According to the data of China Construction Machinery Market Research Center, from January to August 2022, about 72.7% of construction machinery agents were in a loss state, 16.7 percentage points worse than that in 2021, of which 34.6% were in a loss range of more than 10%, 7.9 percentage points worse than that in 2021
Since 2022, as the first group of agents to feel the warmth of the market, they have felt the downward pressure, and some agents have actively or passively withdrawn from the market, because it is difficult to achieve the manufacturer's "strategic expectations" in terms of sales performance or a large area of losses caused by negative gross profit sales.
Some people quit, but others need to fill in the gaps. Compared with re screening and building new channel agents, some host manufacturers have to set up direct sales companies to cover the market. Direct marketing means thorough innovation, on the other hand, it also accelerates the differentiation of the channel side.
When the traditional agent PK direct marketing mode has been developed in the Chinese market for more than 20 years, where should the sales channel of the construction machinery industry go?
In the "Summit Dialogue" segment of 2022 China Construction Machinery Marketing&Post Market Conference, the topic voted by more than 300 on-site and online participants, "PK between agency and direct marketing" topped the list. Agent and direct marketing, who is better and who is worse? How to view the cooperation between manufacturers and agents? These industry benchmarks gave their answers.
The contribution of the agent group is enormous, and the role of the agent is indispensable
Qi Jun directly affirmed the value of China's construction machinery agent group.
With the development of China's construction machinery industry today, the contribution of the agent group is enormous and the role is indispensable.
However, it is worth discussing whether the relationship between Chinese construction machinery manufacturers and agents can last for more than 160 years, just like that between Caterpillar and agents. There are also some differences between the two.
Caterpillar's agency adopts the buyout system, and the later stage of service pricing has a greater voice. Of course, the premise is based on the recognition of Caterpillar's culture and values. The business model of domestic agents is, to a certain extent, dominated by host manufacturers. However, agents are not dependent on host manufacturers, and both parties should overcome this mentality. Host manufacturers should regard agents as partners. As a help for development, it is an indispensable force to help agents make more reasonable plans for business and resource allocation. At the same time, agents should also abide by their loyalty to the brand, and they should not default on the payment of the host manufacturer for their own benefit without fully collecting the accounts receivable, which is inseparable from the trust and cultural recognition of the host manufacturer.
It is said that enterprises with a history of more than 10 years look at culture and enterprises with a history of less than 3 years look at brand. The long-term development of enterprises cannot be separated from the construction of enterprise culture. The two are complementary.
Unswervingly take the road of agency system
Sany has a 16 year history of excavator development. Without these excellent agents, there would be no Sany excavator today. Excavators are a large product category. First, they are in large quantities. Second, they need service products. Without agents, it is impossible to take the direct marketing route. The manufacturer can't manage. The characteristics of excavator products determine that agents, as their own assets, may not be able to manage well, and it is more difficult for manufacturers to send people to manage directly. Therefore, Sany (excavator) unswervingly takes the road of agency system.
Second, as for the relationship between the host manufacturer and the agent, it is necessary to solve the problem of "affinity" and "clearness". On the one hand, "clearness" should not involve too many interests between the host manufacturer and the agent. On the one hand, it is "cordial". The host manufacturer should help the agents and give them more support and empowerment according to the characteristics and capabilities of different agents. Therefore, Sany's main agents basically adopt a strategy of one agent to help agents grow.
Manufacturer cooperation and collaboration is a good way for the future development of the construction machinery industry, especially the excavator industry. The most important thing is to see whether the manufacturer can create good products, which makes the agent feel very proud and trustworthy. At the same time, the communication between the manufacturer and the agent has been constantly strengthened, so SANY basically organizes relevant meetings with the agent every month, listens to the opinions of the agent, and constantly improves the work of products, services, management, etc.
The agent is the most reliable long-term partner, and both parties should share the same values
There are many similar ideas about agency system and direct marketing in different industry backgrounds. However, some facts have proved that direct marketing may not be a good way. Just like in the computer industry in those days, Dell's direct sales model was once agreed that it would be a great feat to change the IT industry, but the brand disappeared in the industry a few years later.
Agents play a very important role in the circulation field. They are a good bridge between host manufacturers and users. The strength and weakness of the bridge, good and bad, are reflected in whether agents can create value. From the perspective of industrial division of labor, host machine manufacturers should have made more efforts in product development, production and manufacturing.
As an international brand with a long history, Volvo Construction Equipment has always attached great importance to the development of agents. From the selection of agents to the later training, all the way from sales, finance to post market operation, each module has its own complete training and development system.
At the moment of crossing the cycle, agents feel great pressure. For Volvo, we think agents are the most reliable long-term partners. For long-term partners, the most important thing is that both parties should share the same values. Only partners with the same values who are dedicated to this industry and industry are willing to work together to go through the darkest moment of the downward cycle. Although it will be better tomorrow, the process of going through the cycle is bound to be painful and accompanied by great pressure. Therefore, those who can go through the cycle in a healthy and sound way should be partners with dreams and the same values for the future.
In China, Volvo's dealer system has developed rapidly, but there are still some immature aspects. For example, Volvo pays more attention to sales and profit margins. After getting used to the short and smooth rhythm, people sometimes don't want to think about the long-term principle. Longevity is not really a good term. It means that you must endure pain and firmly believe in the choices you make when you are at a low ebb. Therefore, Volvo is willing to move forward and cross the cycle together with long-term development partners.
It must be to choose the brand with the same values and adhere to the long-term principle
When choosing a cooperative brand, the real key point of agents must be to choose values that are consistent. They must adhere to the long-term principle, pay attention to development and return on investment, and work together to create the future.
When selecting partners, agents will also give priority to the manufacturer's technology, and the concept, experience, and historical achievements of its channels to see whether its technology is competitive, including whether the industrial layout and the width of the product line can meet the needs of users. Customers now need not only products, but also solutions, so the premise is that the host manufacturer has a complete set of solutions or allows agents to build their own solutions.
The relationship between Chinese construction machinery manufacturers and agents needs to adapt to China's national conditions and continue to improve and evolve. However, whether it is a win-win agency model based on the principle of "mutual respect", represented by Caterpillar, or an agency model with high channel control and penetration management, represented by Sany, or an "alliance" agency model with national brands as its core requirement of sales and share, which has risen in recent years, It is inseparable from the major premise of values and cultural identity.
Although the agency system encounters many challenges, many host manufacturers still adopt the agency production as the main marketing channel mode.
Host manufacturers and agents should be willing to go through the cycle together, share prosperity at peak times, and meet challenges together at low times. Based on the common goal, the rational choice is to define the role and task allocation of agents, reorganize the cooperation mode, and fill the gap of capabilities.
Direct marketing: in the area where the agent can't do well, can the direct marketing company do well in receiving orders
In 2022, although some manufacturers in the industry will continue to implement the direct marketing mode of participating in agents or converting into regional direct branches in some regions in order not to create a market gap and complete performance. However, from the perspective of the operation effect from 2021 to now, in areas where the agents can not do a good job, the possibility that the direct selling companies can do a good job in receiving offers is also very low.
According to incomplete research, the loss of direct marketing channels of some brands is more severe than that of agents. Although from the third quarter of 2021, these brands have made some adjustments in prices and business policies, and even adjusted the general manager of direct marketing companies on a large scale to make comments and reports on their work, the effect is very limited. Until the second quarter of 2022, it even affected the adjustment of some manufacturers' marketing channel executives. However, on the whole, the adjustment of the direct marketing system is very limited.
From the results, direct marketing first means that host manufacturers should directly face the vast China's extremely diversified and differentiated market structure and increasingly demanding user groups for products and services. On the one hand, huge investment is required, from the provincial, prefecture level to district level three-level sales and service networks, from hard costs such as personnel, vehicles, office space, to soft costs such as channel management systems; On the other hand, direct marketing also tests the ability of host manufacturers to manage and control channel risks. For some listed companies, how to deal with on balance sheet and off balance sheet risks after the loss of the original risk firewall function of agents brings pressure to manufacturers.
In particular, after this cycle enters the downward direction, the risk outbreak point is more likely to be in the channel. Poorly managed channels will have greater negative impact on the upstream chain.
