Interculturalité japonaise

Part one: the foreign distributor contract

Section 1/ the basic operation of the foreign distribution contract

1. The distribution agreement

The foreign distributor is a merchant (often means a trader) who purchases goods from an exporter, often at a discount, taking title to property in the goods and resells them for a profit to retailers or dealers within a defined territory. The end user (consumer) usually buys from the latter. The [distribution agreement, contract/the contract of distribution] comprises two main elements:

• A series of contract for the sale of goods: it is just a classic contract of sale between the supplier (or exporter) and the distributor of the product.
• An agreement for distribution which establishes the terms and conditions upon which the product will actually be distributed in the territory concerned.

• Advantages and disadvantages

A main advantage for the exporter is that the distributor already has an established network in the territory. The fact that the distributor provides support and service for the product under the agreement, this relieves the exporter of these responsibilities. The agreement for distribution then is underpinned by the existence of the distributor’s network and [deals with/concerns] the way in which the two parties agreed to market the goods in the territory.

1. Rights of representation

• Both terms: no other distributor possible
• Sole representation: exporter may undertake sales in the territory
• Exclusive representation: exporter may not undertake sales in the territory.

In a distribution contract, the distributor maybe granted sole or exclusive rights of representation. It is necessary for the parties to spell out (=define very clearly) in the contract the precise rights which they want the representative/distributors [shall/to] have.

• Sole and exclusive representation

For both of these, no other distributor is possible. If the representation is sole, we’re talking about a sole distributor: the exporter may undertake sales in the territory of the representative/distributor on his own account. Exclusive representation: the exporter is not allowed himself to compete with the representative/distributor in the territory.

SECTION 2/ THE EXPORTER’S INITIAL SEARCH FOR A DISTRIBUTOR

• Credentials: hampering of sales expectations?

• Staff and sales record : sales people, consistent sales growth, series volume
• Territorial analysis

Prior to entering into a contract of distribution is in the interest of the exporter to research the credentials of any potential distributor. One particular distributor may be less well placed than another when it comes to implementing the specific marketing needs of the products. A poor choice (a bad choice) of the distributor may hamper the exporters sales expectations. The exporter is well advised to consider certain elements.

1. Staff and sales record

The distributor must have at his disposal sufficient staff to sell, distribute service and promote the product throughout the territory. It will be useful to know for the exporter to know how many field sales people the distributor has and the nature of his short and long range expansion plans are. Would the distributor need to expand to accommodate the exporters’ needs properly? Would the distributor be willing to expand? The distributors past sales growth should have been consistent (steady, regular progression).

• The sales volume

Over the past five years will also be an interest for the exporter.

1. Territory and analysis

• Sales territory consistent with objectives

The exporter will need to know the sales territory covered by the distributor and he will have to decide whether this is consistent with the territorial coverage desired by himself.

• Branch offices (agences, succursales)

He will check to see if the distributor has branch offices in the territory and whether these brand offices are located where places are.

1. Product mix

• Compatibility
• Complementary products

The exporter will want to know how many the product line the distributor represents and whether these products line are compatible with its own products. Distributors typically [handle/deal with] complementary but non conflicting products, he might deal with lawnmowers and rakes. Once the exporter has established the distributor can accommodate its product line, the exporter must work out the minimum sales volume needed to justify [his having recourse/in using] to the distributor. When then he has established this, he can check to see if the distributor’s sales projection (prévision de ventes) reflect this minimum figure and try to determine from its knowledge of the distributor whether the sales projection are realistic.

1. Facilities and equipment

The exporter needs to know about the distributor warehouse facilities and methods of stock control. Where servicing is needed is the distributor equipped and qualified to do this/provide servicing? If not, the exporter needs to know if he is willing to [obtain/acquire] the necessary equipment and perhaps arrange for necessary training of staff. If training cost are needed for the staff, these cost may be shared between the exporter and the distributor. This is a subject for negotiation before the contract is written, it must be written in the contract. It will help the exporter to know whether the distributor is willing to make an inventory of (drew up an inventory) [spare parts/replacement parts]. It is generally the case that the distributor will make regular inventories of all products and stock a sufficient supply of spare parts.

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