Page 99 - Export and Trade

Legal

end customers, even where the distributor/reseller is credit risk on customers.
taking the credit risk. ‡ &DQ EH YHU\ LQHI¿FLHQW LI GHDOLQJ ZLWK PXOWLSOH
customers. Really only suitable where you have a
Agency limited number of customers.
Key legal characteristics • Exporter will be subject to local sales and consumption
•Agentdoesnotbuytheproduct–itsellstheproduct taxes and sometimes income tax.
on behalf of the exporter.
•Itoperateswithinthescopeofauthoritygrantedtoit Other considerations
by the exporter. • Choose your agent well. As agents have very
• Earns money through payment of commission and little downside risk, they often have an all care/no
sometimes from the provision of other support responsibility attitude.
services. ‡ 6WULFWO\ GH¿QH WKH VFRSH RI WKH DJHQW¶V UHVSRQVLELOLW\
• Any sale is concluded between the exporter and the and authority.
in-market customer direct.
• Agent does not take any product or business risk. Incorporated joint venture
• Exporter takes the credit risk. Key legal characteristics
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Positives legal entity from the joint venture partners to do
•Salesaredirecttothecustomer so theexporterknows business in the market.
all of its customers. ‡ -9& ZLOO VHOO DV D SULQFLSDO LQ WKH PDUNHW
• Exporter has greater control over the marketing and ‡ ([SRUWHU DQG -9 SDUWQHU DUH QRW OLDEOH IRU WKH
pricing of the product in-market. REOLJDWLRQV RI -9&
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Negatives ‡([SRUWHUPD\OLFHQVH-9&WR PDQXIDFWXUH
• As the exporter is dealing as a principal in the market, • Exporter may supply ingredients/components.
it needs authority to do business in the market. This • Exporter receives some or all of: upfront fees, royalty,
will usually involve formal registration and compliance. management fees, technical assistance fees, sale price
• Exporter takes all the local business risks including the for ingredients/components, dividends.

NZ Export & Trade Handbook 2018 97