Sales Representative in South Africa

Overview by

Commercial Intermediaries

Trading Companies
  • Type of Organization
There are a number of different choices when considering the most appropriate method of entering the South African market. These include direct and indirect export (selling to a middleman such as a trader in your domestic market); licensing or contracting; joint ventures and wholly owned subsidiaries. The choice of entry strategy will depend on the specific characteristics of the market for the product in South Africa including the route that the competitors have taken and the specific characteristics of the product.
  • Type of Organization
Wholesalers take the shape of Distributors in South Africa. A distributor buys, carries stock and sell products directly to retailers. Leading distributors often have branches throughout the country.
Useful Resources
South African National Consumer Union
Department of Trade and Industry (DTI)
South African food wholesalers

Using a Commercial Agent

The Advantages
The most commonly used intermediary to start business in South Africa is an Agent (also known as a Commission Sales Representative or CSR). Agents work on a commission basis after obtaining orders from customers; while as the distributors buy, carry stock and sell products directly to customers. Agents often distribute durable and non-durable consumer goods, as well as some industrial raw materials. They may be particularly appropriate when products are highly competitive and lack a large market.
It is common to appoint a single agent capable of providing national coverage either through one office or a network of branch offices. In addition to their role as the local representatives, agents should be able to handle the necessary customs clearances, port and rail charges, documentation, warehousing, and financing arrangements.
Where to Be Vigilant
Make sure that the local agent is registered with the Director of Import and Export Control of the Department of Trade and Industry.

It is important to visit South Africa to gain firsthand knowledge of the market and personal appraisal of the appointed prospective agent.

It is also imperative to maintain close contact with the local agent so that one is aware of any import procedural change.

Most important, when appointing a agent in South African, take care to find out if the agent or any of his sister companies handles a competing product.

Elements of Motivation
Agents work on a commission basis. They are sometimes paid a retainer fee plus costs plus an incentive on deals.
The Average Amount of Commission
Commission rates range from 3 % to 25 % per concluded transaction.
Breach of Contract
It depends upon the terms and conditions of the contract. But, in case the local agent goes to court, it may be time consuming for the foreign company and favorable results can not be always guaranteed.
Finding a Commercial Agent
DTI, Department of Trade and Industry
Find Sales and Distribution Service Providers in South Africa on

Setting Up a Commercial Unit

The Advantages
With its growing domestic market, it makes sense to set up an office in the country.
Where to Be Vigilant
Setting up a commercial unit in South Africa should be considered in case the foreign company has long term business interests in the country. While setting up an office in the country, one must be vigilant about the below given aspects:
1. The rules & regulations applicable to the related industry.
2. Cost and availability of power.
3. Law & order situation.
4. Other factors to take into account include labor availability and cost, labor relations and work culture, and proximity to resources and/or markets.
Different Possible Forms of Settlement
  • A Representative Office
The purpose of such an office is to obtain market information, provide necessary promotional & service support, and explore further opportunities for business and investments.

A representative office is not allowed to undertake any commercial activity and cannot earn any revenue in South Africa.

  • A Branch Office
South Africa does not consider a branch to be a separate legal entity and needs to be registered as an ‘external company’. The rules and procedures for establishing a branch are similar to those for setting up a locally incorporated company. A branch pays no withholding tax on profits remitted to its head office. A branch office may take and fill orders and carry out a full marketing program, including advertising, recruiting a sales force, and performing promotional activities.
  • A Company
Setting up a wholly-owned corporation will involve more time and expense, but it can offer an effective means of guaranteeing better protection for proprietary information, obtaining credit, and penetrating the South African market more effectively.


Evolution of the Sector
Franchising in South Africa has grown significantly and has emerged as an important economic sector. The country provides immense potential for franchising and opportunities for starting new ventures. For more information, consult the impact of the Consumer Protection Act on franchising on FASA's Website.
Some Big Franchises
Big Al's Franchise , Fast Food
Cash converters , Business
Kip McGrath education center , Education
Multiserv , Retail
For Further Information
Franchise Association of Southern Africa
South African Franchise finder
South Africa franchise opportunities

Finding Assistance

Export Trading Companies
Export Help, Assistance for exporting in South Africa.
Recommended Resource
Department of Trade and Industry (DTI).
Find more on about Selling to South Africa.

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