(Yicai Global) Jan. 20 -- The head of Genki Forest’s marketing center has been detained by police on corruption charges, the Chinese health drinks maker said yesterday, as the firm encounters problems keeping proper tabs on the rapid expansion of its bricks-and-mortar distribution network.

Yi Licheng is one of several company employees to find themselves on the wrong side of the law since November last year. Although Genki Forest has made no mention of the nature of the graft, it is likely to do with the unruly expansion of the firm’s offline sales channels which has been hard to monitor properly, allowing for some fiddling of the books, Yicai Global has learned.

Genki Forest, which is one of China’s fastest growing health drink brands, has been rapidly expanding its bricks-and-mortar distribution network in the past two years and as of the beginning of 2022, it had 1,000 distributors and one million end sales points. In 2021, 90 percent of its sales were through offline channels.

But, unlike online sales, offline sales for fast-moving consumer goods are often fragmented and complex and are very difficult to manage, an industry insider told Yicai Global. There are multiple fees involved, such as entry fees, display fees and promotion fees, and it is hard to keep track of all of them.

Selling beverages involves huge amounts of money, and this inevitably leads to gray areas, the person said. "If a salesman forges the expenses of five stores, it is difficult to verify," he added.

Last year, the company’s founder Tang Binsen sent up a supervision department, indicating that he is aware of the problem. And the Beijing-based firm has been strengthening the layout of store retail channels.

The company, which runs five factories nationwide, ranked 12th in the country in terms of bricks-and-mortar sales of bottled water from January to November last year, up from 15th the previous year, according to market research firm Nielsen.

Genki Forest will improve its sales network and find ways to shift stagnant stock and sell beyond its designated areas. It will also improve the operation of end sales points and customer operations, the firm said at a distributor meeting last month.

Editors: Shi Yi, Kim Taylor