The document discusses a case study involving Gino SA, a burner manufacturer, and its distributor Jinghua and potential OEM customer Feima. Gino's China marketing manager Zhou must decide whether to develop Feima as an OEM customer directly or continue selling through Jinghua, risking losing Feima's business. While gaining Feima as an OEM would increase sales, it could damage Gino's relationship with Jinghua, its largest distributor accounting for 40% of revenue. The recommendation is for Gino to accept Feima as a customer through Jinghua to strengthen bonds with distributors while keeping Feima's business through discounts.

2. WHAT
IS

3. GINO SA-
It is one of the largest burner manufacturer
and exporters in the world and enjoys up to 14%
market share with its product mix.
FEIMA-
Leading boiler factory in Northern China,
typical of the twenty largest OEM’S in China.
JINGHUA-
Largest distributor of Gino in China and
accounted 40% of Gino’s China revenue.

4. DAVID ZHOU-
China marketing manager of Gino SA.
JEAN-MICHEL PIERRE-
Asia pacific area manager of Gino SA
HENRY GONG-
Jinghua’s general manager

5. WHAT
IS
the
current

6. Feima is the existing customer of Gino’s
distributor, Jhingua.
Feima is approaching Gino for OEM
treatment.
Zhou has to decide whether he wants Feima’s
OEM business or not.

7. WHAT
can
be
the

8. WHY Zhou wants Feima’s OEM business ?
Developing OEM business was one way to combatincreasing power of
distributors.
Principal
manufacturer
Distributors

9. WHY Zhou wants Feima’s OEM business ?
Principal
manufacturer
Distributors
Developing OEM business was one way to combatincreasing power of
distributors.

10. WHY Zhou wants Feima’s OEM business ?
Developing OEM business was one way to combat increasing power of distributors
 Good opportunity to break into a well-entrenched customer
in industrial burners, & receive a good reference account, as well.

11. WHY Zhou wants Feima’s OEM business ?
Developing OEM business was one way to combat increasing power of distributors
 Good opportunity to break into a well-entrenched customer in industrial burners, &
receive a good reference account, as well.
Feima had told Zhou that it would not increase purchase of Gino burners
unless it received OEM status.

12. WHY Zhou wants Feima’s OEM business ?
Developing OEM business was one way to combat increasing power of distributors
 Good opportunity to break into a well-entrenched customer in industrial burners, &
receive a good reference account, as well.
Feima had told Zhou that it would not increase purchase of Gino burners unless it received
OEM status.
 Success with Feima would make it easier for Gino to develop OEM
business in other distributor’s territories.

14. WHY Jhingua was adamantly opposed ?
 Jhingua strongly believed that Gino should not develop distributor’s existing
customers as OEM accounts.

15. WHY Jhingua was adamantly opposed ?
 Jhingua strongly believed that Gino should not develop distributor’s existing customers as
OEM accounts.
 The practice would set a very bad example, which could destroy their confidence in
co-operating with Gino.

16. WHAT
IS
THE

17. Zhou took out the distribution contract between Gino and its
distributors. It made clear in black and white that “the principal has
the right to develop OEM business in the territory
of a designated distributor without getting
consent from the distributor.”

18. WHAT
IS
at
stake
in
this

20. THIS SHOWS THAT, 95% OF THE PRODUCTION OF THE
MANUFACTURERS GO TO THE DISTRIBUTORS AND ONLY 2%
GOES DIRECTLY TO THE OEMs.(out of which Feima makes 11% in total)

21. HERE WE CAN SEE THAT GREATER REVENUES CAN COME FROM
DISTRIBUTORS FOR GINO.

22. WHAT
are
THE
possible

23. Accept Feima as Jinghua’s customer
ADVANTAGES
1. Gino can lower the profit margin for Jinghua and can offer additional
discounts for Feima.
2. Moreover a service fee can be added in additional to the contract price for
others hence increasing the distributor’s revenue lost due to
excessive contract discounts.
DISADVANTAGES
1. Loss of potential OEM.

24. Develop Feima as OEM
ADVANTAGES
1. Increased unit sales through Feima.
2. Will lead to establishment of new OEM channels.
3. Building up of a stronger brand image.
4. An increase in purchase of the products.
DISADVANTAGES
1. Fear in distribution channels may lead to poaching further may result in
exits.
2. Disappointment from the side of Jinghua.

25. Reject Feima’s business
ADVANTAGES
1. Relationship with distributors remain unaffected and may strengthen.
2. Search of new OEM and end user accounts.
DISADVANTAGES
1. Important OEM lost.
2. Sales lost.
3.Distributor’s powers increase.

27. (RECOMMENDATION)
In the first alternative (accept Feima as Jinghua’s customer) is the most
strategic fit for this case.
•It will help Gino strengthen its bonds with its distributors and mainly Jhingua
which counts for its highest revenue.
•It is bound to motivate existing channels to build new OEMs and end
channel users with GINO’s sales force and investment.
•Since most of its revenue comes from distributors (specially Jhingua), it can’t
afford loosing its them.
•Moreover, its not right to loose contacts with Feima (as in 3rd alternative),
hence it can be in touch with it through its distributors providing discounts etc.. as per the need.

28. "These slides were created by
NANDINI GUPTA, AKGEC Ghaziabad
as part of an internship done under the
guidance of PROF. SAMEER MATHUR
(www.IIMInternship.com)"