How to identify and deal with distributors in Philippines. How to signed agreement with local company ?
Use an agent or distributor in Philippines?
In the Philippines, business relationships are very complexe question, hard to reply and choose.
Key elements of contracts between brands and their Filipino agents/distributors:
Dont’ judge on Size.
There is no typical profile of a Philippine distributor or agent. There are many sizes of firms. Smaller ones may have fewer than 10 employees and only a few specialized products. Larger trading companies can handle a large number of products and suppliers.
While some firms are focused on the Metro Manila region, others offer additional services to other provinces
Contracts VS following
You have contracts and you have the following of contracts. Identification and duration of the contract, cancellation conditions, definition of covered goods, territory or territories and, where necessary, sole and exclusive rights : it is necessary. BUT relationship and business followup is the more important.
We recommanda to Sign NDA nefore start negociation about pricing models and other specifications, companies , necessary initial non-disclosure agreement (NDA).
You should care of Terms of termination, protection sole and exclusive rights, sales, technical support, tax liabilities and conditions of sale, delivery, prices, order refusal inspection of distributor’s books trademark/patent protection, information that distributor must supply, marketing, advertising, and sales promotion, as well as responsibility for claims/warranties and inventory requirements
HOWEVER, the best way is to support your distributors when contract is done.
If either party wishes to terminate an agent/distributor agreement, there are no laws. Most contracts require that cancellation notices must be given within 30 days or as agreed between the parties.
COMMISSION TO DISTRIBUTORS
The standard agent commission ranges from 10%-30% depend on the indstry. It is very low compare to South East Asia and China;, but can vary depending on the industry. T
Forward sales and indent agreements are often used by local distributors and agents who work with foreign suppliers.
Forward sales agreements allow distributors to place an order with a foreign Brand BUT … it might not be the real situation you understand.
Distributors and/or their dealers may also keep inventories in order to meet the recurring needs of large customers.
Registration
The Philippine Securities and Exchange Commission must register corporate agents/distributors. Agents who are sole proprietorships must register with the Department of Trade and Industry.
Foreign companies should take into account the following factors when selecting a Philippine representative:
Whether the distributor has the financial resources to keep adequate stock, offer effective after-sales services, or offer competitive terms for payment terms
Setting up an office is an option
Better to work in step 1 without legal office there and deal with your distribution partner.
In the Philippines, sole proprietorships, partnerships, corporations are the most common forms of business organization. Others less common business structures are joint stock companies and joint accounts, as well as business trusts and cooperatives.
Franchising : hot solution
very good way to expand fast. You need a strong brand and then you can scale. They also predict a golden age for franchising by 2025
The Philippines franchise sector continues to expand, which has proven that franchising is still a powerful tool in economic development. This sector contributed 7.8% of the country’s GDP
- Food franchises accounted for 80% of total revenue.
- They were valued at $10.8 million.
- Non-food categories generated $2.68 billion.
The trend is growing in retail and the service industry, especially for health and beauty products and affordable indulgences such as salons and spas. PFA says it is a great time to invest in franchises and ride the wave that the industry’s recovery. . But only those who can adapt to this new reality will be able to take advantage of it.
Marketing in Philippines is digital
Digital marketing is your best option. cost effective and popular, you can reach target audience with social media, Facebook Instragram, with localization strategy.
Distributors in Philippines LOVE digital brands, dynamic companies. It will help them to reach new markets.
CONCLUSION
The use of local agents or distributors improves the opportunity for sell in Philippines, no doubt about this. There are currently 2 types of Distributors in the Philippines: stocking distributors and indenters.
We can help you to find distributors in Philippines, just email us and we will contact you