What to look for in an international trade partner
Tools & Resources
Key learnings
- Trade partners can be international commercial agents that work on your behalf to introduce your products or services to potential customers, or distributors that buy your products and sell them to the final customer.
- When choosing a trade partner, you should consider several factors, including complementary products or services, financial stability, market knowledge, quality standards, communication and support, logistics, and references and reputation.
- Remember that your brand reputation in your new market will be influenced by how your trade partner conducts themselves and many customers won’t separate the two organisations when making judgements.
- Seek support from government bodies, chambers of commerce, export organisations, banks, and logistics companies to find potential partners and put the right documentation in place.
As an exporter, you have a range of routes to market available, from direct selling to establishing a business in your target country. A common choice for many businesses is to seek a relationship with an agent or distributor – often referred to as a trade partner. If this is your chosen route, follow the tips in this article to help you choose a trusted trade partner to help you export.
International commercial agents and distributors provide different services, but businesses often informally call them their in-country trade partner.
Agents work on your behalf within your chosen country, introducing your product or service to potential customers. You negotiate your own agreement to pay them a per-sale commission or a percentage of the selling price of your product or service. Your transaction with the end customer is direct, so you set the price and terms of sale.
A distributor (also known as a dealer or re-seller) will buy your products and then add a margin before selling to the final customer at the price they set. They will also determine the terms of sale, as they control the transaction.
Accordingly, the relationship you would have with each type of partner is different. You have more control in an agent relationship than you do in a distributor relationship. However, both can have an impact on your reputation in a country depending on how they conduct themselves, so you want to be sure they will represent your product or service well.
As with any relationship, trust is earned over time, but there are some clues you can look out for when establishing your partnership.
What to look for in a trade partner:
1
Complementary products or services
The trade partner's products or services should complement your offerings.
A good trade partner should enhance your product range and help it to offer a complete solution to customers.
2
Financial stability
It is important to ensure that the trade partner is financially stable and has a good credit history. This can be determined by checking their financial statements, credit history, and payment terms.
You can get an international credit report for many companies from services such as Creditsafe or Experian.
You may also be able to seek a letter of credit from a distributor’s bank to help protect you further.
3
Market knowledge
The trade partner should have a good understanding of the local market, including the customer base, culture, and regulations. This can help you to avoid cultural misunderstandings and comply with local laws.
You will still need at least a basic understanding of the market even if you’re working with an agent or a distributor. You can use these market guides from the Department for Business and Trade to get useful facts and figures and find trade advisers to help you get started.
4
Quality standards
Look out for the quality of the other products or services that the trade partner represents or sells.
Remember that your reputation will be influenced by theirs. If they are representing or selling lots of low-quality products and yours is high-quality, they won’t be the right fit for you.
5
Communication and support
Good communication and support are essential for a successful partnership.
You’re going to be working closely together, so look for a trade partner who can provide a dedicated point of contact who is available to answer questions and provide support when needed.
Consider time zone differences and language barriers when you evaluate the support you’re being offered:
- Can they offer you an out-of-hours contact if your time zones are very different?
- Is there a common language you can communicate in, or will you need to consider using a translation service such as Alphatrad UK?
6
Logistics
If you’re working with a distributor, they should have an efficient logistics system in place to ensure that products are delivered on time and in good condition.
Sadly, it’s a reality that many customers will not consider logistics as separate to your business, so damaged goods or a poor delivery experience will reflect badly on your brand.
7
References and reputation
It is important to check the trade partner's references and reputation in the industry.
This can be done by contacting other companies that have worked with the trade partner in the past or by checking online reviews.
Remember to draw on the wealth of support that is available to you as an exporter from government bodies, chambers of commerce, export organisations, banks and logistics companies. They can often recommend potential partners to consider and help you put the right documentation in place.
Once you have researched and spoken with some potential partners, you will be able to negotiate your agreements.
Work with your legal advisor to create clear contracts and notify your bookkeeper or accountant of your plans so they can prepare. You may also consider speaking with your insurance provider to check your cover.
Next steps...
- For more information on working with an international commercial agent or distributor visit Great.gov.uk.
- Get more advice and tools in our Exporting bundle.
- Connect with support organisations in Scotland and the Northern Powerhouse for recommendations and advice on the trade partners in your target market.