---
title: "Several Scenarios Where FMCG Manufacturers Cut Off Distributors!"
description: "A cosmetics distributor in Zhejiang was frustrated when the manufacturer transferred his agency rights to a new distributor without notice, leaving him to 'raise a child' for others and be seen as a fraud by retailers. Distributor Mr. Wang (pseudonym) said his salespeople found retailers doubted his agency rights and were told another distributor was already handling the brand. As FMCG companies grow, they need stronger distributors, and through a series of measures to update their blood and weed out the weak, Mr. Wang understands, but he is angry that when he called the company to ask, they denied it, and days later, the new distributor told him to stop handling the brand. When he called again, the company played 'Tai Chi,' shifting responsibility, making him doubt their motives."
author: "New Distribution"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2015-07-26"
language: "en"
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---

# Several Scenarios Where FMCG Manufacturers Cut Off Distributors!

> A cosmetics distributor in Zhejiang was frustrated when the manufacturer transferred his agency rights to a new distributor without notice, leaving him to 'raise a child' for others and be seen as a fraud by retailers. Distributor Mr. Wang (pseudonym) said his salespeople found retailers doubted his agency rights and were told another distributor was already handling the brand. As FMCG companies grow, they need stronger distributors, and through a series of measures to update their blood and weed out the weak, Mr. Wang understands, but he is angry that when he called the company to ask, they denied it, and days later, the new distributor told him to stop handling the brand. When he called again, the company played 'Tai Chi,' shifting responsibility, making him doubt their motives.

A cosmetics distributor in Zhejiang was deeply troubled: after just over half a year of representing the BXT brand, the manufacturer transferred the agency rights to a new distributor without any notice. Not only did he 'raise a child' for others, but he was also treated by retailers as a 'fraud' without agency rights.
The distributor, Mr. Wang (pseudonym), said that recently when his salespeople visited stores, they found that retailers did not believe he had agency rights and were told that another distributor was already operating the brand.
**FMCG** companies need stronger distributors as they grow, and through a series of measures to update their blood and weed out the weak, Mr. Wang expressed understanding. However, he was angry that when he called the company's head to inquire, the answer was denial. A few days later, the new distributor in the region told him to stop operating the brand. When he called the company again, they played 'Tai Chi,' shifting responsibility, which made him doubt the company's motives.
"The company kept calling, demanding payment, and if we didn't pay, they would change the agency rights. The intention to circle money was obvious," Mr. Wang said. Currently, the agency situation in Zhejiang, Jiangsu, and other places is very chaotic. In Zhejiang alone, there are five or six provincial and city agents, covering Jinhua, Yiwu, Wenzhou, Taizhou, and Hangzhou, with overlapping regional markets.
Mr. Wang said that as early as March, during BXT's recruitment meeting, they had already 'operated under the table' and signed a batch of new distributors. For old distributors, the agency policy was very harsh: the original region had to be handed over to the new distributor, and they could only operate a few areas in their city, with a monthly payment of 100,000 yuan. The new distributor also had a monthly payment of 100,000 yuan for the larger region.
With his reputation damaged and the tens of thousands of yuan invested in the early stage gone, Mr. Wang planned to stop representing the brand. But another problem arose: he still had tens of thousands of yuan worth of goods, and the company actually asked him to digest them himself. "This isn't food that I can eat every day; I can't apply a bottle to my face every day." With such poor after-sales service, Mr. Wang was disheartened. Even one of the company's beauty consultants said, "With a brand like this, I have no confidence selling it."
Why do FMCG manufacturers cut off distributors? Generally, there are several scenarios?
Based on years of experience as a factory sales manager, I have summarized that FMCG distributors being replaced or major distributors being 'trimmed' generally falls into six types.
**1. Manufacturers paint a pie to brainwash and circle money; distributors are greedy and gullible, losing money!**
This point should give readers some insight from the above case. Borrowing from C2CC's Miss Zhang Zhang: I hope agents and distributors will be cautious and rational when choosing companies and brands, avoiding falling into the 'money trap' designed by companies.
The mindset of such factory sales managers: "Whoever has milk is the mother; only with payment do I get commission. Whoever gives me payment can be the distributor. Once the goods reach the distributor, I don't care how they sell to consumers. The company's idea is to circle money once and then switch brands, design a new recruitment policy to circle money again, and not care about the market's survival."
**2. Distributors have limited strength and slow progress; manufacturers are 'riding a donkey looking for a horse,' wanting to attach to a big shot**
This is the consistent practice of manufacturers who lack integrity and long-term planning. Many manufacturers, when their products first launch, lack brand awareness and find it hard to attract strong, ideal customers. To quickly achieve channel layout or complete payment tasks, they accept any distributor as long as they have money, which leaves hidden dangers for future cooperation. When the manufacturer gradually grows and the distributor can no longer meet the manufacturer's needs for local market development, and the manufacturer has the conditions to attract quality distributors, many dishonest companies will not support or help the outdated distributor but will 'go out of the wall' (seek other partners).
The mindset of such factory sales managers: "Modern society advocates freedom of marriage. Following you has no future, so I have to pursue my own happiness, even if it means being Pan Jinlian (a notorious adulteress)."
**3. Channel optimization and integration: cutting off distributors' weak channels**
Mr. Wei is the general agent for G brand in Q region and has a good relationship with the factory's top management. Mr. Wei is very optimistic about G brand and wants to make it the number one local brand, also using G brand to develop his own distribution channels.
Mr. Wei's main advantage is the supermarket channel. G brand is a mass-market FMCG, and wholesale distribution is its main channel. Since Mr. Wei took over G brand, all local supermarkets have entered, but the distribution rate in the circulation channel is less than 10%. The high costs of supermarkets have become an unbearable pain for G brand.
To fully occupy the Q market, achieve deep distribution, and lower market costs, the G brand regional manager had no choice but to find another strong wholesale distribution channel agent, Mr. Li, and authorized him the distribution rights for the Q market's wholesale channel. When Mr. Wei learned that his distribution channel rights had been cut off, he felt his feelings for G brand were deceived and flew into a rage. To appease Mr. Wei, the factory transferred the regional manager (who had achieved rapid improvement after the channel split) away and issued a public criticism.
The regional manager said: "If I let the client continue in distribution, I'm waiting to die; cutting off the client's weak channel is my chance to survive."
**4. Pursuing channel flattening or deep distribution: manufacturers implement 'cutting vassals'**
The regional general distributor for X company in Jiujiang market had monthly sales of only about 50,000 yuan, while Pengze County, a small county under Jiujiang with a population of nearly 300,000 (this distributor started early and cooperated directly with the factory), had monthly sales of over 300,000 yuan. Huangmei County in Hubei, across the river from Jiujiang, had monthly sales of over 700,000 yuan. This shows that although the Jiujiang region had been operating for two years, it was no different from a blank market. The Jiujiang general distributor was a relatively strong local distributor with annual shipments of tens of millions. Initially, they were optimistic about X brand, but due to some legacy issues from early cooperation, the client refused to invest and build distribution channels. Even when the regional manager developed some sub-distributors, the general distributor's markup was high, and policies were not passed down, leaving sub-distributors with no room to operate and no heart to do the market.
After multiple failed communications, the regional manager got angry! "If you don't do deep distribution, then I'll do channel flattening!" Behind the general distributor's back, he opened county-level distributors one by one in the counties under Jiujiang, and the sales in Jiujiang market multiplied several times in the short term.
The regional manager said: "The factory cannot give up the whole forest for one tree."
**5. The pitiful must have something hateful: false reporting of expenses and disrupting the market—'cutting you without discussion'**
QZ Trading is a relatively strong company locally, representing strong daily chemical brands like Johnson & Johnson and Shanghai Jahwa, and is also a terminal channel distributor for BW Company. However, after the new BW regional manager inspected the market, he revoked QZ's agency rights.
After visiting the terminals, the regional manager found that QZ Trading reported 17 salespeople to the company, but only 10 actually existed. Of these 10 promoters, 7 were also working part-time for other brands. Moreover, the monthly salary reported for promoters was an average of over 1,000 yuan per person, but the promoters actually received only about 600 yuan. Many stores applied for N-shelf and TG display fees, but the regional manager only found one store with a TG display, and according to the promoter, it had just been set up.
The regional manager also checked sales data at some stores and found that actual sales were only one-third of what the distributor reported, and actual market sales were declining sharply. The regional manager wondered: where did the goods the distributor purchased each month go? He called the inspection department and learned that the distributor had been frequently complained about for shipping goods to other regions and had been punished multiple times by the company for this.
The regional manager said: "Smart distributors know how to fight for more factory resources to do the market, but those who ignore the factory's interests and sustainable market development, killing the goose that lays the golden eggs to earn fees, can only be 'smart for a while'."
**6. Self-righteous, not treating the factory manager as a 'big shot,' forcing the factory to 'cut off Ma Su with tears'**
Many experienced and strong distributors do not put the factory's 'spokesperson'—the regional manager—on an equal footing with themselves. They think the regional manager is just a factory worker, a young lad, or a woman with long hair and short knowledge. For the regional manager, the factory's policies are not implemented, they don't receive respect, and distributors always use payment as leverage to demand policies, threatening not to pay if they don't get special support. If the distributor doesn't cooperate, the regional manager's work cannot proceed. When the work becomes unsustainable, the regional manager will look for backup distributors, collect evidence of the current distributor's irregular operations and non-cooperation, and submit a request to change the distributor to the company.
Source: Interpretation of FMCG
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