---
title: "The Growing Tensions Between Major Brands and Distributors: Where Does the Problem Lie?"
description: "Cooperation leads to win-win outcomes, and maintaining common interests requires joint efforts from both sides. This article explores the escalating conflicts between major brands and distributors, analyzing the root causes and offering practical solutions to alleviate tensions."
author: "赵胜男"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2023-02-09"
language: "en"
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# The Growing Tensions Between Major Brands and Distributors: Where Does the Problem Lie?

> Cooperation leads to win-win outcomes, and maintaining common interests requires joint efforts from both sides. This article explores the escalating conflicts between major brands and distributors, analyzing the root causes and offering practical solutions to alleviate tensions.

**Introduction: Cooperation leads to win-win outcomes, and maintaining common interests requires joint efforts from both sides.**

**Different Voices**

Recently, I visited some distributors and found through in-depth communication that although these distributor bosses represent different brands, they share a common trait—they have numerous conflicts with the major brands they represent. Distributor Li Qiang (pseudonym) complained, "Last year, the market environment was poor, and the city manager of Brand A (a leading brand) promised performance rewards. After we achieved the targets with great difficulty, the original city manager left, and the new city manager refused to honor the previous commitment. Now my trust in Brand A has decreased, and where's the motivation to work on next year's market?" Distributor Wang Hua (pseudonym), mentioning a leading brand he has represented for over a decade, also looked worried, "After more than ten years of cooperation, sales in my area have always been good, but now I can't fully focus on the market. Because recently, the manufacturer has been frequently cutting old distributors like us without reasonable evaluation criteria, and I'm worried that I might be on the next list to be eliminated."

Facing these complaints and accusations, city managers have different voices: "The company never issued such performance rewards; it might have been a misunderstanding by the previous city manager. When I took over this area, the previous city manager didn't hand over these matters to me." "There's no random elimination of old distributors. Although there are no clear evaluation criteria, those eliminated are distributors who can't keep up with the manufacturer's new moves and have slow sales growth."

Let's not discuss the truth of their statements, but these issues are indeed conflicts that exist between many major brands and distributors, and they are gradually escalating. So how did these conflicts arise, and why are they intensifying? How should they be resolved?

**Where Do the Conflicts Come From?**

From the perspective of the times, in the past, major brands could bring considerable benefits to distributors. The brand effect, coupled with the demographic dividend, meant that even with low profits, distributors were very willing to accept them—small profits but quick turnover, and as long as there was volume, it was fine. But now, the demographic dividend has faded, and distributors' labor costs have increased. The low profits of major brands have become glaring. At the same time, because major brands have long been in a dominant position, various imbalances have surfaced, leading to more conflicts.

From the perspective of both parties, brand owners and distributors each consider issues from their own interest standpoint. Distributors think about how to sell products and maximize profits, while brand owners think about whether KPIs can be met and whether new products can sell. With different interests, overt and covert conflicts are inevitable.

In general, there are three reasons for the intensifying conflicts:

**1. Poor Management Leads to Widespread Channel Diversion**

To achieve rising company performance, manufacturers increase sales targets every year. Ideally, distributors and regional managers complete tasks under pressure, and everyone is happy. But in today's market environment, achieving sales growth is extremely difficult, and ultra-high targets give rise to various problems. The simplest and most crude way for regional managers to complete sales tasks is to force inventory on distributors. This might boost sales in the short term, but in the long run, distributors have too much inventory that can't be sold, and the problem isn't fundamentally solved—it's just shifted to the distributors. At the same time, distributors themselves have sales tasks, and if they don't complete them, they don't get expense rewards. Multiple pressures force distributors to take risks and resort to channel diversion. Regional managers, to complete their tasks, may tolerate or even participate in channel diversion.

Channel diversion not only harms distributors' profits and leads to distrust in the manufacturer but also damages the manufacturer's price chain and brand image, causing great harm.

**2. Damaged Integrity**

To increase sales, manufacturers often promise additional incentive policies to motivate distributors to sell, but they are not diligent in fulfilling these promises. Often, policy fulfillment is delayed, or expenses are deducted with temporary changes, which consumes trust.

Besides delayed policy fulfillment, there are occasional trust losses due to personnel instability. For example, the previous city manager promised expenses, but the new city manager doesn't honor them. Lack of integrity greatly dampens distributors' future enthusiasm. It's important to note that there is a bridge of trust between manufacturers and distributors, which is the foundation of cooperation. Once trust is exhausted and the bridge collapses, cooperation comes to an end.

**3. Unreasonable Optimization Mechanisms**

As major brands operate for a long time, the distributors who have followed them for a long time are also aging. Some old distributors begin to lag behind in thinking, can't keep up with the manufacturer's new moves, and their sales growth slows. Coupled with different interests, manufacturers don't believe in absolutely loyal distributors. They adopt an attitude of "The brand is big, the market is stable, and we can always find suitable distributors," and abandon old distributors at the slightest mismatch. As distributor Wang Hua (pseudonym) mentioned, many old distributors are anxious, not knowing if they will be the next to be abandoned. Although it's true that some distributors are aging, arbitrary evaluation can unfairly harm loyal and capable distributors.

**Alleviating Conflicts**

Whether due to changes in the times or differing interests, it's inevitable that conflicts between the two sides are hard to fundamentally eliminate. But ultimately, cooperation is the only way for major brands and distributors to win together, and escalating conflicts only harm common interests. Although there is no one-size-fits-all solution to all conflicts, people are actively seeking ways to alleviate them. The following content is summarized and refined from excellent experiences of brand owners and distributors visited in the past, for your reference.

**1. Standardize Team Management**

The bridge of trust between manufacturers and distributors is often built by regional managers and salespeople. Since major brands generally have relatively complete sales teams, how should they manage the team well and maintain the trust bridge long-term? Distributor growth mentor Li Feng once mentioned, **it's essential to increase the sales team's attention to policy fulfillment, never make empty promises, and have corresponding penalties for untimely fulfillment.** For example, manufacturers can set a date—before the 28th of each month—to check whether there are any unfulfilled expense rewards for customers this month. The regional manager is fully responsible, and for each day of delay, one day's salary is deducted. With such constraints, the sales team will naturally pay more attention. Additionally, when leaving, handovers must be thorough: all policies promised during tenure and the overview of the responsible area must be handed over one by one, and salary won't be paid until the handover is complete. By standardizing the sales team, the trust bridge between manufacturers and distributors will be strengthened.

**2. Plan Goals Rationally**

The original intention of manufacturers setting goals is certainly to hope that salespeople and distributors sell more goods, create more benefits for the company, and achieve a win-win situation. But goal planning that doesn't consider actual conditions won't gain support and can easily lead to fraud. If everyone could complete their tasks, who would be willing to engage in channel diversion? Reasonable goal planning **must, on one hand, consider the current and next year's economic situation and plan growth amounts reasonably.** Annual goals shouldn't be born just for impressive data. Take the pandemic years as an example: the economy was sluggish, sales of non-essential products were dismal, and no matter how grand the goals, they couldn't be achieved. In such cases, it's necessary to appropriately reduce the target amount. On the other hand, **it's essential to set reasonable growth rates based on the historical performance base of each region and distributor.** For example, if Distributor A completed 1 million this year and Distributor B completed 500,000, then their sales growth rates for the next year can't be the same indicator. The same applies to the assessment indicators for regional managers. Only when the manufacturer's goal planning is scientific and reasonable will distributors truly recognize it, and conflicts will correspondingly decrease.

**3. Knowledge Empowerment**

Blindly forcing inventory can easily lead to a vicious cycle. Therefore, manufacturers should align with distributors, regularly provide empowerment training, and work with distributors to find ways to expand the market. Major brands, after years of accumulation, have rich theoretical and practical experience. Providing theoretical guidance and tactics is the most basic. For example, during major promotional holidays, they can release complete battle strategy PPTs, which can be distributed to various regions and then fine-tuned. In addition to theoretical knowledge, they should also focus on summarizing and sharing practical cases so distributors can learn from highlights. With such dedicated empowerment, moving inventory won't be a problem, and distributors won't complain bitterly about forced inventory.

**4. Standardized Optimization Mechanism**

Survival of the fittest is a rule of business, and regular optimization can also motivate distributors to accelerate development. But optimizing old distributors without standards seems somewhat like burning bridges. Therefore, it's crucial to establish a standardized optimization mechanism. A scoring standard can be developed, including indicators that the manufacturer values. For example, daily policy execution and quarterly sales can all be included. Regional managers score at the end of each month, and elimination occurs every six months. Distributors scoring below 80 will have their cooperation terminated. Additionally, at the end of each year, review the overall situation to prepare for the next year. With such a clear mechanism, eliminated distributors naturally won't have many complaints or excuses.

The above is mainly from the brand owner's perspective, sharing experiences on proactively alleviating conflicts. Of course, conflicts aren't caused unilaterally; distributors must also adopt the right attitude to maintain common interests. Only with joint efforts can both sides improve.

Do you have other ways to ease the relationship? Feel free to leave a comment below.

**Recommended Reading**


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