Investigate potential representatives or distributors before entering into an agreement with them.
Last Published: 10/21/2016

Once your company has identified a number of potential representatives or distributors in the selected market, contact each one directly. Just as your firm is seeking information on the foreign representative, the representative is interested in corporate and product information on your firm. The prospective representative may want more information than your company normally provides to a casual buyer. Your firm should provide full information on its history, resources, personnel, product line, previous export activity (if any), and all other relevant matters. Your firm may wish to include a photograph or two of plant facilities and products—and even product samples when practical. You may also want to consider inviting the foreign representative to visit your company’s operations. Whenever the danger of intellectual property theft is significant, you should guard against sending product samples that could be easily copied.

Your firm should investigate potential representatives or distributors carefully before entering into an agreement with them. You also need to know the following information about the representative or distributor:

• Current status and history, including background on principal officers
• Methods of introducing new products into the sales territory
• Trade and bank references
• Data on whether your firm’s special requirements can be met

Ask for the prospective representative or distributor’s assessment of the in-country market potential for your firm’s products. Such information is useful in gauging how much the representative knows about your industry; it provides valuable market research as well.

Your company may obtain much of this information from business associates who work with foreign representatives. However, you should not hesitate to ask potential representatives or distributors detailed and specific questions. Suppliers have the right to explore the qualifications of those who propose to represent them overseas. Well-qualified representatives will gladly answer questions that help distinguish them from less qualified competitors. Your company should also consider other private-sector and U.S. government sources for credit checks of potential business partners.

In addition, your company may wish to obtain at least two supporting business and credit reports to ensure that the distributor or representative is reputable. By using a second credit report from a different source, you may gain new or more complete information. Reports from a number of companies are available from commercial firms and from the Commercial Service’s International Company Profiles. Commercial firms and banks are also sources of credit information on overseas representatives. They can provide information directly or from their correspondent banks or branches overseas. Directories of international companies may also provide credit information on foreign firms.

Once your company has prequalified some foreign representatives, you may wish to travel to the foreign country to observe the size, condition, and location of their offices and warehouses. In addition, your company should meet each sales force and try to assess its strength in the marketplace. If traveling to each distributor or representative is difficult, you may decide to meet each of them at U.S. or worldwide trade shows. The Commercial Service can arrange the meetings; it also offers videoconferencing, which can, in many instances, replace the need to travel.

 

Prepared by the International Trade Administration. With its network of 108 offices across the United States and in more than 75 countries, the International Trade Administration 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 trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.



Foreign Trade Techniques Market Research Distribution