Exploring international markets is something that is a natural progression of any company looking to grow their revenue stream and test whether their products can successfully compete overseas.
Over recent years emerging markets have been considered a priority for exporters wishing to find new customers and untapped revenue streams.
As with a lot of things in business however, there are several obstacles in the way of the new exporter. There are first of all the obvious difficulties which may arise in any cross border transaction: language and cultural differences.
These, arguably, are as difficult to overcome as matters such as knowing how logistically to transport products overseas, how to enter the target market, on what terms should you trade and what documents are needed to formalise the arrangement.
The role of an agent and distributor using agents and distributors is a relatively straightforward approach to these issues. An agent will act on a company’s behalf and arrange the sale of the products to the end customer. Distributors will, in effect, become a customer of the company yet there is the added benefit that the distributor already has an established customer base in the target country in which the company is wishing to sell.
So, why are companies not using agents and distributors more?
We have found that many companies are still lacking in confidence when it comes to knowing how to use overseas representatives. Many companies are unsure as to whether to use an agent or a distributor (or both), what their roles are or, quite simply, where they go to find an agent or distributor suited to their company.
There are also concerns such as loss of control over how sales are handled. Does there need to be a formal agreement in place and, if so, what sort of terms need to be included in the agreement?
All of these issues were highlighted in a recent survey conducted at an International Trade Forum (ITF) seminar in which we participated.
The results showed that even if people had used agents or distributors in the past, the majority of people did not feel confident that they knew how to appoint the right person as their agent or distributor.
Where to seek help
Organisations such as UK Trade & Investment and ITF can provide companies with specific information on markets and countries which may be receptive to their products.
Irwin Mitchell can assist companies in drafting and negotiating the agreements between the company and agents or distributors.
Irwin Mitchell can also ensure that some of the concerns that companies have, such as losing control of how the sales are handled, are dealt with in the legal agreements.
This can thereby provide companies with further comfort when using agents and distributors to sell their products aboard.
The potential benefits of trading internationally are huge; agents and distributors are great facilitators of this. We are happy to play our part in ensuring that companies feel confident in using agents and distributors.