When things are related with money. Everything will go crazy.

Apparently I was thinking the same thing when my dad die die also want me in. At the time, I just resign from a sales job earning 3k++

Came in and get a 1.5K salary. Work like hell, increase to 2K. Get a company car to drive. After 8 years, still stuck with 3K+ salary, no entertainment claims, company car and petrol. MY customers who deal 500-600K per annum ask me no freebies meh? I also dont know how to answer. Use a part of my bonus pay for their lunches.

Want to know why my dad no share? He is not my grandpa favorite son. My grandpa got 2 shares, gave to other uncles. He and my other uncle who started this company actually got a chance to own share by deducting salary, but since salary was already low 30 years back, they decided to forego the opportunity and just wanted to be fully paid.

Somemore, it was not until 2005, they finally wake up. Why do I earn so much for the company while only took 10K home monthly. Then they start to buy Merc, double their salary la. Sigh... crazy crazy world...

Well, let's not forget, CAPITAL is also very important. You can't have VOLUME without CAPITAL. We charter vessels, barges. All these require huge CAPITAL.

We approached many banks to increase liquidity and capital. Most of the local banks are too conservative and refused to approve our loan applications. Some foreign banks did, but it wasn't sufficient to create VOLUME. We even approached EX** ... Rejected 

Hard to survive with such low margins.
Nowadays what cost also up.
Make on 5% die one la.
All it takes is one customer to default payment.....

We have done trading before.. you can negotiate float with manufacturer.. 

You sell at 30 days terms, you pay manufacturer at 60 days term.. FOC capital.. but depend lar you must have good volume/rapport with manufacturer and good payment to nego for longer term. 

Tried that, didn't work. Most manufacturers want CASH before delivery / loading to container. Those that offer credit terms, some charge 2% extra, some 5% 

This directly eat into our margins

Hmm... most of my suppliers all with 60 days to 90 days terms one... very rare cash required, unless 1 time business one.. 

I think it depends you need them more or they need you more... 

You are forever kakilang, provided money issue did not arise.

Yet all the big boys can do it.. Tesco/Carrefour all can survive with 1% margin. 

Then again in trading world where you got no moat, it is big always eat small.. 

We have done trading before.. you can negotiate float with manufacturer.. 

You sell at 30 days terms, you pay manufacturer at 60 days term.. FOC capital.. but depend lar you must have good volume/rapport with manufacturer and good payment to nego for longer term. 

Tesco different model la... how to compare? Tesco only provide the space, does not need to care about margins or anything. Rent the shelf out to those interested, collect rents and then pay at the end of who knows which months. I heard they said Tesco earn a lot more doing something else with the money they collected and pay out later to respective distributors. All those rotten stuffs, expired stuffs, returns etc not book into their PnL, its those distributors losses wor.

Thats called bargaining power mah... they are big enough and buy at huge volume.. manufacturer have to kowtow to them.

Last time i remember one case in early 2000's (involve my relative, as he is distributor for nestle products > 30 years). A hypermart wanted to ask nestle to sell to them cheap cheap and provide good terms, nestle only give them distributor price, yet the hypermart not happy ask for lower. Nestle refuse lower to protect their existing distributor.

So the hypermart retaliate by fire sale all of nestle's competitor products at below cost for one whole month. All the distributors end up cannot sell and all their volume dried up even nestle's volume is affected. In the end nestle relents and give the hypermart price below distributor, end up many distributor close shop or switch to trade other items including my relative.

So big fish do eat small fish...

Are you sure? What I heard is they pay you what you have sold on your shelf, not buy from you wor. Another thing is these big manufacturers like Nestle dont go in one. Instead they already have a list of distributors and see who wanna  fight for these hypermarket slot.

I bought an ice cream pack which was melted and having a bad taste. I fired an email to Nestle and get refunded.    But I was told its their respective dealers which are not doing a good job when these things happens.

That was a real life story .. our relative distributor ship closed because of certain hypermarket...

Good stuff!!!
   
Is it correct to say small margins small fish cannot survive?

Is this why stocks when we win we must win with big margin? hehe 

If only care for survival, I think no matter how hard also can survive...

But if want to prosper, then really need big margin... Actually all those below cost sale who bought... also those kedai runcit. Kedai runcit also very systematic nowadays when wanna grab fire sale by hypermarket.

That's just my thinking la....

Say for them trading/wholesaling businesses, if they operate on 5% or 10% margin....
How to survive?

They must give credit (maybe 30 days or 45 days)....
If one account takes goods worth 10k.....
And that 10k account turns bad.....

Basic math will tell us, it needs the business 100k (10% profit margin) to cover that 10k account just in case it turns bad.

Correct?

So my conclusion is cannot survive one....

Happened to my co. before, still surviving. We've had bad debts, we've experienced conman suppliers.

Is that so?
But was your company doing 5%-10% margins?