Entering overseas markets
Finding and contracting with overseas agents and distributors
Make sure you conduct research before selecting an agent or distributor. Draw up a shortlist of at least three, then carefully compare what each can do for you.
Where to find agents and distributors
There are many organisations that can help you with your search, including:
- membership bodies for businesses trading between the UK and your target country
- major banks - these have trade teams which may be able to help
You may also have the opportunity to join trade visits or attend exhibitions in your target country.
Choosing which intermediary to work with
The most important thing to establish is that an agent or distributor has proven experience in your target market. But there are many other factors to consider:
- Are they well located, with the geographical coverage you need?
- Are they well established in the market, and how do they compare with their own competition?
- Look at the product lines they currently sell - will your product fit in well?
- Ask about their strategy for the next five years - does it fit well with your objectives in the market?
- How large and experienced is their sales team? Is it well managed and given effective incentives?
- Can they provide you with market research to feed into your sales forecasts?
- Do they have the warehousing, servicing and other facilities you're looking for?
It's also important to look into their financial standing to ensure you're dealing with a reputable business that can be relied upon to pay you. This can be more difficult with overseas businesses, but it may be possible to conduct a status query through your bank.
Make sure any agreement with an agent or distributor is formalised in a clear written contract. It's worth seeking expert advice - eg from a lawyer with trade-related experience or your local UK Trade & Investment team. Make sure you are satisfied with every part of the contract. Read more about getting paid when selling overseas.
Key contract points to consider include:
- Parties - the names and addresses of the businesses involved, and the nature of the relationship, eg agency or distributorship.
- Products - a clear description of your goods.
- Territory - the geographic area within which the agent or distributor will sell your goods.
- Exclusivity - will they have sole rights to sell your goods? If not what are the exceptions? Can they pass their job to a third party?
- Transport - whose responsibility? Your obligations should be clearly set out in a written contract using Incoterms 2010. Read more about the basics of International trade paperwork.
- Pricing - what price will you receive from a distributor for your goods? What price will an agent charge their customers?
- Commission - what commission will an agent receive?
- Payment terms - when will payments be made, in what currency, and at what exchange rate?
- Period - set a termination date for the agreement, and include clear provisions for ending the agreement before that date.
- Confidentiality - make sure that sensitive information about your business or products is protected.
- Intellectual property - what rights will the agent or distributor have to use your business name, brand names, trade marks etc? Read more about intellectual property protection overseas.
- After-sales care - for example, product liability, insurance and warranties. Who is responsible at each stage of the trading process?
- Marketing - what promotional activities will support your products and who will pay for them?
- Jurisdiction - which country's rules will apply to the contract?
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