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Introduction: When a manufacturer partners with a local dealer to jointly operate a regional market, who actually owns that market—the manufacturer or the dealer?
Throughout the manufacturer-dealer cooperation, disputes and conflicts are common, ranging from mutual complaints to outright separation, after which each party seeks new partners and may even launch targeted attacks. Behind these disputes, there are always reasons—perhaps differing perspectives, conflicting interests, or asymmetric understanding. Many analyses have covered these aspects, so I won't repeat them here. However, one reason rarely mentioned is the issue of market ownership.
When a manufacturer selects a dealer in a certain area to jointly operate a regional market, the question arises: who owns that market? The ownership of the market determines who leads and who follows in the cooperation. After all, in business partnerships, there is no absolute equality; there is always a primary and a secondary role.
So, who really owns the market? There is no objective answer, but both manufacturers and dealers often believe the market belongs to them, that they are the managers with the right to direct. This is often the root of various disputes.
The Manufacturer's View:
The products are ours, the brand is ours, and we have years of industry history and even a certain industry status. We have deep insights into the national market and can even influence and control it to some extent. We have systematic research and overall planning for market operations. In fact, not just a regional market, but the entire national market is under our overall planning and control.
As for dealers, especially those in their local markets, manufacturers believe that these markets fall within their overall planning (since the national market is ours, let alone a regional one). We have already designed and planned accordingly. Some manufacturers even conduct targeted market research and design, select specific dealers based on market plans, and authorize them to distribute our products locally. Some dealers even approach us proactively to secure distribution rights, meaning they join our team and naturally become subordinates or juniors. During the actual market operation, manufacturers also do substantial work, such as dispatching personnel, planning and organizing market activities, investing resources, and covering various expenses. Regarding dealers' capabilities, most manufacturers believe that dealers lack proactive awareness, innovative thinking, operational skills, and especially internal business team management, which are not on the same level as ours. So, dealers should stop arguing and listen to us; we are more capable and comprehensive, and dealers should just cooperate.
Moreover, in most markets, manufacturers have alternatives when choosing local dealers. Giving a market to a dealer is like giving them an opportunity. If they are disobedient or uncooperative, we can easily replace them.
In short, for manufacturers, the national market is like a chessboard, and a particular dealer or market is just one of the pieces. But dealers see it differently.
The Dealer's View:
Most dealers are locals doing local business, with years of life and business history in the area. They started their businesses years ago, gradually building relationships with various downstream customers. Through years of operation, they have established a relatively complete sales network, accumulated good customer relationships, gained a certain local market position, and built a solid reputation for their boss and company. They are thoroughly familiar with local market and customer characteristics, and have even introduced certain categories or brands to the local market or fostered the formation of certain consumption habits.
Therefore, the local market has grown and developed together with the dealer's company. The dealer is deeply involved and integrated with it. So, it's natural for dealers to believe that this local market was built by them over the years, so it belongs to them. They are the ones operating and managing it. Moreover, they know the local market's unique characteristics best, and their plans and strategies are the most suitable.
Regarding cooperation with manufacturers, except for extremely strong products and brands, ordinary products still rely on dealers to operate in the local market. After all, dealers are more familiar with the local market, and many downstream customers only stock products because of their relationship with the dealer. Furthermore, dealers purchase these products with their own money, so they own the goods and should decide how to sell them locally. Manufacturers should support them and invest more resources to encourage larger orders.
At the same time, most products are substitutable, and there are many manufacturers for a given category. Dealers have the choice. If the current manufacturer doesn't work out, they can switch to another without much trouble. During the cooperation, not accepting similar products from other manufacturers is already a big favor to the manufacturer.
Currently, manufacturers don't understand the uniqueness of the local market. They make assumptions and create market plans that are out of touch with reality, overly complicated, and slow to show results. They send a few junior salespeople who lack business acumen and interpersonal skills, and they try to boss us around on our turf. They expect us to follow their orders? Dream on! When I was doing business, these kids were still in diapers.
Both sides are confident in their own rightness, believing they are the leaders and the other is the follower, and that the market belongs to them. This leads to constant disputes and conflicts during cooperation.
On this issue, my view aligns with the dealer's perspective: the ownership of the local market should clearly belong to the dealer, and the manufacturer should play a supporting role. Here's why:
1. Regional Differences in the Chinese Market
Due to differences in economic levels, culture, customs, and consumption characteristics, regional markets vary greatly. A truly universal national market plan is almost impossible. Most manufacturers lack the capability to design separate market plans for each region. It's better to leave the planning to dealers who know the local market better. Of course, if a dealer is not skilled in this area, the manufacturer can provide technical assistance, advice, and reference templates.
2. Fundamental Division of Labor
The manufacturer's core function is to produce products, while the dealer's is to sell them. Unless the manufacturer has sufficient capability, team, and systems, it's best not to overstep its role.
3. Products Don't Sell Themselves
No matter how good the product or brand, it won't sell itself. It requires extensive ground work by the dealer. Currently, channel power has a greater practical impact than product or brand power. Channel power is in the hands of the dealer, so don't argue; it's appropriate to serve the dealer well, unless your product has massive brand pull.
4. Benefits the Manufacturer Brings to the Dealer
Product distribution profits are secondary. The primary benefit is helping the dealer improve their network, increase outlets, strengthen customer relationships, combat competitors, and enhance the dealer's company reputation through product promotion and distribution.
5. Earn the Dealer's Trust and Recognition First, Then Present Your Views
As a manufacturer, if you lack the capability to manage the dealer, it's better to be humble. Let the dealer lead, follow their market plans and strategies, provide support and resources within your means, and do your assigned tasks well. Once you gain the dealer's trust and recognition, gradually propose more constructive strategies and seek their acceptance, eventually fostering their trust and even dependence on you.
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