International Distributor Relationships: Broadening the Horizon of Sales.

Researchers have affirmed the ever growing importance of personal relation and trust- building between buyers and sellers. On many occasions cultural and geographical differences limit the use and effectiveness of traditional tools that manage the relationship between a manufacturer and its foreign distributor, and vice versa.

Here emerges the need for a strong relationship, which enhances international ventures providing,many direct and indirect advantages. It is here that International Distributor Relationships make their vital requirement felt.

What is an International Distributor Agreement?

• International distribution agreements set out in writing the business affiliation between two or more parties to an international distributor arrangement.
• An international distribution agreement will vary from case to case. It depends a great deal on the type of business relationship, as well as how the arrangement is to be executed and maintained over a given period of time.
• An international distribution agreement implies the sales of goods and a supply contract over a given period and must set out the distribution terms relating to price, goods, terms of delivery as well as terms relating to insurance, warranties, mode and method of payment and risk.
• It shall also deal with the issues relating to payment of commissions and returns for damaged product or product under warranty.
• Eventually, the objective of a well written international distributor agreement is to safeguard and ensure profit for both the signatory parties.

Key Points to Consider-

• International distribution agreement shall set out the territory in which the distribution will take place. As far as the subject of international territory is concerned, the agreement should identify how sales of goods in international territory ought to be protected.
• Advertising and promotional activities that the distributor must arrange against those activities that are the liability of the producer must be mentioned.
• Also, discounts pertaining to volumes, and matters concerning incentives for both the producer and distributor are laid down clearly.
• International distributor agreements should enclose information related to fluctuating foreign currency exchanges, as large fluctuations can have serious financial consequences to both parties.
• Provision should be made with the accord for those countries that experience momentous political or economic volatility.
• With regards to the agents, the international distributor agreement needs to noticeably state the authority of the intermediary agent.
• Distributors are usually not a representative of the supplier and are able to trade on their own account.
• There are certain countries in which distributors are not allowed to represent competitors without getting permission from suppliers.
• The exact terms of any international distributor agreement may be governed by prevailing local laws.
• Distributors often set this price and compensation for the seller may be calculated by spreading most of the cost to the distributor in their new sales price.

After a professional agreement is formally implemented, both parties can benefit from the new distribution channel and should occasionally review the agreement to ensure it remains equally advantageous for both parties involved.

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