---
title: "The Partnership Model: The Core to Scaling Up and Rapid Growth for Distributors!"
description: "This article discusses the partnership model adopted by Shaanxi Baihui Trading, which has enabled it to retain talent and achieve continuous growth. The model involves virtual joint ventures with department managers, where employees invest a small amount for a share of profits, boosting motivation. The article also explores how this model can solve cross-regional expansion challenges for distributors, drawing parallels with historical land reform."
author: "赵波"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2020-08-11"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/the-partnership-model-the-core-to-scaling-up-and-rapid-growth-for-distri-8709920c/"
markdown: "https://xinjignxiao.com/en/articles/the-partnership-model-the-core-to-scaling-up-and-rapid-growth-for-distri-8709920c.md"
original_source: "https://mp.weixin.qq.com/s/Bc4SuvHB0kIJ8_cFW-653w"
translation: "https://xinjignxiao.com/zh/articles/%E5%90%88%E4%BC%99%E4%BA%BA%E6%A8%A1%E5%BC%8F-%E6%98%AF%E8%AE%A9%E7%BB%8F%E9%94%80%E5%95%86%E5%81%9A%E5%A4%A7-%E5%BF%AB%E9%80%9F%E5%8F%91%E5%B1%95%E7%9A%84%E6%A0%B8%E5%BF%83-8709920c.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/the-partnership-model-the-core-to-scaling-up-and-rapid-growth-for-distri-8709920c/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# The Partnership Model: The Core to Scaling Up and Rapid Growth for Distributors!

> This article discusses the partnership model adopted by Shaanxi Baihui Trading, which has enabled it to retain talent and achieve continuous growth. The model involves virtual joint ventures with department managers, where employees invest a small amount for a share of profits, boosting motivation. The article also explores how this model can solve cross-regional expansion challenges for distributors, drawing parallels with historical land reform.

**Click the image above for details**
Recently, I visited Nie Biquan, the head of Baihui Trading in Ankang, Shaanxi. Nie is an old friend of New Distribution, having attended many of its conferences. Readers familiar with New Distribution will know him, as we have reported on him before. The reason New Distribution is willing to report on him is largely due to Nie's broad personal vision: he uses a partnership model in internal organizational management to share profits and power. Despite the overall sluggish environment, his business has grown year after year.

**-01- Partnership Model**
The partnership model adopted by Shaanxi Baihui Trading, in summary, is to retain outstanding talent and activate initiative by creating virtual joint ventures with department managers and supervisors. **The company holds 70% of shares, partners hold 20%, and employees hold 10%, but partners and employees do not need to fully pay in their shares; partners only need to contribute 30% of the capital to receive 100% of the dividends from their 20% share.**

**Two details here:**
**1. The company pays partners a basic salary and commissions, ensuring their livelihood;****
**2. Employees invest a small amount to gain a large return (30% capital contribution leverages 100% dividends).****

As partners, to achieve higher returns on investment, they work harder. If only sales commissions were paid, employees typically focus on short-term gains. Shaanxi Baihui's model ensures both short-term benefits and long-term interests, binding employees to the company through dividends.

While Nie was away, I asked about the partners' income. The highest-earning partner made nearly one million yuan annually, and the other partners also received around 400,000 to 500,000 yuan in dividends! This was shocking to me. In a fourth-tier city like Ankang, if someone can earn such income, how motivated would they be? I then understood why Shaanxi Baihui, after succeeding in Ankang, could also succeed in Xi'an, growing the business to over 400 million yuan!

**I found several characteristics of Shaanxi Baihui's model:**
**1. The partnership model must target mature brands with strong profitability, capable of independent departments, independent operations, independent accounting, and independent profit distribution.****
**2. Baihui's business is primarily KA (key accounts), with clear focus, and relatively simple product and channel types, making management easier. They only handle categories like general merchandise, paper products, and sanitary products.****
**3. Partners are deeply involved in the business, managing specific matters, familiar with operations, and maintaining good customer relationships. Moreover, Nie has strong expertise and high strategic and tactical levels, leading the team to victories consistently.****
**4. Business and interest layers are unified. Regarding partnership, they only partner on the business they manage, meaning "I am responsible for this category or channel; I am only responsible for my own interests, and I do not participate, or participate minimally, in other profits."**

Overall, Baihui's current model is highly practical and implementable. Through the partnership model, it effectively activates the enthusiasm of senior executives, who go all out to improve interests for the company and themselves. In some local markets, distributors representing mature brands with growth potential can learn from this to develop and retain talent.

**If you want to replicate this, there are several details to note:**
**1. Must be consistently profitable, winning, and growing; without profits, there is nothing to distribute.****
**2. Employees won't invest without seeing clear benefits; if they don't invest, they won't have a sense of ownership and won't work seriously.****
**3. Financial accounting must be robust, able to analyze in real time the revenue and operations of each person, store, and product, maintaining transparency.****
**4. The boss must have a truly open mind, willing to share profits and let employees benefit.**

**The biggest advantages of Shaanxi Baihui's partnership model are:**
**1. Activates employees, enhancing their initiative;****
**2. Retains talent, empowers them, and avoids trained excellent people leaving with resources to become competitors;****
**3. Frees the boss, as more people genuinely think about company matters for themselves, allowing the boss time for strategy and better quality of life.**

However, we must clearly see that different categories have different market operation characteristics, and one model cannot cover all industries.

For large-store channels like KA, success depends not on sales promoters but on the business manager's resources, customer relationships, and professionalism, and whether they can obtain better resources from store buyers. This requires high-caliber people for KA, who are scarce talent. Thus, Baihui uses this model to lock in such talent.

In contrast, food and beverages, and daily chemical and paper products, differ significantly: **high frequency, high homogeneity, low involvement, impulse consumption, and products must be ubiquitous and easily accessible. This requires covering numerous stores, with extremely complex terminal operations, continuous maintenance for effective distribution, and very low per-unit gross margins.**

Therefore, high turnover is needed, even using customer funds to ensure cash flow. Unlike large stores, the importance of business personnel becomes particularly critical for small stores.

Jinmailang's rapid growth in recent years essentially transformed former distributor salespeople into small bosses through the "four-in-one" model, turning employees into entrepreneurs, effectively stimulating initiative beyond standardized workflows.

**This is essentially minimizing operating units, using model innovation to stimulate everyone's initiative, so that each person voluntarily and spontaneously does things well within the smallest operating unit, rather than relying on supervision and management.**

But the drawbacks of small bosses are obvious: they only consider their own patch, ignore company tasks, only sell products that are easy to sell, and resist market development and product promotion.

In a sense, the interests of Jinmailang's small bosses are not fully aligned with those of distributors and manufacturers, leading some to kill the goose that lays the golden eggs, overdrawing the market, or in weak areas, small bosses can't earn money, causing market collapse. Also, unequal profit distribution across regions can cause imbalance and resignations.

**I believe the core to solving this problem has two principles:**
**1. For poor markets, support them initially;****
**2. Short-term interests must align with long-term interests, and small bosses' interests must align with distributors' interests.**

Then, small bosses should strive for themselves, earn extra income through effort, and achieve personal development and growth.

For solutions, I think we can refer to Baihui's model: **small bosses need to invest, but not by buying goods from the distributor; they must invest in the company's operations to gain excess returns on investment, rather than becoming small wholesalers like Jinmailang.**

**To adopt Nie's model, several issues must be considered:**
**1. Balancing short-term and long-term interests for the role;****
**2. The transition from an employee mindset to an entrepreneur mindset;****
**3. The importance of the role versus profit-sharing ratio;****
**4. Conflicts between the role's interests and the company's interests.**

**My principles for model design:**
**1. Stimulate the smallest operating unit that drives sales;****
**2. Respect human nature, avoid institutional traps, and don't kill the goose (contracting is not advisable);****
**3. In a partnership model, interests must align, resources must complement, and mutual dependence for progress;****
**4. Roles should have short-term security and long-term benefits (getting a good deal);****
**5. Roles should have room for advancement and development (promotion, cross-region, larger scale, more profits);****
**6. Have a mission, vision, and values, so that brothers have both interests and dreams.**

**-02- Greater Development**
What I see as more important is that Shaanxi Baihui's model fundamentally solves the challenge of cross-regional expansion for distributors.

**In the FMCG industry, the hardest thing for distributors is cross-regional development. On one hand, they are unfamiliar with new markets; on the other hand, many brands are already represented by established distributors.**

But the current operating model of distributors makes cross-regional mergers and acquisitions difficult. Even if they acquire, they cannot operate well, which is also the crux of Eternal Asia's problems.

From Baihui's case, I see Eternal Asia's issues. Let me illustrate with an example:

When Eternal Asia acquires a large local distributor, the negotiations go well: with sufficient funds, they can grow bigger and stronger, enhance risk resistance, modernize management, and solve risks. Many bosses are tempted and cooperate with Eternal Asia.

But after cooperation, many bosses find that once the company is standardized, profitability drops significantly, they earn less than before, finance is controlled by headquarters, they transform from boss to professional manager, their word is no longer final, and operational flexibility is greatly reduced.

The role change is hard for many distributor bosses to adapt to, so once the contract ends, they immediately exit and run away, taking their original team to start anew.

What am I trying to say? Eternal Asia's integration of distributors is jokingly called "packing potatoes in a sack" in the industry—it looks big but is actually bloated, because these integrated distributors share several characteristics:

> **1. They are propertied;****2. They have lost the passion of entrepreneurship;****3. Some want to grow but are constrained by talent and capital.**

Essentially, Eternal Asia united distributors but made them lose absolute control of their business, turning these entrepreneurial bosses into employees, reducing their initiative. Such a drop is hard for most distributors to adapt to.

Through Baihui's case, I see there is a solution. Let me use the analogy of the Nationalist and Communist forces.

After the second Northern Expedition, Chiang Kai-shek integrated many warlords, but they all shared a common trait: they were vested interests, outwardly obedient but turning hostile if their interests were threatened.

But what was Mao Zedong's slogan? Only eight words: "Fellow villagers, beat the local tyrants, divide the land!"

The Eighth Route Army's first action upon arrival was land reform—beating tyrants, dividing land, and distributing it to tenant farmers and laborers. So you see, Chiang had difficulty getting warlords to contribute money and grain; instead, he had to bribe them with money and grain.

But the Eighth Route Army first distributed money to tenant farmers and laborers, and led them to fight for the country and liberate all of China. If you were in their shoes, who would you follow?

The essence here is the secondary distribution of core resources: suppressing some, winning over some, and uniting some. This is why many were willing to follow the Communist Party.

**After Eternal Asia acquires a distributor, the partners should no longer be the original distributor, but the "proletariat"—the employees who had no equity and no chance to be bosses.**

Essentially, after acquiring a distributor, Eternal Asia should not leave most equity to the original distributor but distribute part of the equity to employees, making them masters and striving for themselves.

Only then, even if the distributor loses entrepreneurial drive, the initiative of the employees below can be captured, just like Mao's land reform.

After acquiring a distributor, without secondary distribution of interests, why should the original employees feel a sense of belonging to the new owner? Without belonging, why should they fight for you? When the old boss leaves, they will surely follow.

Therefore, proper interest distribution is the fundamental way for distributors to use talent well, expand cross-regionally, and grow stronger.

I don't know how much distributors understand what I'm saying. **Today, in China's commercial distribution industry, if distributors want to grow bigger and stronger, relying solely on endogenous growth is no longer enough; they must grow through cross-regional, cross-brand, and cross-category development.**

The above text has clearly explained the core of how distributors can achieve cross-regional growth.

Of course, to achieve the model of Shaanxi Baihui Trading, many distributors still face many issues: high barriers, must be profitable, difficult, requiring long-term good company performance. Trust, transparency, and the boss's personal charisma must be sufficient.


---

## 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