The distribution mode of China's construction machinery industry has undergone great changes in the past few decades. The development of the Chinese market has grown from small to large. The distribution mode of main engine manufacturers has also changed from direct sales to the widespread use of agents to distribute products and provide services.
After the reform and opening up, foreign brands represented by caterpillar entered the Chinese market, which also brought the agency model of foreign mature markets. When the market enters the rapid rise cycle, the advantages of the agency model are fully revealed. They understand the local market, are closer to customers and operate more flexibly. Therefore, for products with large sales such as loaders and excavators, the agency model has proved to be a highly efficient distribution model, which is adopted by more and more Chinese and foreign brands.
In the round of market adjustment in 2012, there were problems in the operation of many agents. In order to avoid the blank area, some brands began to adopt the manufacturer's direct marketing mode, and the mixed distribution mode of direct marketing and agency also appeared in the market.
The author believes that the direct marketing mode is more suitable for the sales of products with high value, small sales volume and strong professionalism. The direct marketing of excavator, loader and other products is actually a forced choice for manufacturers.
Generally speaking, the operating cost of the direct mode is higher than that of the agency mode. The quality of the operation largely depends on the ability and personality of the general manager of the direct company. Many direct companies have operating losses, and their cash flow is also maintained by the payment owed to the headquarters. Some brands adopt the mixed distribution mode of direct marketing and agency. The policies for direct marketing companies and agents are different inside and outside. The real son and the dry son are always different. This practice is difficult to keep the agent and the manufacturer United.
Generally speaking, the responsibility, rights and interests of the direct marketing model are not clear, and it lacks market competitiveness in the long run. However, even in the agency system, there are two agency models with different business ideas in China.
The first is the "partner" agency model dominated by foreign brands. This model has been practiced in mature markets in Europe and America for nearly a century and has been proved to be a successful model. Many agents have cooperated with manufacturers for several generations, just like Caterpillar's agents in China, lixingxing machinery, Xinchang machinery and Yichu Mingtong, who have begun to cooperate with caterpillar in the international market, They are very consistent in values and business philosophy, and the cost of communication between them is very low.
This kind of agency model regards agents as partners, long-term cooperation, mutual benefit and win-win, sharing risks, protecting the interests of agents, and putting the healthy and sustainable development of agents in the most important position.
The other is the "wolf enterprising" agency model represented by domestic brands. Its main characteristics are: growth is the primary market development goal of agents, and the relationship between manufacturers and agents is the distribution of interests. Through the year-end rebate as a lever, it maintains sufficient pressure on agents, forces agents to maintain a high degree of consistency with the market objectives of manufacturers, wins the distribution of interests after completing the market objectives, and agents who fail to meet the market objectives, Will be eliminated.
Under this agency mode, the tasks of complete machines and accessories are very heavy every year. Even if everyone has doubts about the market prospect of this year, the sales target of the agent is still higher than that of last year. Sometimes, in order to get the rebate at the end of the year, the agent has to purchase excessive complete machines and accessories that cannot be sold in the short term, which affects the cash flow and future of the enterprise.
Under the increasing pressure, anxiety, staying up late, hard drinking and sub-health have become the norm, and it is difficult to balance work and life. Employees work overtime to complete the workload of two people, so that enterprises can continue to lay off workers, and the internal entanglement is becoming more and more serious.
The second Agency mode makes agents more wolf like and more enterprising for market share. This rash behavior that forces agents to rush into market share reminds me of the novel chicken crowing in the middle of the night. Manufacturers are like landlords and agents are like long-term workers. But if the long-term workers lie down tired, the landlords can only go to the fields by themselves!
In recent years, the market share of domestic brand excavators has risen all the way, while foreign brands have declined all the way, which is closely related to their different business philosophy. On the surface, the second mode completely wins the first mode, which makes many domestic brands firmly believe that this is a better agency mode.
However, the author believes that the construction machinery industry is highly cyclical. The second agency model is more suitable for the upward cycle of the market. The incremental market sales are large. Enterprises need to seize the "window period" of development opportunities. When the market enters the downward cycle, the risks brought by this model may be greater than the benefits. The lesson of the market downturn a few years ago has proved this, and many agent bosses are still worried.
Some practices of the "wolf enterprising" model have led the industry into a "dead end" of irrational development. This development is unsustainable, which has become a consensus in the industry. Manufacturers adopting this model need to consider the anti risk ability of agents in the downward cycle more, rather than only focusing on their own market objectives, and more on win-win rather than just their own profits. Otherwise, they will fail to reach the speed, and may even lead to the collapse of the agent system.
The first agency model emphasizes risk control and sustainable development, which is lack of initiative in the upward cycle of the market. In previous years, some foreign brands also began to learn the year-end rebate policy of domestic brands.
When the industry enters the downward cycle, the first mode becomes more stable. Instead of fighting a price war, it is better to firmly maintain large and old customers, solidly develop the post market, ensure the survival of agents, and wait for the next opportunity. After all, the "buy one, pay one" seriously violates the basic business principles.
Which model is better? There is no standard answer. In different periods, choosing the most suitable development model for your own enterprise may be the best answer.
The industry will face great changes in the next few years. Electrification under the "double carbon" policy is a new opportunity and challenge for many enterprises. The increase in the cost of electric equipment and the decrease in sales volume, coupled with the downward cycle of the industry, will force the market to return to rationality, and agents will also experience a new round of reshuffle. As for which agency model is more suitable for the Chinese market, let time answer.
Whatever the answer, the best thing is to stay.
