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CBI EXPORT GUIDELINES
More information
Please also read the following:
• CBI’s ‘Exporting to the EU’ (Chapter 1 – the EU as an export market, chapter
2.4.1 and 2.4.2 – trends in business to business, subcontracting, chapter 2.5 –
case 2 exporting magnesium from India) (http://www.cbi.eu/marketinfo ‘search CBI
publications’ export manuals);
• CBI’s ‘Digging for gold - Internet as a source for marketing information’
(techniques to do internet research, many useful websites) (http://www.cbi.eu/marketinfo
‘search CBI publications’ export manuals);
• CBI’s ‘Your guide to market research’ (http://www.cbi.eu/marketinfo ‘search
CBI
• publications’ export manuals);
• CBI’s ‘Export Planner’ (chapter 3.1) (http://www.cbi.eu/marketinfo ‘search CBI
• publications’ export manuals);
• CBI’s export tool ‘EMP Builder’ at http://www.cbi.eu/tools ( ‘Export Marketing
Plan’).
3 Market entry
When bringing your product to market there are a finite number of distribution
channels available, and depending on your product, only a particular channel may
apply. Whether categorised as a commodity or a specialty product can have a
significant influence on how your product is marketed.
Agent
Exporting using an agent can be cost-effective and profitable but most agents do
not carry out sales activities. They merely bring the product to the attention
of potential buyers and collect a certain percentage as commission. Agents often
work to together with specific distribution companies. Moreover they are
protected by EU legislation and therefore termination of a contract can be
expensive and take a long time.
Distributor
A representation or distributorship arrangement may be harder to arrange but
your European associate will purchase the product that is to be sold, thus
sharing the marketing risk. A distribution partner usually adds 30 to 50% to
cover commissions, credit risks, after-sales service and the cost of carrying
local inventory to meet small orders. Distributors also often require exclusive
contracts. The distributor shares much of the same legal protection as the
agent.
Before choosing a distributor specific questions have to be asked. Does the
distributor have access to key regions? What is the distributor’s product
portfolio? It may be possible to bundle your product with other devices or even
cross-sell your product. The client portfolio is also important. Whether the
distributor predominately sells medical devices or medical disposables is an
important question to ask. Another valuable question is whether the distributor
is experienced at selling to the public sector or the private sector.
Joint venture
If you already have a relationship with a European manufacturer, a joint venture
can be considered. A joint venture is valuable and often includes an exchange of
knowledge and foreign investment. However, intellectual property rights are
often a consideration for European manufactures as a strong reason not to engage
in joint ventures. Any potential joint venture must safeguard the property
rights of all parties involved. Such ventures require significant investment and
are usually more appropriate for high value products.
Private label
Private label manufacturing can also be considered. Manufacturing the product
and having a company more familiar with the local environment market and sell
the product can be advantageous. Private labelling, however, is more appropriate
for well-established products with an existing market.
Trade channel most suitable for DC exporters
Deciding on which trade channels is most suitable for DC exporters is highly
dependent on the type of product sold. If your product is a commodity, one of
the options available is to manufacture the product under your own brand name
and sell via a distributor. Another option is to manufacture the product as a
contract manufacturer. As a contract manufacturer you can limit risk and
manufacture a product under a license agreement or mutual contract. Such an
agreement can be especially advantageous if you pool resources with other
manufactures and are not dependent on a limited number or orders.
If your product is a speciality or niche product, you will likely have more
bargaining power, granting a distributor the right to market a product. You may
put a non-competition clause in the contract (i.e. the importer/distributor is
not allowed to market competing products) and specify minimum turnover targets.
Furthermore, the distributor may be required to report on a regular basis on his
sales activities.
Direct exporting, while uncommon, has the potential of being an important
distribution channel in the medical devices and disposables market, specifically
in the extramural market. Self care products that are available in the
extramural market include self test kits that analyze glucose levels or
cholesterol in the blood. As ecommerce gains in popularity and as people become
more comfortable with making purchases online, large wholesalers with ecommerce
sites are likely to find opportunities for self test kits in the extramural
market.
For more information, refer to the Chapter 3 of the CBI market surveys, CBI’s
Export planner (Chapters 4.6, 4.7 and Chapter 5), CBI’s EMP Builder (Chapters 3
and 7.7) and CBI’s ‘Your guide to market research’ (Chapter 3.3.3).
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