Some foregin companies uses agents or distributors to represent their business and sell their product in Japan.
The role of agents and a distributor can be confusing. However, it is vital to be able to distinguish the differences and uses of each of them.
Finding an Agent in Japan
What is an Agent? An agent acts as a representative of the provider and doesn’t have any power over the product. They are usually paid a commission based on an agreed portion of the sales generated.
A Japanese agent might represent multiple services or product lines. They could operate on a basis of exclusivity, acting as the sole agent for a company, or in concert with a team of other agents.
Find a Distributor in Japan
What is a distributor? A distributor personally takes on the product, purchasing them outright, then reselling them in Japan from retailers or to customers directly. In some cases, a distributor might sell to a separate wholesaler, who in turn sells to retailers or customers.
Distributors can carry complementary or competitive products and frequently offer after-sales services. They earn a profit by adding a margin to the cost of the product. These margins are usually higher than those of agents owing to distributors’ added costs, such as inventory storage. So you will need to work closely with a possible distributor to make sure their sales approach suits your brand image.
To assure healthy sales of your product, be sure to research your distributor’s performance history and make sure that they aren’t carrying too many competing products. Analyze the worth of your product within the Japanese market before entering any negotiations with a distributor.
Japanese client preferences allow some distributors to charge 50%, 100%, or even 200% over the original retail value. A poorly negotiated contract might realize a mere 10% profit on your end. This becomes particularly important if you’ve been asked to create modifications to your product to suit the Japanese market.
Agent or Distributor?
The most important thing to keep in mind when selecting an agent or distributor is to confirm with them that you intend to establish a comprehensive operational relationship. You need to be ready to build high levels of trust and participate in regular communication. Before making your final decision, meet with your potential partner in their native market. This allows you to gain a stronger understanding of them, and observe their familiarity with and their presence in that environment.
| When Assessing Potential Agents or Distributors, Consider the Following:
- Do they have strong networks and contacts? Do they have relationships with the correct individuals in the desired business and government sectors?
- What is their expertise in that sector? Do they have reliable information and have they represented a similar product before? Will they assist with marketing?
- A well-established company with a large network of contacts might not be versatile or receptive to your way of doing business.
- A young, energetic company tends to be comparatively more resourceful and innovative in attempting to prove its worth, though it might have fewer contacts.
If you are intending to use agents or distributors in Japan, make sure you have a thorough and well-constructed contract ready to go. Should a dispute arise between two parties, the courts will defer to the specific written terms of the agreement to resolve it.
Make sure that there is no ambiguity within the contract, and that it will be fully understood.