Breakthrough Innovation: Iron And Steel Distribution Business Chain

Breakthrough Innovation: Iron And Steel Distribution Business Chain

A financial storm hit, the steel market has experienced volatility in the steel distribution industry, the original deep-seated problems have become exposed, especially in the existing steel flow patterns need to change how and what kind of Chinese iron and steel trade patterns, new how to set up vendor relationships, etc., are the industry’s attention. To this end, the reporter interviewed Zhou Linyan China Federation of Logistics and Purchasing Vice President.

Reporter: At present, the main characteristics of steel sales model, what is? Existing models can meet industry needs?

Zhoulin Yan: China’s current steel flow pattern is different from Europe and the United States and also from Japan and South Korea.

Europe and the United States to steel mills and market-based, Japan and South Korea in a comprehensive trading company Proxy Sales mainly in between China, that the production and circulation enterprises, agency sales and marketing while companies from the existence of common development, but the flow of corporate sales account for a large proportion of total sales.

Our steel distribution business sales agency, essentially a buy agent, that is, payment before delivery, the product substantive to buy, sell products owned distribution companies. Since this model is a cash transaction, but also pay the full amount, not only takes up a lot of liquidity, and increased business risk, seriously affected the economic and social benefits circulation enterprises, limiting the expansion of business scope.

Commission agency industry is not the only option

Reporter: commission agent and the buyout agents different? Commission agent is the next best model for the flow of Chinese steel?

Zhoulin Yan: commission agent system is a sales agent system, it simply is the flow of business to act as market intermediaries, in accordance with the manufacturer sales prices of specified goods, according to the number of sales commissions or agent fees extracted, the product before sale owned manufacturing enterprises.

The agency bought marketing rights is embodied in the proxy, its sales of products owned circulation enterprises. Implementation of the commission agent, you can build risk and profit sharing business relationship mutually beneficial, this is the direction of efforts, but not the only choice, in addition to the supply chain can Cooperation Each other form a community of interests and other shares.

Chinese steel flow pattern will ultimately what is now elusive, is still at an exploratory stage; the future, even if relatively stable, and also will continue to change and adjust to the new situation.

Direct model can not meet the downstream needs of SMEs

Reporter: In recent years some large steel enterprises set up branches and offices across the country, the full implementation of direct marketing, direct control of the terminal, how to assess the risks and benefits of this practice?

Zhoulin Yan: a small number of manufacturers regardless of product characteristics and market demand, blindly increase the proportion of direct sales. First, contrary to the flow of society, and professional development trends; second is not practical, it is difficult to achieve.

Wide range of SME large, large manufacturers can not meet the needs of SMEs; if a lot of new sales offices and sales outlets, great investment, very economical, still need the large number of wider distribution coverage enterprises for the production of distribution services.

Of the last century have had lessons in this regard, the production company should not repeat the same mistakes.

Reporter: steel strengthening channel control, compression part of the case, some of the functions of steel distribution business is changing. It is said that the new supply chain in the steel mills in the distribution function of distribution companies has been weakened, to be re-located in the logistics business and the parties pledge of warehouse receipts, distribution processors, etc., how to treat it?

Zhoulin Yan: the development of logistics distribution companies, distribution processing, and finance and other services, it is its ability to strengthen and increase distribution, rather than the distribution function of weakening.

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