of terminals, manufacturers dare not easily replace you. If they replace you, it's hard to find a substitute or successor distributor, and the market will only get worse.
The client also told the author: "Every year, many manufacturers proactively approach me to discuss cooperation because I have 5,000 stable cooperative terminals. This is my confidence and my bargaining chip with manufacturers. Even if I switch to another brand, I can still live quite comfortably."

2\. Control channels with entry barriers
Of course, not every distributor can control enough channels, but if you have channels with entry barriers, you can also survive well.
Such channels are not easily replaceable by anyone; they inherently have certain channel barriers, such as channels requiring large upfront investment (large restaurants, nightclubs, large chain supermarkets) or channels requiring strong social relations (schools, government, etc.).
The core of special channel cooperation has two points:
* Key persons in the channel
* Suitable products
Distributor owners should personally visit and maintain key persons in the channel, deeply understand the needs, sales scale, and settlement cycles of special channels, and combine with your own resources. If you can meet their needs, you can choose suitable, differentiated products to seek cooperation first, then combine products to form a stable partnership.
If you cannot meet their needs, then look for the next target.
"A large factory we currently cooperate with, in the first year we cooperated on one product, basically not making money. Later, through cooperation on other products, we started making money," said a client in Nanchang who specializes in special channels.
Mastering channels with entry barriers, even if not many, will not be easily replaced.
At the beginning of the year, I visited a county distributor with small sales, but he didn't seem anxious at all.
The client said: "I only do catering, currently covering over 40 restaurants." I was puzzled: "These 40-plus stores probably can't support your team, and catering capacity is declining."
The client continued: "I am a local, and I am familiar with these store owners. If I don't supply, others may not be able to supply to many of these stores. In the same category, these stores now only sell products I supply, and they are high-margin products. This year, I took on a new high-margin beverage, XX pomelo juice, and sales are growing fast."
Additionally, for special channels, manufacturers also provide resource support, so they almost never proactively eliminate such distributors.

2. Have hidden channels to digest near-expiry products
Manufacturers pressuring inventory has become the norm. The ideal state manufacturers hope for is: goods are pressed onto distributors; distributors press terminals (or expand new channels, bringing new increments); terminals increase sell-through, squeezing competitor share; finally, sales grow and share increases.
But the reality is that it stops at the "goods pressed onto distributors" or "distributors press terminals" stage. Terminal sell-through cannot keep up, leading to increased resistance to terminal pressure, and more goods remain in distributor warehouses.
Because pressing terminals further exceeds their sales capacity, it ends in a mess, and distributors have to bear the consequences.
Since pressing terminals is not feasible, the only way is to take a side path: ship goods at low prices to quickly digest inventory, minimizing losses (if goods expire in the warehouse, the loss is too great; shipping out at least doesn't lose money). This is how they survive.
Of course, some manufacturers fine for cross-region sales. How to avoid being caught? That's where your strength is truly tested.
This year, I visited a client with small sales, not exceeding 3 million yuan annually, but he lives quite comfortably.
I looked at the warehouse inventory; relative to his size, it was quite high. I was puzzled: "With your size, products can easily become near-expiry, so you must be losing money."
The client smiled and said: "No expired products will occur. When products still have 4 months of shelf life at the terminal (at least 1 month earlier than other clients in the market), I will recall them and then dispose of them."
Later, the business person told me that this client has hidden channels to digest near-expiry products, not in his own market, and the company cannot detect his cross-region sales.
In the current market environment, survival is the absolute principle.

Final Thoughts
The market environment has changed, and manufacturers are proactively reforming. This wave of change will first hit distributors.
Especially traditional distributors will face major changes. Some traditional distributors have planned ahead, laid out in advance, or successfully transformed, or built their own channel systems, standing out among many traditional distributors.
However, many distributors are still complaining, complaining about low online prices, high restaurant closure rates, slow small store sell-through, long settlement cycles for special channels...
As Teacher Xiao Masong said: "Your product selection ability, channel competitiveness, cost control, user operation ability, etc., at least one must be done well. If none are done well, then being eliminated is nothing to complain about. The market is like this: survival of the fittest."
In the past incremental era, as long as you worked hard, you could get a share.
In the current environment, those traditional distributors without core competitiveness are destined to be eliminated by the market. Complaining does not solve problems. Only action, doing what you can do, doing what is worth doing, can you find a way out.
Only by assessing the situation and proactively attacking can you have more calmness when the storm comes.


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## Citation metadata

- Publisher: New Distribution
- Author: 金名
- Published: 2025-10-11
- Canonical: https://xinjignxiao.com/en/articles/manufacturers-have-started-cutting-clientswhere-do-traditional-distribut-afe90014/
- Original source: https://mp.weixin.qq.com/s/je6xhkeM-C6QJ43wEkeYcg

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