Signing Distributors/Agent Agreements

An Expert's View about Business Administration in China

Last updated: 22 Feb 2011

9.3 Points to Note in Signing Agreement with Distributors/Agents

9.3.1  Sales Behaviour

1. Distributors may only sell the manufacturer's goods in their assigned regions and not across regions.

2. Before the goods leave the factory, information on the distributor may be added onto the products.

3. Distributors cannot wholesale their goods to regions covered by other distributors. Those who breach this rule have to buy back the goods and pay a fine; they may even have their distributors' rights rescinded and face legal action.

4. Manufacturers may announce their standardised prices through advertisements in a move to standardise the retail prices within the same region.

9.3.2  Complaint Procedures

1. If a distributor finds out that its products are being sold through other sales channels in the same region, it should collect the relevant information and evidence and lodge a written complaint with the production enterprise immediately.

2. Upon receipt of the distributor's complaint, the manufacturer should send a senior sales manager to the region to investigate the matter.

3. The manufacturer should, based on information and evidence collected from on-site investigations, assess the situation involving the parallel goods and the degree of damages done to the distributor.

4. The manufacturer should penalise the supplier of the parallel goods and compensate the distributor in accordance with the relevant regulations.

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Posted: 21 February 2011, last updated 22 February 2011

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