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Export Trade Intermediaries

Export Intermediaries are firms that market U.S. goods overseas on the behalf of manufacturers, distributors, and agricultural groups. Export intermediaries range from giant international companies to highly specialized, small operations. They provide a variety of services, including market research, finding overseas distributors or commission representatives, exhibiting products at trade shows, advertising, shipping, and arranging documentation. In short, the intermediary can take full responsibility for the export end of a business, relieving the manufacturer of all the details except filling orders.

Intermediaries may work simultaneously for a number of different firms. Renumeration for services may be by commission, salary, or retainer plus commission. Some Intermediaries take title to the goods they handle, buying and selling them in their own right. Products of a trading company's clients are often from the same industry. One advantage of using an intermediary is that the intermediary has marketing resources that would require a smaller firm years to to develop on its own. Some export intermediaries also finance sales and extend credit, facilitating prompt payment to the producer.

Export intermediaries are generally classified as being either export management companies or export export trading companies based upon the services offered. However, many export intermediaries function as both a trading company and an export management company.

Export Management Companies
Export Management Companies (EMCs) perform the functions that would be typically performed by the export department or the international sales department of manufacturers and suppliers. EMCs develop personalized services promoting their client's products to international buyers and distributors. EMCs usually represents the manufacturer on an exclusive basis. It solicits and transacts business in the names of the producers it represents or in its own name for a commission, salary, or retainer plus commission. Some EMCs provide immediate payment for the producer's products by either arranging financing or directly purchasing products for resale. Typically, only larger EMCs can afford to purchase or finance exports. EMCs usually specialize either by product or by foreign market, or s ometimes even both. Because of their specialization, the best EMCs know their products and the markets they serve very well and usually have well-established networks of foreign distributors already in place. This immediate access to foreign markets is one of the principal reasons for using an EMC, since establishing a productive relationship with a foreign representative may be a costly and lengthy process.

In their capacity as a firm's export arm EMCs may:
1) Attend trade shows and participate in trade missions to promote their client's products;
2)Conduct market research to locate new markets;
3)Conduit for improved packaging and distribution;
4)Selects overseas representatives, distributors and suppliers for their clients;
5)Arrange for export documentation, customs forms, logistics, regulation compliance and payment;
6)Implement advertising and provide translations;
7)Purchase products from their clients for resale in international markets.

One disadvantage of using an EMC is that a manufacturer may lose control over foreign sales. Most manufacturers are properly concerned that their product and company image be well maintained in foreign markets. An important way for a company to retain sufficient control in such an arrangement is to carefully select an EMC that can meet the company's needs and maintain close communication with it. For example, a company may ask for regular reports on efforts to market its products and may require approval of certain types of efforts, such as advertising programs or service arrangements. If a company wants to maintain this type of relationship with an EMC, it should negotiate points of concern before entering an agreement, since not all EMCs are willing to comply with the company's concerns.

Export Trading Companies
A typical ETC is more market-orientated and transactions driven than a typical EMC. An ETC most often acts as an independent distributor creating transactions by linking domestic producers and foriegn buyers.

As opposed to representing a given manufacturer in a foriegn market, the ETC determines what U.S. products are desired in a given market and then work with U.S. producers to satisfy demand. ETCs can perform a sourcing function searching for U.S. supplies to fill specific foriegn requests for U.S. products.

A special kind of ETC is a group organized and operated by producers. These ETCs can be organized along multiple or single-industry lines and can also represent producers of competing products.

Most ETCs take title to the goods involved, but some will work on a commission basis.

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