The variety of agent and merchant middlemen in most countries is similar to that in the United States. International marketers seeking greater control over the distribution process may elect to deal directly with middlemen in the foreign market. They gain the advantage of shorter channels and deal with middlemen in constant contact with the market.
Using foreign country middlemen moves the manufacturer closer to the market and involves the company more closely with problems of language, physical distribution communications, and financing. Foreign middlemen may be agents or merchants, they may be associated with the parent company to varying degrees, or they may be hired temporarily for special purposes. Some of the more important foreign country middlemen are manufacturer’s representatives and foreign distributors.
Manufacturer s’ representatives
Manufacturer’s representatives are agent middlemen who take responsibility for a producer’s goods in a city, regional market area entire country or several adjacent countries. When responsible for an entire country, the middlemen is often called agent. As in the United States the well chosen well motivated well controlled manufacturer’s representative can provide excellent market coverage for the manufacturer in certain circumstances. The manufacturer’s representatives are widely used in distribution of industrial goods overseas and an excellent representative for any type of manufactured consumer goods.
Foreign manufacturer‘s representatives have a variety of titles, including sales agent, resident sale agent exclusive agent, commission agent, and indent agent. They take no credit, exchange or market risk but deal strictly as field sales representatives. They do not arrange for shipping or for handling and usually do not take physical possession. Manufacturers who wish the type of control and intensive market coverage their own sales force would afford, but who cannot field one, may find the manufacturer’s representatives a satisfactory choice.
A foreign distributor is a merchant middleman. This intermediary often was exclusive sales rights in specific country and works in close cooperation with the manufacturer . The distributor has a relatively high degree of dependence on the supplier companies, and arrangements are likely to be on a long run, continuous basis. Working through distributors permits the manufacturer a reasonable degree of control over prices, promotional effort, inventories servicing and other distribution functions. If a line is profitable for distributors they can be depended on to handle it in manner closely approximately the desires of the manufacturer.
Foreign Country Brokers
Like the export broker discussed in an earlier section, foreign country brokers are agents who deal largely in commodities and food products. The foreign brokers are typically part of small brokerage firms operating in one country or in a few contiguous countries. Their strength is in having good continuing relationships with customers and providing speedy market coverage at a low cost. Typical but still parts of this category are art auction houses such as those in China and in the Netherlands. At the latter you can spend $85,000,000 for Rembrandt if you can spare the change.
Managing Agents and Compradors
A managing agent conducts within business within a foreign nation under an exclusive contract arrangement with the parents company. The managing agent in some cases invests in the operation and in most instances operates under a contract with the parent company. Compensation is usually on the basis of cost plus a specified percentage of the profits of the managed company. In some countries managing agents may be called compradors and there are some differences in duties performed.
Dealers: Generally speaking anyone who has a continuing relationship with a supplier in buying and selling goods is considered a dealer. More specifically dealers are middlemen selling industrial goods or durable consumer goods direct to customers; they are the last step in the channel of distribution. Dealers have continuing close working relationships with their suppliers and exclusive selling rights for their producer’s products within a given geographic area. Finally, derive a large portion of their sales volume from the products of single supplier firms.
Some of the best examples of dealer operations include Massey Ferguson with a vast worldwide network of dealers and Caterpillar Tractor Company, with dealers in every major city of the world.