Using an Export
Management Company
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An
EMC Can
Represent
Export-Oriented
Joint Ventures
Export Trade
Certificate of
Review Program
An EMC
acting as an
agent or as a
distributor,
whether
independent or
created by
member
clients, can
be a hub
through which
joint
exporting is
facilitated
among the
members. The
U.S. Commerce
Department’s
Export Trade
Certificate of
Review can
provide U.S.
antitrust
protection to
the EMC and
participating
firms that
join together
to engage in
export
activities,
such as
setting export
prices,
consolidating
shipments,
bidding on
large or
complex
contracts, and
sharing export
information
and costs.
Additional
information is
available at www.export.gov/oetca.
See also the
August 2002
issue of
Export America
for an
introduction
to the Export
Trade
Certificate of
Review.
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Does your firm
have the time and
specialized knowledge
to enter new markets?
Do you have the
resources or personnel
necessary to develop
an export business? Is
your business growing
at a satisfactory
rate? Is your firm
receiving inquiries
from overseas buyers?
If you answered
“no” to any of the
first three questions
and “yes” to the
last question, you may
want to consider
turning over the job
of building an export
business to a
specialized export
sales firm called an
export management
company (EMC).
What
is an Export
Management Company?
An EMC is an
independent firm that
acts as the exclusive
export sales
department for
non-competing
manufacturers. EMCs
work to develop
exports for their
clients. An EMC
functions in foreign
markets just as a
sales representative
or exclusive
wholesaler functions
for a manufacturer in
the U.S. market. An
EMC usually has a
formal agreement with
manufacturers (which
the EMC often calls
the “principal” or
the “factory”) to
“manage” their
exports. Sometimes
EMCs will represent
all of a
manufacturer’s
product line, but not
always. The EMC
usually receives
exclusive rights to
sell in all foreign
markets.
How do EMCs
Act as Agents?
The EMC establishes a
presence in foreign
markets by soliciting
orders from foreign
customers in the name
of the manufacturer.
Invoicing is done in
the name of the
manufacturer, and the
EMC helps the
manufacturer with all
the details of the
export transaction.
The manufacturer bears
the risk of
nonpayment, and it may
be asked to extend
credit to the foreign
customer. “Agent”
EMCs are paid a
commission on export
sales. The EMC may
suggest an export
price, but
manufacturers have the
final say on prices
and whether to accept
orders.
How do EMCs
Act as Distributors?
More frequently, an
EMC will operate as an
exclusive distributor
on a buy-sell basis.
The EMC buys products
from the manufacturer
at set prices and
resells them to
foreign customers at
prices established by
the EMC. The EMC is
responsible for
invoicing and bears
the risk of
nonpayment. The EMC
pays the manufacturer
on agreed
terms—usually
similar to the
manufacturer’s terms
for its best U.S.
customers.
When the EMC acts
as a distributor, the
manufacturer may have
no control over export
prices or know the
identity of foreign
customers. However,
many EMCs work closely
with their principals
on both pricing and
customer relations.
This is particularly
true if the products
are technical and call
for special servicing
or installation.
EMCs
Come in All Shapes and
Sizes
No matter what your
product, there is an
EMC capable of
handling your export
business. But they are
not all alike. Some
EMCs are relatively
large, handling lines
of dozens of U.S.
manufacturers from a
wide range of
industries and in turn
exporting to most
world markets. Other
EMCs might deal with
just a few clients or
a limited number of
products, or focus on
doing business in
selected export
markets. While EMCs
may offer a general or
full range of export
facilitation services,
some EMCs have
specialized expertise
in particular export
activities, such as
in-country market
research and
promotion.
Is
an EMC Right for Your
Business?
All manufacturers
lacking export
experience should
consider an EMC. Even
sophisticated
exporters may want to
consider using an EMC
for selected products
for some foreign
markets. Firms looking
for new markets in
order to accelerate
their business growth
should also consider
using an EMC.
How
It Works
EMCs usually have
long-standing sales
networks abroad. Some
have established
foreign sales and
warehousing
subsidiaries. But more
commonly, EMCs appoint
export agents, or
sales representatives,
and networks of
exclusive distributors
and dealers in each
foreign market.
Most EMCs are
experienced in all
facets of exporting,
including marketing,
travel, locating
buyers, and customs
procedures. Typical
strengths include the
expertise to handle
all exporting and
sales details as well
as the ability to
establish a strong
foreign distribution
system. EMCs can
answer inquiries,
prepare quotations,
record orders, handle
shipping details, and
get paid.
EMCs can be relied
upon to reduce the
manufacturer’s
overall export costs
and risks. Their
profits are based on
how successfully they
export. Thus, they are
motivated to do a good
job.
What is the
Cost of Using an EMC?
An EMC’s charges to
its principals vary
depending upon the
product, the degree of
promotion required,
and the EMC’s method
of operation. An EMC
operating on a
commission basis will
usually want a
commission that
equals—or
exceeds—your best
domestic commission.
This might range from
10 percent for
consumer goods to 15
percent or more for
industrial products.
EMCs functioning on a
buy-sell basis will
ask for the best U.S.
discount plus an extra
discount.
In addition to
commissions or
discounts, an EMC may
charge for other
items. Some EMCs will
ask for “special
event” contribution
like a 50/50 sharing
of costs to exhibit in
a foreign trade show.
EMCs may require
contributions for
advertising and other
promotional
activities. A few EMCs
ask for monthly
retainers, especially
in the early stages of
establishing export
sales.
Build
Your Export Business
EMCs already have a
network of foreign
agents and
distributors, so
export sales will come
more quickly. Your
product, if
compatible, will have
a built-in
distribution system.
If you were to build
your own export
distribution channels,
it would take much
longer to realize
sales, and the related
export risks and costs
would increase. Even
when EMCs must build
new distribution
channels to meet the
needs of their
clients, the
in-country expertise
and overseas contacts
of the EMC should
accelerate business
development. Thus, an
EMC saves a client
time and money.
Some
Limitations
Export management
companies are not the
answer for all export
situations. Most EMCs
are relatively small
and may have limited
financial resources.
Thus, some may not be
able to stock
products, or offer
extended in-house
financing to foreign
customers.
EMCs focus their
efforts on those
products that bring
them the most profits.
New product lines, or
those with perceived
limited potential, may
be overlooked.
Many EMCs do not cover
Canada. Yet Canada is
among the best
potential export
markets for many U.S.
products and
new-to-export firms.
With EMCs,
manufacturers
relinquish some degree
of control over the
export effort. When an
EMC acts on a buy-sell
basis, manufacturers
sometimes have no
control over who buys,
the selling price, or
the degree of
promotion.
Locating
an EMC
There are several
sources that are
useful in locating an
export management
company.
The Federation of
International Trade
Associations (FITA)
has a Web-based
directory of EMCs (http://fita.org/emc.html).
The directory is
searchable by product
capability. While this
tool is a good place
to start, it is not
comprehensive and
other sources may help
you narrow the field.
Trade publications,
especially association
and marketing
magazines, also
identify EMCs serving
a particular product
field or export
market.
U.S. Department of
Commerce Export
Assistance Centers
are familiar with EMCs
and gladly assist in
identifying suitable
local partners for
their clients.
However, the best EMC
for your products may
be located in another
part of the country
and unknown to your
local Export
Assistance Center, so
do not hesitate to
call Export Assistance
Centers elsewhere,
especially in port
cities.
Like any other
firm, an EMC will have
strengths and
weaknesses. When
selecting an EMC or
other export
facilitator, always
obtain background
information on the
firm’s business,
export service
specialization (if
any), and export
experience and
successes, as well as
talk with other
clients regarding the
EMCs methods of
operation.
Sources for this
compilation include
the FITA Web site and
the Office of Export
Trading Company
Affairs.
Note: This article
originally appeared in
ExportAmerica.
Date Updated: March 27, 2007
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