---
title: "Niulanshan Issues 'Decentralization Order': How Far Should the Distance Be from Manufacturer to Terminal?"
description: "Niulanshan's move is an open secret: its ultimate goal is to completely eliminate wholesalers and achieve direct manufacturer control over retail channels, i.e., 'direct terminal control.' Is direct terminal control really the only path for manufacturers to reach consumers? Niulanshan's 'decentralization order' has caused a stir in the liquor industry: starting from late June, some major products in Beijing's total distribution channels are being allocated by district, and wholesale is being banned. As a result, the number of first-tier and second-tier distributors in Beijing has been reduced from over 100 to 23. And reportedly, this is just the beginning."
author: "窦林毅"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-08-06"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/niulanshan-issues-decentralization-order-how-far-should-the-distance-be-58807a3b/"
markdown: "https://xinjignxiao.com/en/articles/niulanshan-issues-decentralization-order-how-far-should-the-distance-be-58807a3b.md"
original_source: "https://mp.weixin.qq.com/s/S6O3EHJBvVjTmFuWONvQQg"
translation: "https://xinjignxiao.com/zh/articles/%E7%89%9B%E6%A0%8F%E5%B1%B1%E7%A5%AD%E5%87%BA-%E5%89%8A%E8%97%A9%E4%BB%A4-%E5%8E%82%E5%AE%B6%E5%88%B0%E7%BB%88%E7%AB%AF-%E5%88%B0%E5%BA%95%E8%B7%9D%E7%A6%BB%E8%AF%A5%E5%A4%9A%E8%BF%9C-58807a3b.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/niulanshan-issues-decentralization-order-how-far-should-the-distance-be-58807a3b/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# Niulanshan Issues 'Decentralization Order': How Far Should the Distance Be from Manufacturer to Terminal?

> Niulanshan's move is an open secret: its ultimate goal is to completely eliminate wholesalers and achieve direct manufacturer control over retail channels, i.e., 'direct terminal control.' Is direct terminal control really the only path for manufacturers to reach consumers? Niulanshan's 'decentralization order' has caused a stir in the liquor industry: starting from late June, some major products in Beijing's total distribution channels are being allocated by district, and wholesale is being banned. As a result, the number of first-tier and second-tier distributors in Beijing has been reduced from over 100 to 23. And reportedly, this is just the beginning.

**Introduction:**
Niulanshan's move is an open secret: its ultimate goal is to completely eliminate wholesalers and achieve direct manufacturer control over retail channels, i.e., 'direct terminal control.'
Is direct terminal control really the only path for manufacturers to reach consumers?
Niulanshan's 'decentralization order' has caused a stir in the liquor industry: starting from late June, some major products in Beijing's total distribution channels are being allocated by district, and wholesale is being banned. As a result, the number of first-tier and second-tier distributors in Beijing has been reduced from over 100 to 23. And reportedly, this is just the beginning. Niulanshan's move is an open secret: its ultimate goal is to completely eliminate wholesalers and achieve direct manufacturer control over retail channels, i.e., 'direct terminal control.'
**The Ills of Traditional Channels Are Beyond Cure**
Channels were once the main reliance for enterprises to conquer markets and expand territory. Enterprises only needed to leverage existing channel pathways to quickly get products to terminals, where they could be purchased and used by consumers. Especially for FMCG, it was said that those who control the channels control the world. However, with the rapid rise of e-commerce and internet channels, and the great development of mobile micro-commerce, the drawbacks of traditional channels have been magnified infinitely.
First, **costs remain high, becoming an unbearable burden for enterprises. Promotional fees, entry fees, labor costs, advertising fees—none can be omitted, and they keep rising. Sales figures may look impressive, but in reality, they mean losses for the enterprise. There are too many layers: from provincial and municipal agents to county-level distributors, plus the intermediate wholesale links. Each layer takes its cut, so by the time products reach end consumers, they have no price competitiveness. Yet low prices and discounts have always been the main competitive means for Chinese enterprises. Without price advantages, it's hard to get consumers to buy. Management costs are too high: every regional market requires dedicated personnel to supervise, urge, serve, and manage the entire sales area, prevent cross-region sales, control quality, and each region's management costs are no less than hundreds of thousands or millions. Traditional channels have reached a point where they are riddled with problems, an unbearable burden for enterprises, and not something enterprises can change on their own.**
**For enterprises, the best choice at present is to achieve 'direct terminal control,' and indeed, companies with strong market growth such as 'Yili,' 'Uniqlo,' 'Niulanshan,' and 'Zhou Hei Ya' have all done 'direct terminal control' quite well.**
**Start by Reducing Agency Layers**
For mature enterprises, like 'Niulanshan,' gradually reducing agency layers in some markets and gradually controlling terminals directly is the most prudent choice. Reducing from the usual 5 layers to 3, and for areas close to their home base, using their own teams to directly manage terminals, **the role of agents shifts from terminal sales to 'warehousing, logistics, and distribution.' For enterprises, this not only increases visible profit income but also simplifies channel management such as preventing cross-region sales and unifying price systems.**
**If Direct Operation Is Possible, Avoid Franchising**
From the day an enterprise is born, it should try to build its own direct operation team and develop its own market direct operation capabilities. Even a great company like 'Apple' relies on global direct operation to control terminals. **'Zhou Hei Ya' and 'Juewei Duck Neck' have similar products and both originated from grassroots in Wuhan. 'Juewei' has 7,172 stores nationwide with revenue of 2.9 billion yuan, while 'Zhou Hei Ya' has 715 stores with 2.4 billion yuan. The surprising thing is that 'Zhou Hei Ya's' gross profit is nearly 1 billion yuan higher than 'Juewei's.' The secret lies in the fact that 'Zhou Hei Ya' is direct-operated, while 'Juewei' is franchise-based. Now 'Juewei' is undergoing a difficult transition to direct operation.**
Direct operation, for enterprises, is a bit troublesome in the early stages: they have to research, develop, and manufacture products, as well as market, develop, and build their own markets. So many enterprises choose franchising or investment attraction models, which save effort, but the results are not worry-free. **Enterprises that choose direct operation may seem to have more trouble and higher risks initially, but because they have terminal operation capabilities, they not only increase profits but also gain good control over frontline consumer information. With the ability to directly serve end consumers, they can better adapt to market changes, thereby enhancing their ability to resist risks and develop more rapidly.**
Therefore, in the long run, direct operation is a capability that enterprises must possess.
**The Foundation of 'Direct Terminal Control' Is Delegating Power to the Frontline**
**'Direct terminal control' not only means reducing agency layers externally but also reducing management layers internally, reducing management levels, enhancing the authority and permissions of frontline business personnel, and concentrating enterprise resources toward the frontline, truly realizing 'let those who hear the gunfire command the battle, deliver ammunition to where the gunfire is dense, delegate power to them, and let them directly command the battle.'** Especially, it is not recommended to set up market personnel at the frontline. If a salesperson can do the job alone, there is no need to add a market specialist; besides increasing costs and causing confusion, it is hard to see any necessity for such a role.
**Delegating authority to the frontline is the only way to build an efficient, execution-oriented team that can win battles, truly drive channel reform, and achieve enterprise slimming.**
**The Integration of Online and Offline Is a Value Chain That Must Be Connected**
E-commerce and micro-commerce are the best forms for enterprises to achieve direct sales and understand consumer needs. An enterprise that does not understand user experience is dangerous. **E-commerce and micro-commerce can both obtain user information at the first moment of sale, understand the true reputation and evaluation of their products. Reputation management is the most effective basis for consumer purchases, and managing reputation is a function that enterprises must master. When conditions permit, enterprises should try to shift their sales focus online and to mobile. In the future, mobile will definitely be the main entry point and form for consumer shopping and consumption experience. If online sales are active and online strategies are in place, offline physical stores will naturally not be far behind. If offline provides a good consumption experience, it will better feed back into online consumption and win good reputation effects. The integration of online and offline is a value chain that enterprises must connect.**
In summary, channel reform is something enterprises must do; otherwise, the heavy channel burden and high costs will drag them into the abyss. Conversely, if an enterprise succeeds in channel reform, it will be a new leap forward, entering a new realm. Why not do it?
Source: Sales and Market (cnmarket)
At the request of many distributor friends, our public platform's fourth B-end e-commerce inspection class will be held from August 15-18, visiting Qianmi Network and Alibaba Retail Link in Nanjing and Hangzhou. Distributor friends interested in transformation can join us for on-site inspections:
Activity Schedule:
Time: August 15-18
> August 15-18
>
>
>
>
> Nanjing·Hangzhou 15th: Check in at designated hotel in Nanjing; 16th: On-site inspection of Qianmi Network, then high-speed rail to Hangzhou in the afternoon; 17th: Participate in the 'FMCG Distributor B2B Transformation Exchange Summit';
> 18th: On-site inspection of Alibaba Retail Link in Hangzhou;
**Distributor friends interested in transformation are welcome to join us to learn and inspect on-site**:
**Organization Format**
************1. Company visit
2. Actual market case visit
3. On-site explanation
4. One-on-one communication************
Participating distributor friends only need to pay a registration fee of 200 yuan
Other expenses are self-covered
Note: This inspection is limited to distributors only
****************Distributor friends interested can register by long-pressing the QR code below.****************
****************When adding, please note: "Fourth Phase Registration".****************
**Non-participants, please do not disturb**
**Group Photos from Previous Inspections:**
**Group photo of the 3rd B-end e-commerce inspection, from top to bottom: Yunbao Shangmeng, Weijie City Distribution, Wanshang Yizhan.**
**Group photo of the 2nd B-end e-commerce inspection, from top to bottom: Jinhuobao, Caiba, Yishang.**
**Group photo of the 1st B-end e-commerce inspection, from top to bottom: Piduoduo, Beiquan, Yishang.**
-END-
The best FMCG distributor learning platform in China
Dedicated to providing professional, practical, and actionable tutorials for enterprises and distributors
Committed to helping Chinese FMCG distributors grow rapidly
**The most professional and practical knowledge base in the FMCG industry**
Reply with the red number below to get the corresponding content
Reply with number 1 to view the complete knowledge base
| **001** Excellent article selection | **002** Distributor market operations | **003** Terminal visit management | **004** Sales supervisor skills | **005** Sales improvement techniques | **006** Channel expansion | **007** Managing distributors | **008** Distributor development | **009** Distributor internal operations management | **010** Team management | **011** Efficient distribution techniques | **012** Sales manager's eighteen skills | **013** KA operation methods and strategies | **014** First lesson for new salespeople | **015** Internet, brand | **016** Distributor B2B transformation |
[Long press QR code to follow]


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671