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Choosing an Import Agent

In exporting, an agent overseas might be a company or partnership or an individual working on a self-employed basis. The agent agrees to try to win orders for you (the principal, i.e. the would-be exporter), and pass such orders on to you for possible acceptance, without the agent taking title to the goods. That’s how the word agent is used narrowly, but it’s also used in a wider sense to include some intermediaries who do buy and sell on their own account. Thus, there are several different types of agent in international trade. As an assessor for the professional body The Institute Of Export IOE International Trade

I have set questions regarding various aspects of import agents; and this essay looks at the different types of possible agent overseas; the qualifications such an agent should have; steps involved in choosing such an agent; and the ways in which a principal and its overseas agents (once appointed) should help each other.

In this essay, I’ll use UK English (e.g. stock) rather than, say, US (inventory). This is no criticism of any particular variety of English: I have enjoyed living and working in the US for two years, but I am more familiar with UK English.

What are the different types of agent overseas? A commission agent does not hold stock, apart perhaps from samples. An agent del credere is a commission agent who bears the credit risk (that is to say, the risk of the importer not paying). A stocking agent is a commission agent who holds stock, without buying on her/his own account. A distributor has preferential rights to buy and sell specified products in a specific territory. A stockist is a distributor but one who generally receives greater reward because s/he undertakes to carry a specified level of stock. Distributors/stockists usually operate on their own account, so they risk making losses. Any of these agents/distributors/stockists might also agree to offer and provide after-sales service.

What qualifications/qualities should an import agent possess? An import agent very probably needs to have the following positive qualifications/qualities: local knowledge and contacts; marketing ability; product/service enthusiasm; and the disposition to learn, and update her/himself; the resources to cover the entire proposed territory (sales; and, if agreed, after-sales); the official (and, if relevant, minority) language(s) of the importing country, and preferably the principal’s language also; plus solvency, probity, and good health. If the agency is a company as opposed to an individual, there is somewhat less chance of business being interrupted through illness, accidents, or death.

An agent probably also needs to have the following negative qualifications/qualities: NOT represent too many other principals (i.e. the potential agent should NOT be a so-called agency collector); and NOT hold conflicting agencies, although complementary agencies are often very useful, e.g. let’s say you manufacture cutlery (knives, forks, etc), and the prospective agent might already represent manufacturers of crockery (bowls, dinner plates, cup, saucers, etc), and glassware, for example, but NOT cutlery.

Having generated a list of potential agents, one should take the following steps: make a short-list; obtain status/credit reports (from a bank and/or a credit-vetting agency); if possible, make a personal visit to see the potential agents and their organisations; preferably bring one or two of the potential agents over to see your operations; and, if things look favourable, move towards written agreement.

How can you help each other? Well, even if it is not made explicit in the written agreement, there needs to be good two-way traffic between principal and agent in all relevant information (within reasonable bounds of commercial sensitivity). From the agent’s side, changes in, for example, import regulations, customs duties, quotas, exchange controls, competition, social/market/marketing trends, technical standards, and trademark and service-mark regulations. From the principal’s side, development plans for production capacity and new products and services, and any expected delivery problems. Additionally, holding conferences for agents from various territories can be useful, as can the (e-)mailing of company newsletters. In certain circumstances and subject to appropriate safeguards, the principal might be prepared to consider providing loans to the agent, possibly even on lenient terms.

To conclude, no exporter should leave everything to the agent: the exporter (and not just the agent) should participate in trade fairs and exhibitions in the target market, and periodically visit the premises of customers and potential customers. Best wishes. Bon voyage.