Domestic Agents

Export broker

  • The function of an export broker is to bring a buyer and a seller together for a fee. The broker may be assigned some or all foreign markets in seeking a potential buyer. They negotiate the best terms for the seller (i.e., manufacturer) but cannot conclude the transaction without the principal’s approval of the arrangement.
  • As representative of the manufacturer, the export broker may operate under its own name or that of the manufacturer.
  • For any action performed, the broker receives a fee or commission.
  • An export broker does not take possession or title to the goods and so is less frequently involved in the export (shipping) of goods than in the import (receiving) of goods.
  • The export broker is useful due to its extensive knowledge of the market supply, demand, and foreign customers.
  • The broker is also a valuable associate for highly specialized goods and seasonal products that do not require constant distribution.

Manufacturer’s export agent or sales Representative

  • This is an independent businessperson who usually retains his or her own identity by not using the manufacturer’s name.
  • An export agent pays his or her own expenses and may represent manufacturers of related and noncompeting products.
  • Like a broker, the manufacturer’s export agent works for commission. Unlike the broker, the relationship with the manufacturer is continuous and more permanent.
  • The contract is for a definite period of time, and the contract is renewable by mutual agreement. The manufacturer, however, retains some control because the contract defines the territory, terms of sale, method of compensation, and so on.
  • The manufacturer’s export agent may present some problems to the manufacturer because an agent does not offer all services. Such services as advertising, credit assistance, repair, and installation may be excluded.
  • The manufacturer relinquishes control over marketing activities, and this can hurt a manufacturer whose volume is too small to receive the agent’s strong support.

Export management company (EMC) / combination export manager (CEM)

  • An export management company manages, under contract, the entire export program of a manufacturer.
  • Those export brokers and manufacturer’s export agents who represent a combination of clients may also be called EMCs.
  • When compared with export brokers and manufacturer’s export agents, the EMC has greater freedom and considerable authority.
  • The EMC provides extensive services, ranging from promotion to shipping arrangement and documentation.
  • EMC is responsible for all of the manufacturer’s international activities.
  • Foreign buyers usually prefer to deal directly with the manufacturer rather than through a third
  • Party because EMC usually solicits business in the name of the manufacturer and may even use the manufacturer’s letterhead.
  • Identifying itself as the manufacturer’s export department or international division, the EMC signs correspondence and documents in the name of the manufacturer.

An EMC typically requires at least a one-year contract to handle a manufacturer’s products, more often; it is a three-year contract.

EMCs are compensated in several ways frequently being through the form of a commission, salary, or retainer plus commission.

Reasons why a firm uses an EMC

  1. It has international marketing expertise and distribution contacts overseas.
  2. Due to the many services provided, an EMC’s costs are relatively low presented by efficiencies of scale; that is, costs can be spread over the products of several clients.
  3. The EMC provides shipping efficiency because it can consolidate several manufacturers’ products in one shipment.
  4. The orders are consolidated at the port and shipped on one ocean bill of lading to the same foreign buyer.
  5. By consolidating shipments of products from several principals, a company obtains better freight rates.
  6. Since many EMCs provide financial services, manufacturers are guaranteed payments and collections  from overseas buyers
  7. EMC allows the manufacturer to concentrate on internal efforts and its domestic market due to the many services they handle which could be held by manufacturer.

Disadvantage using EMCs

  • An EMC prefers new clients whose products complement the EMC’s existing product lines.
  • The EMC is very likely not interested in unknown products or new technologies that require too much time and effort in opening new markets overseas.

Cooperative Exporter

  • A cooperative exporter is a manufacturer with its own export organization that is retained by other manufacturers to sell in some or all foreign markets.
  • The usual arrangement is to operate as an export distributor for other suppliers, sometimes acting as a commission representative or broker.
  • Because the cooperative exporter arranges shipping, it takes possession of goods but not title.
  • The cooperative exporter’s motive in representing other manufacturers primarily involves its own financial interest.
  • Having fixed costs for the marketing of its own products, the cooperative exporter desires to share its expenses and expertise with others who want to sell in the same markets abroad.

Purchasing/buying agent

  • A purchasing/buying agent represents a foreign buyer. By residing and conducting business in the exporter’s country, the purchasing agent is in a favorable position to seek a product that matches the foreign principal’s preferences and requirements.
  • Operating on the overseas customer’s behalf, the purchasing agent acts in the interest of the buyer by seeking the best possible price. The purchasing agent receives a fee or commission for the services rendered.
  • The purchasing agent is also known by such names as commission agent, buyer for export, export commission house, and export buying agent.
  • Since the agent operates on an order basis, the relationship with either seller or buyer is not continuous.

Country-controlled buying agent

  • This is a variation of the purchasing agent is the country –controlled buying agent. This kind of agent performs exactly the same function as the purchasing/buying agent, the only distinction being that a country-controlled buying agent is actually a foreign government’s agency or quasi-governmental firm.
  • The country-controlled buying agent is empowered to locate and purchase goods for its country. This agent may have a permanent office location in countries that are major suppliers, or the country’s representative may make formal visits to supplier countries when the purchasing need arises.

Resident buyer

  • Another variation of the purchasing agent is the resident buyer. The resident buyer is an independent agent that is usually located near highly centralized production industries.
  • Although functioning much like a regular purchasing agent, the resident buyer is different because it is retained by the principal on a continuous basis to maintain a search for new products that may be suitable.
  • The long-term relationship makes it possible for the resident buyer to be compensated with a retainer and a commission for business transacted.
  • The resident buyer provides many useful services for a manufacturer. It can offer a favorable opportunity for a supplier to maintain a steady and continuous business relationship as long as the supplier remains competitive in terms of price, service, style, and quality.
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