The supplier of Xinhua department store Gets the extremely harsh annual contract

Absrtact: After the supplier to blow up Jingdong Mall to implement the Overlord clause, Xinhua department store also encountered the same trouble. March 3, Xinhua department Store (600785.SH), a supplier to the reporter disclosed that due to many suppliers dissatisfied Xinhua department store in the 2012 annual contract of many

Following the implementation of the "Overlord" clause, Xinhua department store also encountered the same trouble.

March 3, Xinhua department Store (600785.SH), a supplier to our correspondent, said, "because many suppliers dissatisfied with the 2012 annual contract by Xinhua Department of the many stringent provisions, more than 10 suppliers in the Ningxia Xinhua department store in 100 stores announced the closure."

The supplier said, "since 2009, the group formally took over the management of Xinhua department stores, the conditions to the suppliers more and more stringent." There are Xinhua department stores in 2011 to do a 100 million yuan business, the whole year only earned less than 2 million yuan, basically a loss of operating. 2006, the United States and the U.S. group at 170 million yuan to the cost of holding Xinhua department store 27.7% of the major shareholders.

March 5, the above suppliers said, "4 o'clock in the morning, in the local relevant departments as well as Xinhua department stores, suppliers, such as the joint efforts of 4 parties, we have to reconcile with Xinhua department store." ”

Four harsh terms

December 2011, Xinhua department Store's suppliers got an extremely harsh annual contract, in the contract, for the guarantee rebate, strong promotional, exclusive competition, improve sales rebate, etc. four provisions of the provisions, so that some suppliers feel pressure, and thus refused to sign the contract.

The above mentioned suppliers, the so-called guarantee rebate provisions, Xinhua department store suppliers must be signed with the Department of the annual guaranteed sales contract, if the guarantee amount is 5 million yuan/year, the unfinished part, will be sold by the retailer in the way of deduction of the payment.

The so-called compulsory promotion, that is, unconditional participation in Xinhua department Store promotional activities. The suppliers said that sales in 2011 were 3 times times higher than in 2010, when a first-line brand could not participate in the promotion, but the new contract stipulated that any brand must participate in the promotion. "In the promotion, the market rules must be 40 percent-50 percent strength, and this is close to the cost of our goods." ”

Xinhua department Store in Ningxia has 6 stores, accounting for the local department stores sales market share of about 30%. However, with the opening of the local economy, such as Wanda Group, such as enterprises also stationed in the local, so the new Xinhua department store in the contract requirements of the supplier in Xinhua department stores, it is not allowed in other department stores operating stores, this is the so-called exclusive competition clause.

At the same time, the supplier said that the 2012 new contract stipulates that the sales back to a 2011 increase of 1% to 5%, and Xinhua department stores for clothing suppliers in the past, the sale of the deduction point is 16%-23%.

The standoff over the contract lasted until the end of February 2012, and the contract involved neither suppliers nor retailers to budge. March 2, there are more than 10 related to Ningxia Xinhua department store, 4 stores of about 100 stores suppliers, decided to suspend the way to counter the new Xinhua department store out of the next year's overlord clause.

Xinhua department responsible for media related people said, "We are in principle the hope and the development of suppliers, but some brands through the market test is ultimately to be eliminated, some brands we strongly support its development, so our terms for different suppliers, due to different circumstances, their acceptance degree also have a difference.

Quartet Communication and reconciliation

After learning of the supplier's joint business, Xinhua department store began to seek reconciliation with suppliers.

This reporter understand, participate in the business of the supplier annual revenue accounted for Xinhua department store in the annual sales revenue of 10%. and involved in the closure of the activities of about half of the suppliers have yet to sign a contract with Xinhua department store, in the sidelines. Xinhua department responsible for media-related people said, "This situation is not what we would like to see, but the contract signed, we will be based on the principle of consultation."

However, the supplier said, it is 3 years ago, the United States to participate in the actual operation of Xinhua department stores, Xinhua department stores are demanding for suppliers. Xinhua department responsible for the media, said, "We are operating a department store, every year there will be a certain growth in performance, and this growth is reflected in our cooperation with the supplier level, for example, a number of promotional activities we have to bear a part of the cost, not just the supplier side."

According to the description of the supplier, after nearly 10 hours of negotiations, including Xinhua department store management, suppliers, relevant associations, government departments of the Quartet Communication, until 4 o'clock in the morning March 5, Xinhua department stores and closed suppliers to reach a settlement.

The basis of reconciliation is that, according to the Ministry of Commerce and other five ministries issued by the "clean-up and reorganization of large-scale retail enterprises to the supplier of illegal charges work program" requirements, Xinhua Department of general merchandise to cancel the guarantee of the return of suppliers, strong promotional, exclusive competition three requirements. The two sides agreed to sign a new annual contract on March 15, and the closure of brand stores resumed business.

Awkward "middle layer"

"I cried two times in my three or four days out of business." "The above material supplier said, one is to be engaged in the distribution, the agency industry feel despair, one Xinhua department store although said reconciliation, but he still worried about encountering" scores "embarrassment.

He reflects that the "middle tier" agents and distributors between retailers and manufacturers are only a transitional product in the modern circulation industry, and the middle tier will surely face a survival crisis in the next 5-10 years. And the strength of the retailer is excessive competition, "in Ningxia, which has more than 1 million people, there are about 13 large department stores."

According to its further revealed that distributors, agents not only encounter the squeeze of retailers, but also encounter the stringent requirements of brand manufacturers. He cited, for example, because of rising costs and other factors, brand manufacturers also control the cost, so some of the first-line clothing brand manufacturers require agents and distributors can not have returns, and these problems resulting from a variety of returns, the agent and distributor costs.

The cost of hiring agents and distributors is also rising sharply. He revealed that for a company selling at 100 million yuan, in terms of labor costs, 2010 at 7 million Yuan, and 2011 increased to 11 million-12 million yuan, up at least 4%.

Faced with this awkward state, the supplier said it would seek a transformation over the next 3-4 years to cope with the decline in the industry.