One of the most important things you can do when
starting the search for someone in your target market to represent
your products overseas is to develop a profile of your preferred
partner.
If it's important that you have a large quantity
of product in the overseas market -- such as automobile parts
-- you probably want a distributor who will purchase and warehouse
the goods. On the other hand, if you want to maintain a closer
relationship with the buyer, such as when service and communication
with the home office are important, you'll want a representative
who will place orders to you on behalf of the customer.
Try to make sure your partner is actually in the
field you're selling to. Some importers have lots of contacts
in their market, but little expertise in a particular product
area. In the same way, don't automatically assume that large representative
companies will serve you better. Often they represent so many
products that they give little attention to yours -- particularly
if you're a small company. Sometimes a smaller, more aggressive
representative will serve you better.
There is an understandable tendency to pick an overseas
representative because he speaks English well. Naturally this
makes it easier to communicate with you (unless you have proficiency
in his language), but that doesn't necessarily mean he's the best
partner for your company. This seems obvious, but many companies
overlook it. Competence in the target country is more important
than fluency in your language.
I've been sucked in by salesmen with professional-looking
brochures. Yes, a professional appearance is important -- especially
if this person will end up representing your product -- but this
shouldn't be the most important factor. Check him out.
When someone wants to be your representative, you
have a right to request more information including company names,
contact information, principal activity, trade and bank references,
sales territory and number of salesmen. Then make sure you check
references and verify the information provided by the company.
You may also want to purchase a credit report. [The Kentucky World
Trade Center can provide these reports for you.]
Overseas representatives have lots of reasons to
want exclusive rights to sell your product. Be very careful of
granting these rights too quickly. Some potential representatives
claim commercial and political connections as reasons to grant
them exclusive rights.
I am aware of at least one importer who placed a
large first order with promises of many more to come. This can
be very seductive, as you might imagine. But what happened in
this case -- and it happens frequently -- is the importer never
ordered again. He simply wanted an exclusive agreement to isolate
the company from selling in that market! If you go slowly in granting
exclusive rights until the partner has truly proved himself over
time, you'll do better.
It's not a good idea to replace your representatives
frequently. Pick somebody for the long haul and develop a relationship
based on trust and experience. Bear in mind that if you make a
change in representation, some countries will require you to compensate
the old representative first.
That's one reason it's a good idea to check in your
target country to determine if such a law is in effect in your
target country. At the same time, you can also find out if a representative
is required to be registered before he begins working for you.
Normally, your relationship with a representative
will be conducted in stages. The first stage usually consists
of a short letter of understanding with conditions for a more
formal relationship later (selling "X" number of units
of your product, for instance). Later, after several sales have
been completed and payment made, you can develop a more formal
sales representative or distributor agreement.
And finally, make sure that you support any representative
or distributor, new or old. Frequent communication, respect and
support are crucial to his success -- and yours.
Dennis Hessler is the president of Spyglass Point
Productions, an international trade consulting and publishing
company. Dennis may be reached at dennis@spyglasspoint.com.
