Why are more and more manufacturers and distributors absconding? They could simply do business properly, so why choose illegal, fraudulent paths? Cases of distributors absconding are increasing yearly. On one hand, we remind distributor friends to be vigilant; on the other, we analyze the core reasons behind this phenomenon:

Mizone Distributor Absconds

In recent years, we've seen many cases of distributors absconding, but few as 'extreme' as the Nanyang Mizone distributor. Numerous details indicate that the Nanyang Mizone distributor's absconding was a planned, strategic 'runaway'—more precisely, a 'textbook-style default.' The distributor didn't actually flee; she continued living at home but transferred all her assets, leaving customers who had paid her with no chance to seize the warehouse.

Yang Juan, based in Nanyang, primarily operated Mosilian yogurt (hereafter 'Mosu') and Mizone. She had been doing Mosu for four to five years and took over Mizone two years ago. Most of her funds for Mosu relied on loans, causing costs to accumulate. Some Mosu customers reported that last year's expenses had not been settled even now.

Originally, Mosu and Mizone complemented each other well: Mosu sold well during Mid-Autumn Festival and Spring Festival, while Mizone was a summer beverage. But such a company, operating on loans, would see one product fall into trouble if the other couldn't rotate funds.

Every immediate-consumption customer would rush to stock up before the Spring Festival. Mizone naturally wouldn't miss this opportunity. Many customers paid for 500-3,500 boxes but didn't pick them all up. By June, a large amount of prepayments remained with Yang Juan. Since the peak season hadn't arrived, sales were naturally slow.

Without cash flow, Yang Juan, relying on loans, couldn't pay Mizone company in time. Seeing her delay, Mizone company's approach was to apply for a payment bonus for her, asking her to give up some profit. They held an ordering meeting to collect another round of money from terminal customers, pay the company, and complete sales targets.

So in June 2018, with the participation of the Mizone city manager, the ordering meeting was very successful, collecting over 2 million yuan. However, after the payment was made, terminal customers not only couldn't see new goods but also couldn't pick up the goods they hadn't taken from the Spring Festival. All signs indicated Yang Juan was about to abscond.

But in reality, she didn't abscond; she transferred all her assets to her sister's name. Facing customers demanding goods, Yang Juan said she used the money to repay high-interest loans and her sister.

Helpless terminal customers reported the case and discovered it was a premeditated default. The legal representative of Yang Juan's company was Li Li, but Yang Juan had always been the operator. If the company had problems, she was just an 'employee.' Additionally, the receipts Yang Juan arranged for business to collect prepayments were irregular; most were written on plain paper, without official seals.

Infuriatingly, the Mizone city manager not only shirked responsibility, claiming it had nothing to do with Mizone, but also organized some large second-tier distributors to use Yang Juan's account to pay and ship goods, continuing to push their sales targets.

Now, Mizone company still hasn't provided a solution to terminal customers, and Yang Juan continues her life as a deadbeat...

Industry insiders believe that distributors this year face dual pressure from manufacturers and the market, with a sense of crisis every day. Manufacturers' salespeople constantly push distributors to pay and take goods but rarely assist in developing local markets. If sales targets aren't met, the brand agency rights may be taken back by the manufacturer, and the 'child' they painstakingly raised is taken away in an instant.

On the market side, due to the overall environment, despite various efforts, distributors must face monthly losses! Most distributors are barely holding on. It's no exaggeration to say that distributors are living in dire straits.

In recent years, more and more distributors have been deceived. Out of ten distributors, nine have been scammed, countless times. Many have no way to complain. We are also frustrated that they keep falling for the same tricks. It takes two to tango. We hope distributor friends can stay alert, recognize the truth, and strictly prevent being deceived again.

Source: Distributor's Home -END-