Includes typical use of agents and distributors and how to find a good partner, e.g., whether use of an agent or distributor is legally required.
Last Published: 8/9/2019
When considering the Egyptian market, it is advisable to take a long-term approach to the market rather than seeking immediate returns. It is highly recommended that U.S. companies enter the Egyptian market via a well-placed agent or distributor, particularly for selling to government agencies. Established agents and distributors offer in-depth knowledge of local laws and regulations and they can offer key introductions in a society that is relationship-based.  Agents can coordinate transactions with an Egyptian buyer, including after-sales service, and assist in finalizing transactions to their client’s satisfaction. Additionally, agents and distributors play a public relations role, promoting a U.S. company’s brand, products or services to a wide network of contacts within Egypt. Egyptian law concerning commercial agency agreements is among the most liberal in the Middle East. The law, which is neutral concerning exclusivity and compensation, does not require you to cancel an agency agreement once you enter one, and there is no minimum notification period for cancellation. There is no requirement that the agent authorize the import of the foreign principal's products into Egypt or that the importation take place through the agent. Importers of any product must be separately registered. Commercial agents must register the existence of their agency with the Ministry of Trade and Industry Commercial Registry Department, giving basic facts about the agreement, including the amount of commission received on sales. The foreign firm itself faces no local registration requirement. The commercial agency law is also neutral concerning dispute settlement procedures, leaving this to the parties to decide, preferably in writing, at the time of appointment of the agent.

Commission rates vary according to the type of product or service, volume of sales and involvement needed by the agent. Typically, the larger the volume of sales, the smaller the commission rate.  For commodities such as rice, wheat, sugar, lumber and cotton, the commission ranges between one and three percent; for chemicals and foodstuffs 3-5 percent; for medical equipment, earthmoving equipment, and office/business equipment about 10 percent; for expensive laboratory and scientific equipment 15 percent. For major projects such as a complete civil engineering project, the commission is typically 3-5 percent. In tenders, the commission is calculated in the quoted bid. If a bidder reduces the bid price, the agent typically is asked to share in the reduction. Commission rates must be reported in bid packages for government tenders, with the government reserving the right to reduce any commission it deems extravagant. Commission rates also must be noted in the Ministry of Trade and Industry Commercial Registry documents signed by the Egyptian agent. Agent exclusivity is not required by law; however, it is advised for U.S. firms to provide exclusivity in order to avoid import and custom clearance complications.

Agencies can be split geographically and/or by product, although this is generally not necessary in Egypt, where activity is centered around the capital city of Cairo. If there is a geographic split, it is generally Alexandria, with or without the Delta cities on one hand and Cairo and the Nile Valley on the other. Agencies also can be split between private and public customers, with one agent specializing in tenders and others handling private-sector customers. Agents often appoint subagents to cover smaller cities.

The U.S. Commercial Service offers the Gold Key Matchmaking Service, Initial Market Check and International Company Profile programs to assist U.S. companies in identifying local agents/distributors for their products. For further information, U.S. business representatives should contact the nearest Department of Commerce Export Assistance Center in the United States.

Recognized business networks in Egypt include the American Chamber of Commerce in Egypt, the Egypt-U.S. Business Council, Egyptian Businessmen Association, the Egyptian Business Women Association, the Egyptian Junior Business Association, the Alexandria Business Association, the Federation of Egyptian Industries, and the Egyptian Exporters Association.
 
Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.


More Information

Egypt Business Registration