Exporting to India:
10 Steps to Locating The
Most Reliable Agents &
Distributors
India, the United States'
26th largest trading partner,
is listed by the U.S. Commerce
Department as one of its
"10 Big Emerging
Markets" (BEM). This
means U.S. exporters to this
nation of over one billion
people are eligible for a
range of export promotion
benefits and services. One of
these is the U.S. Commercial
Service's (CS) invaluable
resources for locating
reliable agents or
distributors--key to
successfully selling in this
market.
Begin With CS India Guide
As the CS explains,
"When a company wants to
sell its products or services
in India, before establishing
a branch office or a
subsidiary, it can enter the
market by appointing
representatives or
distributors. If the product
has a wide market, it would be
appropriate to appoint
representatives or
distributors by region."
Practical, hands-on advice on
exactly how to do this is
contained in India Country
Commercial Guide 2002. The CS
has eight separate offices in
India (see accompanying
sidebar).
The CS is a branch of the
Commerce Department's
International Trade
Administration (ITA),
publisher of the Country
Commercial Guides. The Guides
are available at http://www.export.gov/marketresearch.html
or http://www.trade.gov/td/tic/
and can be ordered in hard
copy or on diskette from the
National Technical Information
Service (NTIS) at
800-553-NTIS.
Among other
export-assistance services,
the CS offers industry sector
analyses and market insight
reports covering the Indian
economy. It also offers market
research tailored to specific
export and investment needs,
as well as business
matchmaking services.
10 Steps to Finding Right
Distributor, Agent
The CS India Guide gives
the following guidelines for
selecting representatives for
your company's export products
in India:
- Key considerations in
selection of distributors:
Business reputation and
standing; business
capacity and marketing
strength; expertise and
previous experience in the
line; financial capacity
and willingness to invest
in the line;
creditworthiness. An ideal
India distributor will
have the capacity to offer
customers the required
assortment of products and
services and a willingness
to extend credit. The
distributor should be able
to provide storage
facilities, showrooms,
shops, service workshops,
sales staff, and service
commensurate with the
expected volume of
business.
- Ensure your product will
be strongly represented
among the representative's
product mix: Some
potential representatives
will provide long lists of
foreign principals,
covering dozens of
products. Although such
lists may seem impressive
at first sight, some of
them may be outdated, and
some of the relationships
may no longer exist.
Further, representatives
with many principals and
product obligations could
find it difficult to
devote sufficient
management and resources
to support additional
relationships.
- Make sure your
prospective distributor is
committed to actively
promoting your product:
Many representatives will
highlight their widespread
distribution network and
countrywide presence. They
will project a
professional image, backed
by well-qualified staff.
Very often such
representatives will leave
the distribution of a new
product or service to this
network, without making
any extra effort. U.S.
firms should avoid the
temptation to establish a
relationship with a
representative or
distributor merely because
this individual appears to
be the most persistent or
enthusiastic.
- Determine who the
customers are and where in
India these customers will
make their buying
decisions: A potential
distributor who handles
products similar or
related to those of a U.S.
firm is not necessarily
the best choice. Selected
Indian firms have very
effective distribution
channels, and can offer
the U.S. principal more by
way of marketing savvy
than mere product
knowledge. Representatives
with fewer principals and
smaller operations can
prove to be more adaptable
and committed than agents
with a large
infrastructure and a large
reputation. A small
distributor could be ideal
where a flexible strategy
is called for.
- Avoid conflicts of
interest where the
potential representatives
handle similar product
lines: U.S. firms should
decide up-front whether or
not this will be
acceptable in order to
avoid complications later
on in the process.
- Decide
whether you will need more
than one representative:
It is not uncommon in
India to appoint multiple
representatives for
different products,
locations, or distinct
markets. U.S. firms should
set up proper feedback
systems so that the level
of dedication in the
venture remains stable.
-
Examine all distributor
prospects, perform credit
checks: Credit and
reputation checks will be
easier, with a number of
private organizations now
providing these services
in India. The CS in India
recommends due diligence
checks on Indian parties
and these should be
carried out thoroughly and
promptly. This can be done
by checking with the CS or
through fee-paid services
(see sidebar). The cost of
a standard background
report on an Indian entity
is approximately $300.
When ordering a report,
specify "ICP
Report" for speedy
action. If the credit
check is positive,
contract details can be
negotiated and a
memorandum of
understanding or
representatives agreement
finalized.
-
Look for distributors of
complementary products:
U.S. firms can screen
unsolicited applications,
seek any additional
details needed, and see
who responds best to your
request for more specific
information.
-
Evaluate the prospect in
the Indian context: An
Indian friend of mine once
told me - "We Indians
not only invented
bureaucracy, but we
perfected it too."
Selling to the bureaucracy
or Indian parastatal
companies is important to
the success of your
efforts in India.
Make sure that your
prospective agent /
distributor can provide
government references.
Rather than focusing on
the decor of the office,
consider address, as well
as references from
lawyers, accountants, and
above all, existing
clients. For technical
products, a visit to the
prospect's place of
business is critical to
ensure technical
expertise. It is vitally
important for U.S. firms
to check the potential
representative's
reputation. This can be
checked with local
industry sources, industry
associations, existing
clients, bankers, other
foreign companies, and the
prospect's competitors.
-
Take advantage of the
International Partner
Search (IPS) program: IPS
is offered by the CS
through its eight offices
in India. (See "New
Gov't. Export Service
Locates and Screens
Overseas Partners" in
August 2001 ME.)
With the gradual opening up
of the market in line with
India's WTO commitments, U.S.
exporters will find strong
interest from potential
representatives and
distributors for a wide range
of products. The Guide also
provides practical information
on franchising and direct
sales as methods of market
entry.
We also encourage you to
use our companion MDEC IT
Guides:
India
WebGuide - The
WebGuide compiled by the
Ypsilanti U. S. Export
Assistance Center, US
Department of Commerce, is
meant to provide an overview
into the many sources of
information which must be
considered in making a
business decision.
Date Updated: March 27, 2007
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