---
title: "Ten Major Obstacles to the Development of Chinese Distributors"
description: "This article outlines ten major obstacles that Chinese distributors face in their development, including issues with product mix, sales incentives, customer treatment, price wars, channel management, over-reliance on individual efforts, weak brand building, mismatched management, high costs, and outdated mindsets. Each obstacle is analyzed with practical examples and suggestions for improvement."
author: "New Distribution"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2014-09-21"
language: "en"
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# Ten Major Obstacles to the Development of Chinese Distributors

> This article outlines ten major obstacles that Chinese distributors face in their development, including issues with product mix, sales incentives, customer treatment, price wars, channel management, over-reliance on individual efforts, weak brand building, mismatched management, high costs, and outdated mindsets. Each obstacle is analyzed with practical examples and suggestions for improvement.

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**1. Uneven Product Mix**
In pursuit of a comprehensive product structure, distributors often use "full product range" as an advantage to attract distribution customers. When purchasing and stocking products, they often fail to consider sales prospects and the consumption habits of target customer groups, accepting products from manufacturers without screening. While this ensures a full range, it inevitably leads to uneven product quality. As a result, products may not sell well due to price, quality, style, or grade issues, leading to overstocking and occupying warehouse space and capital. Distributors then either resort to "clearance sales at rock-bottom prices" or demand returns from manufacturers. The former can strain relationships with peers, while the latter can break manufacturer-distributor relationships.

**2. Sales Volume Driven by Incentives Instead of Management**
To increase the frequency and quantity of orders from distribution customers, distributors often use various tactics to stimulate short-term purchase desires: giving gifts, offering premiums, increasing rebate points, lowering supply prices, promising regional exclusive distribution rights, etc. They treat every customer as a god, complying with all demands without principle. Conversely, they neglect price control and regional management during product distribution, and fail to assess customers' credit ratings and financial strength. This ultimately leads to customers completing sales tasks but disrupting the market, or even "relocating, going bankrupt, or closing down" overnight, causing huge bad debts for distributors.

**3. Sales Policies That Favor Large Customers Over Small Ones**
In the distribution business, "low prices," "rebates," and "courtesies" seem to be preferential sales policies enjoyed only by "large customers" with high purchase volumes (measured purely by amount). Distributors' "support and tilt" toward large customers is evident. In contrast, they treat "small customers" with indifference, arbitrarily raising supply prices, and not even considering year-end rebates. Little do they know that the more support given to large customers, the faster they may become competitors, akin to "using your own vital energy to open someone else's meridians," depleting your strength while enhancing theirs. Raising a tiger only to be bitten by it. Meanwhile, small customers, unable to endure the cold treatment, switch their purchasing channels to other distributors. This not only loses customers but also indirectly boosts competitors' sales.

**4. Price Wars in a Low-Margin Era**
Due to low industry profit margins, distributors have lamented, "Sewing clothes for others" (one for manufacturers, one for retailers), and "both ends active, middle shrinking" (profits are taken by manufacturers and retailers). However, in this low-margin environment, some distributors still resort to "price wars" such as giving discounts and lowering prices to grab customers, rather than competing on quality, brand, or service. On one hand, this disorderly competition severely disrupts the industry's distribution order, straining industry relationships; on the other hand, it causes significant losses because they do not truly have a cost advantage.

**5. Common Channels for Different Products**
Some distributors, after obtaining agency rights from manufacturers, fail to accurately position products and develop appropriate channel strategies. They indiscriminately ignore product price, grade, and maturity, forgetting basic marketing principles: high-priced, high-grade products suit urban markets; low-priced, low-grade products suit rural markets; mature products suit traditional wholesale channels; new and novel products suit terminal retail channels with strong promotion capabilities. Instead of "fishing selectively" by region, customer, and channel, they "cast a wide net" across all regions, customers, and channels. While this increases market coverage (not market share) and may capture some sales opportunities, it inevitably leads to slow-moving inventory with some customers, causing channel overlap and waste in the short term, and undermining customers' confidence in distributing other products in the long run. Ultimately, the gains do not outweigh the losses.

**6. Individual Heroism in Market Operations**
Many distributors, when operating in the market, rely on their comprehensive networks, thoughtful service, and strong financial strength as "heavy artillery," thinking they can conquer the market alone. They believe their networks ensure smooth channels, their service keeps customers loyal, and their strength provides credit support. Yet market operations still fail. Why? Because they fail to "combine swords" with manufacturers, unable to unleash the power of "1+1>2." "Only a mother knows her child." Think about it: Are distributors clearer about product selling points than manufacturers? No. Are they more accurate in product positioning? No. These are the most critical factors in decision-making. If distributors could obtain strategic guidance and promotional support from manufacturers, wouldn't they be like a tiger with wings, invincible in market operations?

**7. Weak Corporate Brand**
"Tilling others' fields while letting your own lie fallow" is a common ailment of traditional distributors. Creating sales and building brands all benefit manufacturers. After a partnership, what do distributors gain? Market share, sales, profits, and product brands all belong to manufacturers. Distributors only receive limited profits. Successful distributors have built numerous well-known product brands, yet their own company names are far less famous. In the new era, distributors will embark on a path of building their own brands, leveraging multiple products to create and accumulate brand value for their own enterprises.

**8. Management Mismatched with Development Speed**
Some distributor enterprises have already embarked on the path of large-group intensive development, yet they still implement management models from their small and medium-sized enterprise stages. Some private and family-owned enterprises have achieved considerable scale and strength, but their "small workshop" management style hinders further progress. For example, some large distributors have very backward data informatization, lacking even basic computer networking, unable to integrate internal purchase, sales, and inventory data; unable to achieve synchronized operations among departments, headquarters, and branches; and unable to share information with other enterprises and the industry. This is one manifestation of mismatch: management methods lag behind development speed.

Conversely, some distributors raise the banner of "seeking efficiency from management," ignoring their actual strength, scale, and business volume, and indiscriminately introduce "advanced" but "inappropriate" management ideas and tools. Ultimately, advanced tools and equipment are brought in but cannot be used, ending up sleeping in warehouses. This results in resource waste. This is another manifestation of mismatch: management methods ahead of development speed.

**9. High Costs**
Because manufacturers and distributors are two different interest groups, the flow of products from manufacturers to distributors involves not only logistics and transportation but also buying and selling transactions. Wherever there is trade, there are conflicts of interest. Manufacturers, for their own benefit, inevitably consider many tangible (e.g., raw materials, wages) and intangible (e.g., brand value, equipment depreciation, formulas) factors in cost accounting. For distributors, this raises procurement costs.

Downstream distribution customers are also becoming increasingly "demanding": besides requiring initial stock and lowest supply prices, they also demand door-to-door delivery. This further increases distributors' logistics and transportation costs.

Higher procurement costs, lower product added value, and a series of "complications" such as high pricing make it difficult for distributors to form price advantages to attract downstream customers; higher logistics costs also shrink profit margins, leading distributors to lament, "Business is getting harder and harder."

**10. Hard-to-Change Mindsets**
First, there is the "setter" (second-hand passer) mindset. Distributors believe their role is merely to smooth product sales channels and distribute products to downstream customers' warehouses; other tasks like promotion are the manufacturer's responsibility. They lack the awareness to transform from "setter" to "agent" (acting as "sales agent" for manufacturers and "purchasing agent" for distribution customers).

Second, there is the "sewing clothes for others" value concept. They think that after a partnership with manufacturers, market share, sales, profits, and product brands all belong to manufacturers, and they only get limited profits. Little do they know that by leveraging product operations, they can also improve their marketing networks and create a golden brand for their own enterprises, becoming model enterprises in the industry.

Additionally, there are competitive concepts that replace quality, brand, and service wars with price wars; policy allocation concepts that base support on sales volume rather than customer type; and so on. These fundamentally restrict distributors' market operations, brand cultivation, competitive strength, and customer management. These mindsets can be described as the "inner demons" hindering distributors' transformation in the new era.

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