Distribution in Germany

Import Channels: In Germany there are no regulations which oblige foreign suppliers to trade through specific channels. They are free to conduct their business as they choose, though the traditional importers, wholesaler, retailers who import directly, buying organization of co-operatives and retailers directly importing industrial companies, sales agents (commercial agents, commission agents).

German import traders mostly specialize in certain products or countries of origin. Owing to their wide experience, they are in a particularly good position to pave the way for the entry of inexperienced suppliers into the German market. However import functions are also fulfilled by many wholesale merchants who for part seek to provide retail traders, industrial and handicrafts in certain products or lines of business. Any of them are represented in all parts of the Federal Republic of Germany, while others confine their activities to certain regions.

In the consumer sector, directly importing retailers, department stores, mail order house and the central buying organizations of retail trade and co-operatives have considerably strengthened their position (especially as regards food, textiles, household goods, furniture). It is estimated that more than 50 per cent of the consumer goods entering Federal Republic of Germany reach the end consumer directly or indirectly through department stores and mail order firms. Some of these firms have their own brands produced abroad according to their own specifications. Addresses can be obtained from the Bundesarbeitsgemeinschaft der Mittleund Grossbetriebe des Einzelhandels (Association of German Retailers), Cologne Germany.

The special role of the commercial agent: The commercial agent as a sales agent is of considerable importance to those foreign exporters and producers who systematically work the German market but who do not want to establish their own branches there.

To make sure that the commercial agent reaches the right customer with the commodities in question from the start, he must be thoroughly informed about what he is offering and what the foreign firm, which he represents, is able to provide. Therefore at the very beginning there should be an extensive discussion with the commercial agent about the manufacturing program, terms of delivery and payment, facilities of transport, outward appearance of the goods and advertising, technical composition of the goods and the possibilities of their utilization. Very often commercial agents complain that samples do not arrive in time and thus their work is rendered practically impossible. Special effort should be made to ensure that supplies really correspond to the sample provided earlier (for example, in respect of shades or color of textile) and to observe the agreed terms of delivery. Also, the German customer is accustomed to inquiries and complaints being dealt with immediately.

In addition, the foreign partner should be aware of the fact that a period of introduction covering several years is required when building up a business in Germany.

It is customary or the commercial agent to represent various industrial firms whose products complement each other. It makes him especially interesting to the customers and enables him to gain particularly good idea of the market situation and reliability of the customer.

Talks will indicate which district is to be covered by commercial agents. Some foreign producers want to negotiate with only one commercial agent or the whole of Germany, who will then co-operate with other colleagues. However, taking into account that there are several big industrial centers in Germany, in many cases it might become necessary to negotiate with several agents. It would be better for the foreign producer to start with one or two districts and then gradually extend the business. In the discussions, the commercial agents themselves will make suggestions about the most appropriate size of the districts.

In individual cases, it might be useful for the foreign producer to establish a warehouse in Germany in order to supply his customers promptly. The stored commodities remain the property of the foreign producer till they are sold. Commission on the goods is paid to the commercial agent only after they have been sold. If the agent is in charge of the establishment and administration of the warehouse, he is paid compensation of some kind (fixed allowance, higher commission etc) to cover the cost of storage. However, it is also possible to ask a forwarding agent to take the goods in stock.