[Business] Distributor in China Part 2
--------Game of Power in Wholesale and Retail in China
经销商在中国
批发零售行业权利的游戏
When talking about selling to China, the first big word come in the conversation is “DISTRIBUTOR”. The underlying logic is simple. I proudly have a good brand and good product, China has a huge market with great potential, all I need to do is to find a distributor to sell my products. I give him a good cut, say more than 50% of the gross margin, very generously, and he make the sell, deal with the sub-wholesalers, hire salesman in market, sell my product whichever way he sees fit, and take care of the loss.
当我们探讨把商品出口到中国市场的时候，对话中出现的第一个关键词就是“经销商”。这背后的逻辑很简单。我这里有优质的品牌和商品，中国有巨大的市场和消费潜力，我需要做的就是找到经销商来买我的商品然后卖到中国市场。我给他很好的分成，比如零售价50%的利润，然后他负责销售，对接下一级批发商和零售商，用他能用的方式销售并承担损失。
Perfect story, only question left is how to find such perfect distributor. This is really a game of power and political lobbying by core.
故事很完美，那么接下来需要做的就是找到完美的经销商。而核心问题是，这是一个关于权利和游说能力的游戏。
PART 2 When the Power Shift to Shelve Owners
第二部分：权利偏爱货架所有者的时候
What if the sales is steady and I am already fully stocked and remember, the packaged food has a shelf life. The supermarket would easily spot my weakness and reluctant to pay me in time. Every six month, every three month, by the end of the year, all possible. Even worse, those big supermarkets usually has a slow financial department, everything would be one to three months delayed.
假如销售只是稳定，并没有火爆，而我自己的仓库已经堆满了货呢？时刻记着预包装的快消食品是有保质期的。这时商超很容易就会发现我的弱点，并拒绝及时支付给我货款。每半年，每三个月，或者年底才结算都是有可能的。更糟糕的是，大型商超的财务系统一般都很慢，所有的账目基本都是三个月左右的延期。
Therefore, it is likely that I get paid 6 -12 months later than I first put money down to purchase from the brand factory. With that profit and time delay, I still have to cover all the fixed costs of personnel, shelf rent, warehouse, enduring the really big investment and really late repayment. To be honest, if I am that loaded and not care for the time value of the money, as long as my Profit and Loss account shows positive, actual cash flow is not intimidated by such delay of payment, it is a very good business that I fight hard to get.
于是乎，相对于我当初支付货款从品牌方进货的时候，等我收到下家的货款，可能已经过去了6-12个月。 核算一下利润和结款时间的拖延，我依然需要支付人工工资，仓库开支，货架堆头租金，同时忍受巨大的开支和巨慢的回款。 说实话，如果我资金真的很充裕，也不在乎资金的时间价值，只要我的损益表显示我是有钱赚的，那么真实的现金流只要不因为结款慢而断档，这还是个很棒的生意，毕竟当初也是挤破头才抢到手的。
That is a good brand as there are competitors fighting for the right to sell. What if the brand is not well known? Do I pay shelf rent for unsure demanding among end customers? Do I purchase in big bulk and risk the long time of sales and late payment from retailers? The fact is that every market place has its precise algorithm to calculate their shelves worth against the inventory turnover online and offline. The less well known the brand is, the longer the turnover time, the higher the total rent, straightforward math. Even a powerful distributor with well known brands have to deal with such unpleasant cash flow most of the time, it would only be more painful with unknown brand. To be frank, successful distributors are all experts in this game, can be easily convinced.
这里故事里主角是一个优质大品牌，有许多我的竞争对手想要争夺代理权的那种。但是如果是个不知名的品牌呢？消费者需求都是未知的时候我还心甘情愿付货架堆头租金吗？我还会大宗进货，承担销售周期长，回款慢的风险吗？事实是每个市场，线上线下的商家都有精准的算法在合计库存，周转速度他们的货架堆头的价值。品牌的知名度越低，库存周转时间越长，总的货架租金就越高，非常直观的数学逻辑。哪怕是实力超群的经销商代理着知名品牌，大部分时候都需要忍受令人不愉快的现金流，更何况是不知名的品牌，这个过程只会跟令人难受。说实在的，成功的经销商都是这场游戏中最精明的玩家，没有那么容易被说服。
That is a typical business model of a typical distributor in China. Big or small, well loaded or with limited budget, all negotiating actively defining who has the bargaining power, and who should be lobbying whom.
这就是一个典型的中国经销商的商业模式。大或小，资金充裕或有限，都在积极的协商定义自己的议价权，定义谁应该来说服谁。
If you can follow the story above, surely you can understand why it is so difficult for a foreign brand to FIND a distributor. Even with budget and distribution channels, and actively sourcing foreign brands, they will be chasing big names with international influence already. To be specific, those brands and products that end customers are willing to purchase through “Daigou”. Because the demand is already there but the supply is rare, expensive or time consuming. As the business fact is much higher margin of imported goods than local products, the profit would highly motivate the distributor to bear with the high up front cost, the long time of waiting, the investment in marketing, as long as the demand is certain, is not something that the distributors have to figure out, the educate the end consumers.
如果你能很好的跟上故事的思路，应该就能理解为何找到经销商来代理进口品牌会如此困难。毕竟即使是有预算和销售渠道，且积极寻找海外品牌做其代理的经销商，也喜欢追逐有影响力的国际大牌。说明白一点，他们喜欢代购手里已经在经营的品牌，这意味着消费者在积极从海外购买，需求明确。因为需求已经有了，但是销售渠道稀缺，昂贵，或者耗时长。鉴于中国市场的行情就是进口商品的毛利润率远高于国内品牌，利差会激励经销商忍受高额的前期垫款，较长的收款周期，且积极投资做渠道宣传。只要市场需求是明确有的，而不是经销商需要自己去挖缺去教育消费者的。
--------Game of Power in Wholesale and Retail in China
经销商在中国
批发零售行业权利的游戏
When talking about selling to China, the first big word come in the conversation is “DISTRIBUTOR”. The underlying logic is simple. I proudly have a good brand and good product, China has a huge market with great potential, all I need to do is to find a distributor to sell my products. I give him a good cut, say more than 50% of the gross margin, very generously, and he make the sell, deal with the sub-wholesalers, hire salesman in market, sell my product whichever way he sees fit, and take care of the loss.
当我们探讨把商品出口到中国市场的时候，对话中出现的第一个关键词就是“经销商”。这背后的逻辑很简单。我这里有优质的品牌和商品，中国有巨大的市场和消费潜力，我需要做的就是找到经销商来买我的商品然后卖到中国市场。我给他很好的分成，比如零售价50%的利润，然后他负责销售，对接下一级批发商和零售商，用他能用的方式销售并承担损失。
Perfect story, only question left is how to find such perfect distributor. This is really a game of power and political lobbying by core.
故事很完美，那么接下来需要做的就是找到完美的经销商。而核心问题是，这是一个关于权利和游说能力的游戏。
PART 2 When the Power Shift to Shelve Owners
第二部分：权利偏爱货架所有者的时候
What if the sales is steady and I am already fully stocked and remember, the packaged food has a shelf life. The supermarket would easily spot my weakness and reluctant to pay me in time. Every six month, every three month, by the end of the year, all possible. Even worse, those big supermarkets usually has a slow financial department, everything would be one to three months delayed.
假如销售只是稳定，并没有火爆，而我自己的仓库已经堆满了货呢？时刻记着预包装的快消食品是有保质期的。这时商超很容易就会发现我的弱点，并拒绝及时支付给我货款。每半年，每三个月，或者年底才结算都是有可能的。更糟糕的是，大型商超的财务系统一般都很慢，所有的账目基本都是三个月左右的延期。
Therefore, it is likely that I get paid 6 -12 months later than I first put money down to purchase from the brand factory. With that profit and time delay, I still have to cover all the fixed costs of personnel, shelf rent, warehouse, enduring the really big investment and really late repayment. To be honest, if I am that loaded and not care for the time value of the money, as long as my Profit and Loss account shows positive, actual cash flow is not intimidated by such delay of payment, it is a very good business that I fight hard to get.
于是乎，相对于我当初支付货款从品牌方进货的时候，等我收到下家的货款，可能已经过去了6-12个月。 核算一下利润和结款时间的拖延，我依然需要支付人工工资，仓库开支，货架堆头租金，同时忍受巨大的开支和巨慢的回款。 说实话，如果我资金真的很充裕，也不在乎资金的时间价值，只要我的损益表显示我是有钱赚的，那么真实的现金流只要不因为结款慢而断档，这还是个很棒的生意，毕竟当初也是挤破头才抢到手的。
That is a good brand as there are competitors fighting for the right to sell. What if the brand is not well known? Do I pay shelf rent for unsure demanding among end customers? Do I purchase in big bulk and risk the long time of sales and late payment from retailers? The fact is that every market place has its precise algorithm to calculate their shelves worth against the inventory turnover online and offline. The less well known the brand is, the longer the turnover time, the higher the total rent, straightforward math. Even a powerful distributor with well known brands have to deal with such unpleasant cash flow most of the time, it would only be more painful with unknown brand. To be frank, successful distributors are all experts in this game, can be easily convinced.
这里故事里主角是一个优质大品牌，有许多我的竞争对手想要争夺代理权的那种。但是如果是个不知名的品牌呢？消费者需求都是未知的时候我还心甘情愿付货架堆头租金吗？我还会大宗进货，承担销售周期长，回款慢的风险吗？事实是每个市场，线上线下的商家都有精准的算法在合计库存，周转速度他们的货架堆头的价值。品牌的知名度越低，库存周转时间越长，总的货架租金就越高，非常直观的数学逻辑。哪怕是实力超群的经销商代理着知名品牌，大部分时候都需要忍受令人不愉快的现金流，更何况是不知名的品牌，这个过程只会跟令人难受。说实在的，成功的经销商都是这场游戏中最精明的玩家，没有那么容易被说服。
That is a typical business model of a typical distributor in China. Big or small, well loaded or with limited budget, all negotiating actively defining who has the bargaining power, and who should be lobbying whom.
这就是一个典型的中国经销商的商业模式。大或小，资金充裕或有限，都在积极的协商定义自己的议价权，定义谁应该来说服谁。
If you can follow the story above, surely you can understand why it is so difficult for a foreign brand to FIND a distributor. Even with budget and distribution channels, and actively sourcing foreign brands, they will be chasing big names with international influence already. To be specific, those brands and products that end customers are willing to purchase through “Daigou”. Because the demand is already there but the supply is rare, expensive or time consuming. As the business fact is much higher margin of imported goods than local products, the profit would highly motivate the distributor to bear with the high up front cost, the long time of waiting, the investment in marketing, as long as the demand is certain, is not something that the distributors have to figure out, the educate the end consumers.
如果你能很好的跟上故事的思路，应该就能理解为何找到经销商来代理进口品牌会如此困难。毕竟即使是有预算和销售渠道，且积极寻找海外品牌做其代理的经销商，也喜欢追逐有影响力的国际大牌。说明白一点，他们喜欢代购手里已经在经营的品牌，这意味着消费者在积极从海外购买，需求明确。因为需求已经有了，但是销售渠道稀缺，昂贵，或者耗时长。鉴于中国市场的行情就是进口商品的毛利润率远高于国内品牌，利差会激励经销商忍受高额的前期垫款，较长的收款周期，且积极投资做渠道宣传。只要市场需求是明确有的，而不是经销商需要自己去挖缺去教育消费者的。
