A storeowner’s ability to understand the company’s products, provide pre-sales service and post-sales support, and ability to generate revenue by selling ‘Shengmingsu’ brand products are assessed during this trial process which lasts two to four quarters. Additionally, the company plans to continue to add more stores in the first quarter of 2009 to bring its total number of Yongye branded stores to over 1,125 by the end of the quarter. The company expects having 2,000 Yongye branded stores by the end of 2009.
The company does not own any of its branded stores. Yongye works with distributors to target existing, independent agricultural stores which it believes meets its national branding criteria and then enters into agreements with storeowners through which the company offers training about its products to storeowners and a computer to each store which consists of educational and promotional information about the use of its products. Before becoming a Yongye branded store, stores are often physically cleaned and upgraded to meet the company’s national standards. Once a store becomes a Yongye branded store, Yongye’s name is notably displayed in front of the store, and its products are featured as headline products throughout the store through the use of various visual identity items. Storeowners take delivery of direct marketing and product support from Yongye’s service professionals and the opportunity to sell a high quality nationally marketed product.
A group of independent distributors trade Yongye’s products to the branded stores, which are situated in 10 provinces. These distributors have the significant job of attaching storeowners of newly branded stores to the company’s overall sales network by providing them with the training and support needed to link the company to its end users. Emphasizing the importance of the independent distributors to its sales model, the company intends to increase and strengthen its distribution network throughout 2009.
Expanding our distribution channels and network of branded stores is critical for us to keep pace with market demand for our products. Our easily scalable ‘community-based’ branded store sales model is unique in our industry and has allowed us to increase sales faster than if we developed our own corporate stores,’ said Mr. Zishen Wu, chairman and chief executive officer of Yongye. ‘We recently expanded our production facilities and will be able to support additional stores and meet demand for our ‘Shengmingsu’ plant and animal nutrient products. Looking at the stores currently going through the trial process, we see the largest number of new stores in Hebei province, while our fastest growth is in Shandong province.
