I'm thinking of becoming the sole distributor of an industrial product. Right now, I'm working full-time as a project manager at a German multinational. I spent 7 years in Germany and speak the language fluently, so I'm thinking of starting by approaching a German manufacturer who is not represented in SE Asia. There are many, many things to think through:

a) I can obviously only address smallish companies, since the large ones would be more interested in working with large established distributors like KVC which is very well organised.

b) I have a full-time job upwards of 10 hours a day, so I can't provide face-to-face sales consultations or travel to some company to negotiate prices or even install the thing. So I'm limited to plug-and-play products of relatively low dollar-value which do not require maintenance (I am alone in this) or much in terms of after-sales service.

c) I don't have much cash to invest as working capital, so I cannot keep stock, unless I can persuade the company to give me stock on consignment (is this customary?).

d) Should I establish a company first before writing to them? How honest should I be about my situation with them?

My value add would be in getting the products listed in all the proper industry catalogs in SE Asia, buying advertising (on my own money?), responding to enquiries from corporate purchasers, preparing quotations, organising the shipments etc. I'm not interested in profits at the moment. I just want to get the ball rolling.

I'm obviously not going to be a distributor of choice. I hope to persuade them to nonetheless work with me with the following arguments:

a) It's likely a larger company would have little interest in a product line that does so little volume

b) Hey, I approached you first!

c) You'll get to learn about the competitiveness of your offering in SE Asia by piloting in a micro scale with me. You'll learn who your competitors are, what they're doing, and how your product in it's present form fairs. I'll give you constant feedback.

Your opinions, and better still, experience would be nice.

I have the same experience .

About 2 years back ,i became the sole distributor for a certain product from china. They were willing to give us a better price but certainly not giving us stock on consignment. Sales at first were cash basis and slowly they give us credits

beginning is always like that
only cash

so u gotta find investors to flow in cash for u

i think consignment would be impossible. you might want to seek some help from the MGCC too for general setup information. speaking the language will definitely help especially if you need to discuss stuff with the staff in germany. they usually are that much easier to handle if you speak german - but i guess you know that already

It is a consumer product or an industrial product?

---

Added on August 2, 2009, 7:18 pmI have a low opinion of MGCC on this matter! I learnt German in KL with one of their employees, and even visited their office once. Our MD was president some years ago. I think they'll laugh me out the door. You have a reason for me to think otherwise?

This post has been edited by kotmj: Aug 2 2009, 07:18 PM

industrial cum service product.

Would you mind telling me the things you had to do in the past two years? Was anything particularly difficult?

Maybe you've been in entrepreneurship for some time. LOL. I was trained to be useful within large corporations.

Hmm, I'm facing the same dilemma as you too as currently I plan to distribute this brand of product which has high market share in other continents but literally no existence or presence in South East Asia market.
But here's a question, is there any competition to your product offering, and if there were, what are they like? Are they big corporations?

Are you asking me or idunnolol?

I'm not distributing anything at the moment, but am doing everything I can to start doing so. About competition: If the manufacturer exists, it means there is demand for what they make. If the product sells in Europe, it also means it will sell here because there are European factories in Malaysia which will need those parts. The revenue might be tiny, but I am not aiming for world domination just yet.

---

Added on August 2, 2009, 8:05 pmOh yeah: I plan to eventually distribute a portfolio of products, not just one.

This post has been edited by kotmj: Aug 2 2009, 08:05 PM

I am directing the question to threadstarter, in which this case, happened to be you.
Interesting answer because I plan to do the same just as you, but perhaps we are targeting different customers or market.

Yeah, there are very many niches.

kotmj,

i have no experience with MGCC but i did work for IGCC a couple of years ago. and there helping interested parties with such kind of things was pretty much exactly what they did. not direclty my field though so i cant relate from personal experience. i know MGCC works on a different scale than IGCC but i would have assumed that they might be able to give you some support. dr. herret seemed like a supportive fellow when i got to know him ... about three years ago. i needed to sort some things out and he was indeed quite helpfull.

you can always try - afterall you would be their potential new member.

I always hear this but I have to say if you think like that, you may not be starting at the right path ...

I had zero when I started my trading biz, in less than 6 months I owned 2 factories and cover 80% of the market. And this happened within a red sea market.

yes, using money to earn more money is the easy path in business,
but in real biz environment, the smart way comes when you proceed through without any money, or with other's people money ....

hope this helps some ...

I had a closer look at their website and the services they said they're offering. You're most likely right. Most German companies that have any intention of entering the Malaysian market would have contacted them eventually. I must get past my reservations about their office. It's more expensively located and lavishly decorated than our MD's office, and we do way, way more revenue than them. Way more.

none particularly difficult. We just buy when consumer in Malaysia wish to have their products replace or repaired

This post has been edited by idunnolol: Aug 3 2009, 02:34 PM

There is no such thing like consignment or terms payment in import export kind of business. No money no goods.

You mean you do not keep stock? Customer contacts you, places order, pays you. You in turn place order and send payment to China, product arrives, and you ship to customer. Right?

But how does the customer know you exist? Do you receive promotional materials from the manufacturer (brochures and catalogs)?

Hi Kotmj, funny thing i am doing something silmilar but not really planning for sole distributer.
i will be based in germany before the end of the year and like you doing the preliminary groundwork.

i already have a small company registered here in malaysia and plan to open one in germany later once i get to grips with its laws. good luck on your venture.

Well if you need an independent opinion on anything German-related, you're welcome to PM me. BTW: I spent 8 months on my thesis with a company near Guetersloh in NRW.

---

Added on August 3, 2009, 8:19 pmI get it by now that I shouldn't even mention the word consignment. That being so I either distribute something where the customer will accept long delivery lead times (I order from Germany, when he does so from me), or I distribute something with a relatively low dollar value, something where the minimum order quantity is pre-financeable by me. I've actually found a product that meets these requirements. I'll need to register a company.

This post has been edited by kotmj: Aug 3 2009, 08:30 PM

danke schon. ich war auch in NRW, deutchland, in aachen. Ich hatte meine studium da gemacht und arbeite fur ein jahr plus.

Das eruebrigt sich dann

Once you place your first order, they will naturally give brochures and such. But now most will give the catalog online. About long delivery time , just use a fedex. I am one proud user of fedex and would recommend them to anybody importing items from foreign country

How about the charges? Are they economical in the long run?

I include charges to customer la, problem solve. To bring in things from europe there is only 3 way. Drive all the way. Ship it but will take 3 weeks or fly here which take 3 day. which one you prefer?

This post has been edited by idunnolol: Aug 3 2009, 11:27 PM

Spoken like a person with enormous pricing power! I'm liking the Fedex model more and more. Pay premium freight, but keep no stock.

But remember to include tax and duties that might be levied

@idunnolol, whens your next trip to europe?
im now permanently based here

Not sure though, Which part of europe your based in?

Is Fedex giving a premium rate? Currently my manufacturer using TNT express which quite costly to me(now my freight costing rate can be at 1.4 which is so high, im expected to be 1.0-1.2 max). Hence, i plan to use sea freight for bulk order as my manufacturer gives me special price as their distributors. For info, im into industrial product. The high costing freight will affect my selling price here. If you guys comments Fedex really gives premium price with good delivery, and alternative i no need to keep stock, i am keen interest to know.

Thus, the delivery term you guys opt for is CIF, FOB or ex-work? Anyone experience using local freight forwarder where manufacturer quoted ex-work factory & the local freight forwarder do the rest from factory to custom to door destination. Is this be competitive rate? or else?

Ex-work for me, Normally i use fedex for my international package and gedex will pick up from my office to the final destination.

How much will your product weight to use sea freight? Sea freight can take 2-3 weeks to arrive man

im interested in being the sole distributor of a retail product and has been searching online about how to get started. I've got the same questions as you too, so kotmj, have you found the answers to your questions yet?

Your current strong industrial customer base is more towards which area? I suggest you get a product that you are familiar with & can promote to your current customer base. If can get it from German origin then it is an added bonus due to the fact you are working German MNC & can converse in german.