---
title: "Wahaha's Joint Distribution System Is Actually Somewhat Hollow"
description: "Wahaha's joint distribution system has been widely praised by media and experts, and even cited by Harvard Business School as a case of Chinese channel innovation. It is said that Zong Qinghou's victory over Danone was largely due to this system. Some experts even believe that the secret to Wahaha's sustained success lies in its joint distribution system, which they consider its core competitiveness. Many new FMCG entrepreneurs highly admire this system, attributing Wahaha's strong sales solely to it, and deifying the role of distribution channels. However, this mindset is dangerous and needs to be tempered with some cold water."
author: "谭霁刚"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2015-10-25"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/wahaha-s-joint-distribution-system-is-actually-somewhat-hollow-10d5337f/"
markdown: "https://xinjignxiao.com/en/articles/wahaha-s-joint-distribution-system-is-actually-somewhat-hollow-10d5337f.md"
original_source: "https://mp.weixin.qq.com/s/z1cgty2AQL8FEYkTYOjrow"
translation: "https://xinjignxiao.com/zh/articles/%E5%A8%83%E5%93%88%E5%93%88-%E8%81%94%E9%94%80%E4%BD%93%E5%85%B6%E5%AE%9E%E6%9C%89%E7%82%B9%E8%99%9A-10d5337f.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/wahaha-s-joint-distribution-system-is-actually-somewhat-hollow-10d5337f/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# Wahaha's Joint Distribution System Is Actually Somewhat Hollow

> Wahaha's joint distribution system has been widely praised by media and experts, and even cited by Harvard Business School as a case of Chinese channel innovation. It is said that Zong Qinghou's victory over Danone was largely due to this system. Some experts even believe that the secret to Wahaha's sustained success lies in its joint distribution system, which they consider its core competitiveness. Many new FMCG entrepreneurs highly admire this system, attributing Wahaha's strong sales solely to it, and deifying the role of distribution channels. However, this mindset is dangerous and needs to be tempered with some cold water.

Wahaha's joint distribution system has been lavishly praised and promoted by media and experts, and has even been cited by Harvard Business School as a case of Chinese channel innovation. It is said that Zong Qinghou's victory over Danone was also largely due to the joint distribution system.
Some experts and scholars even believe that the secret to Wahaha's sustained success is the joint distribution system, which they consider its core competitiveness.
Nowadays, many entrepreneurs entering the FMCG field highly admire Wahaha's joint distribution system, attributing Wahaha's strong sales solely to it, and deifying the role of distribution channels, thinking that with channels comes market sales. This mindset is dangerous and needs to be tempered with some cold water.
Wahaha's sales cannot be separated from its distribution channels, but channels are not the only factor. Wahaha has a large number of products that have failed to open up the market even under the joint distribution system. Some products failed because their characteristics prevented them from sharing channels, but there are also products that were fully suitable for circulation in the joint distribution system, such as Wahaha sunflower seeds, Dacuyi nutritious wet noodles, Kangyouli beverages, Lesuanru, and pure milk, which also failed to achieve good market results.
The reason they can collect deposits and advance payments is because of the hot-selling products, not the joint distribution system itself.
One major factor for the industry's admiration of the joint distribution system is that it brings Wahaha huge advance funds, with deposits becoming an important source of available capital. It is said that Wahaha's customer deposit balance is as high as tens of billions of yuan. Such a large amount allows Wahaha to do many convenient things in terms of capital. Secondly, Wahaha's funds are recovered in a timely manner, significantly speeding up capital turnover. The deposit system is a disguised form of advance payment, basically eliminating the pressure of accounts receivable. Distributors must actively pay back each month to obtain end-of-month rebates, so the number of capital turnovers is at least 12 times a year.
In the era of capital operation frenzy, the joint distribution system with its low-cost financing function naturally became highly praised.
Is Wahaha's joint distribution system the only one in the FMCG field that can absorb financing? In fact, any brand with hot-selling products collects deposits or advance payments from distributors. The more popular the product, the more they collect. Some even collect from distributors and their sub-distributors, and logistics companies transporting products also have to pay large deposits to the brand company. Only three types of companies are unable to collect deposits: new products that haven't gained sales, products with low sales and little reputation, and products that were once popular but are now declining.
The financing capability is not inherent to the joint distribution system itself, but rather a capability of products that sell well and bring stable benefits to distributors. If business owners want to collect deposits, they should first build their products' self-selling power.
The speed and capability of distribution are no longer Wahaha's unique skill; there are many other players in the industry with stronger capabilities.
Wahaha's channel distribution speed is also a topic of discussion among experts and media: "The joint distribution model allows Wahaha to cover all channel terminals nationwide within 3 days for every new product launch."
Mr. Zong also proudly said, "Our advantage is speed, just like the blood vessels in the human body. As soon as a new product is launched, it flows quickly throughout the body like fresh blood. This shows the soundness and speed of Wahaha's marketing network."
The experts' statements may be exaggerated, but Mr. Zong's words are more measured.
Wahaha's new product launches have a characteristic: they first bombard with advertising and then distribute. Moreover, if you observe carefully, the products that Wahaha can distribute nationwide in a short time are all copies of varieties that are already selling well in regional small brands. Products that are independently innovated and not yet validated by others in the market cannot get all members of the joint distribution system to accept them. This highlights a distributor psychology: if other products are selling well and peers are making money, distributors will be eager to follow suit, so they immediately accept Wahaha's new products. But if they have to take risks to validate market sales themselves, they will wait and see.
The joint distribution system is a major resource for Wahaha, allowing its hot-selling products to "spread across the world," but it is not Wahaha's exclusive secret to "dominating the world." Once there are no hot-selling products and no massive advertising support, Wahaha's joint distribution system cannot exert its power.
The joint distribution system has a "boost hot, kill cold" effect. First, when there are new products that distributors are uncertain about, the system fails, such as Dacuyi instant noodles, which had poor distribution. Second, once product sales show a declining trend, distributors' willingness to stock and distribute significantly decreases, leading to a rapid decline in sales, as seen with Jihuo, sunflower seeds, and fruit juice drinks.
Those who sing praises for Wahaha's joint distribution model often say: "The joint distribution model's characteristic is that it does not directly control terminals, which greatly saves on sales personnel. Wahaha can achieve tens of billions in sales with only two to three thousand salespeople. Compared with the huge sales teams of JDB, Uni-President, and Master Kong, Wahaha undoubtedly has lower costs."
I disagree with the above view. First, having fewer salespeople does not mean lower sales costs. Distributors are not stupid; they have their own salespeople to run terminal sales. If Wahaha doesn't provide personnel, it must pay for distributors (either by lowering product prices compared to competitors or implementing large-scale promotions with gifts). Second, other companies manage their own people and spend money transparently, while Wahaha gives money to distributors, who may not necessarily use it for detailed terminal work.
Wahaha's joint distribution system is formidable when competing against developing small and medium-sized regional brands. First, it can quickly occupy markets where regional brands haven't expanded. Second, regional brands lack terminal execution capability; if products sell naturally without brand marketing, Wahaha can squeeze them out of the market.
However, when Wahaha's joint distribution system faces companies with strong terminal and market promotion execution, or big brands, it loses its combat effectiveness.
For example, when Wahaha followed up on fruit juice drinks, it was very optimistic, and distributors were also optimistic, but terminal sales remained low. The reason is that Uni-President and Master Kong also valued such products, and even rural small store terminals had salespeople. In terms of terminal display, Wahaha couldn't compete without personnel. Additionally, there were many low-quality products from small regional factories circulating at lower prices, and Wahaha couldn't beat them on price.
For example, when Wahaha followed up on sunflower seeds, they were extremely popular at the time, and most distributors wanted to do them. But as soon as Wahaha sunflower seeds were distributed, terminal salespeople from Qiaqia, Aming, and Kede Xiang blocked them. Although these companies were not as strong as Wahaha, they had terminal business, and in the terminal market, Wahaha's joint distribution system was powerless.
In earlier years, a veteran of the Chinese FMCG industry once said that for fast-moving consumer goods, the brand is not the most important, the product is not the most important, and even consumer demand is not the most important; the most important is the channel.
But society is developing. Consumers are no longer in an era where they can't buy products. Productivity has advanced, and there are more and more products, but the shelf space in retail stores cannot be infinitely expanded, and consumption will not expand indefinitely. Channels have a role, but they no longer have the power they once had, especially in an era where even a small rural store sees several manufacturer terminal salespeople a day.
In the era of multimedia and self-media information explosion, advertising bombardment that cannot precisely target consumer groups is just burning money.
Many people believe that Wahaha's good sales are due to the joint distribution system, which allows the company's sales personnel to shift from passive to active, freeing them from the heavy shackles of debt collection, saving a lot of time, and allowing them to concentrate on market research, analysis, and various market promotion activities such as advertising and promotions. Good market promotion has made Wahaha successful.
But the reality is not like that. Among those who actually run FMCG, how many have seen Wahaha salespeople in the market? Except for the early days when Wahaha's promotion was commendable, there has been nothing outstanding since 2000.
How did Wahaha do promotion in its early days? The media has reported extensively. They took money to advertise on local TV stations, then pretended to be retail customers calling local sugar and wine companies to order goods, and also did a lot of free samples. At that time, this method was very effective and practical. But now, Wahaha's new product promotion is limited to a burst of TV advertising and occasional tasting events with temporary promoters in some markets. There are few other methods. Occasionally, roadshows are not as good as those of several major domestic brands.
Nowadays, the number of media channels has increased dramatically. Urban people have TVs at home, ads in hallways, computers on desks, phones in hands, and maybe newspapers in corners; rural TVs have also moved beyond the era of receiving only a few dozen channels. Whether through cable or satellite, there are dozens or nearly a hundred channels to choose from.
In this situation, advertising is really hard to place. First, it's hard to target accurately, leading to waste. This is not just half wasted; it's often more than 90% wasted. Second, even if you accidentally target correctly, if the volume doesn't reach a critical point, it's hard to get the target audience to notice and remember among the flood of advertising information, so the effect is naturally poor.
To make advertising precise and effective, analyzing the channels through which the target consumer group receives information and their information processing behavior patterns becomes the top priority for advertising investment.
Wahaha's three major shortcomings: terminal display effectiveness, promotion and promotion level, and the creation of leading products with self-selling power.
Wahaha's successful products have a major characteristic: they quickly follow trends, copy products that are selling well in small and medium-sized companies' regional markets, bombard with TV advertising, and use the joint distribution system's channel network to quickly distribute nationwide.
Wahaha's half-dead products also have commonalities: they follow and copy products from national hot-selling brands, especially those where the existing brand has done well in terminal promotions and display. Wahaha basically hasn't achieved big gains, and most are half-dead.
Wahaha's completely failed products are characterized by independent innovation or introduction of products not available in the mainland market, as well as conceptual products that other companies have started operating in small regions but haven't been validated by market success, such as Dacuyi nutritious wet noodles and Kangyouli beverages, which all failed.
Wahaha has strong channel circulation capabilities but weak terminal market capabilities. Once products enter retail stores, if there are no strong competitors, it's fine. But if they encounter products with strong terminal display control capabilities, Wahaha will be squeezed into inconspicuous positions. If consumers don't specifically ask for it, sales basically disappear.
Wahaha has strong TV advertising capabilities but weak ground-level consumer promotion capabilities. Wahaha's products are made known to consumers almost exclusively through TV advertising bombardment. Apart from free samples, it's hard to see Wahaha's promotional methods in daily life. When faced with products that need to guide consumption or strong competitors, Wahaha achieves nothing.
Wahaha's mainstream products are basically copies of trends, and the concentration of hot-selling products is very high. If they don't create one or two products with strong self-selling power, once the mainstream hot-selling products encounter unexpected problems or the market shows a downward trend, Wahaha will be extremely dangerous.
Among the products Wahaha has launched in recent years, there are some with good selling points and some that should have sold well in the market, but they quietly left the market due to improper promotion and inadequate terminal maintenance.
**-END-**
Content Selection
Click on the title below to read directly:
[Line Sales Representative Practical Operation Guide (with full PPT download attached)


---

## 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