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   Choose Trade Partner

How to choose the trade partner?                        

There are a lot of methods through which we can choose a trade agent in foreign markets. But we should define the commodity to be exported, its demand rate and the nature of consumers before choosing the agent.

Kinds of main trade agents:

1- An Agent with a commission.
2- A sales agent (distributor).
3- The agent of solidarity.
4- A mixture of two or more of the above mentioned kinds.

An Agent with a commission:

He is the one who receives orders from buyers to send them to the exporter who load shipments to buyers directly. Thus, the agent has nothing to do with the commodity. He does not take any risks. He gets an agreed upon commission (a definite rate) in return for his services. Setting this rate depends on the nature of market. He plays an important role in promoting commodities.

Sales agent (Distributor):

He is completely different from the agent with commission. A distributor buys the commodity, store it for a while and sell it later at the price he wants. The distributor's role is greater than the agent with commission's as the earlier gives the buyer's guarantees and facilities together with post-sales services such as maintenance and spare parts. In this case, the distributor's commission is greater than the agent with commission as the risks he takes are greater than the risks taken by the agent with commission.

The agent of solidarity :

This kind  is accompanied with some kind of risk as the agent is responsible for the orders of supply he gets. He is also responsible for paying the price of the commodity to the exporter when the buyer does not pay.
Thus, he gets a commission greater than the above mentioned two kinds of agents. This kind of agents is not popular because of its high costs.
Generally, agency contract may include more than one kind of agency. An agent can be with commission and a distributor at the same time.
When choosing an agent, he should have good reputation, good financial resources and productivity.

There are some other factors that should be regarded when choosing an agent:-

- Previous experience.

- Types and number of other agencies he performs ( their impact depends on the adopted marketing strategy).

- Understanding of market conditions.

- The financial institutions he deals with, capital cycle in his institution and so on.

- Geographic area he can cover.

- Volume of his annual activity.

- Anyway, the exporter should communicate directly with the agent to know the points of success or the reasons of failure in the market

 

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