Working with agents and distributors in Hong Kong and Macau is very much like working with agents and distributors in the United States. An agent takes orders in the supplier's name. Distributors act in their own name and may stock products purchased from the manufacturer for resale.
Hong Kong and Macau have no special legislation regarding agents and distributors. Virtually anything to which both sides can agree to and put into a written contract is acceptable and enforceable; this includes restrictions on territory and a grace period for termination of the agreement. U.S. firms should consult local legal counsel when drafting contract terms. Items that are often in contracts include:
• Exclusivity and sales territories – businesses should be careful about granting an exclusive agency too soon or in too large a territory if the agent is to have coverage beyond Hong Kong or Macau;
• Proprietary information – local laws prohibit theft of intellectual property, but prevention of piracy is always less expensive and more effective than post-facto remedial legal action;
• Levels of sales activity – set specific targets and goals the agent or distributor must meet in order to maintain or renew the agreement;
• Payment terms;
• Quality control – inspection – verification;
• Legal jurisdiction - generally, Hong Kong is chosen, but another location sometimes (U.S. or Macau) may be specified; and
• Covenants restricting business activity following cancellation of the contract.
There are many types of agents and distributors in Hong Kong and Macau, ranging from those who simply stock retail stores with standard items to agents who provide sales, engineering and technical support for complex systems. It is common for a single company to deal in a wide variety of products in a particular sector. Agents and trading companies may be less specialized than companies in a large economy like the United States, but the best ones are focused and have contacts in a specific line of business.
Although it is possible to identify distributors in Macau, many Hong Kong distributors are capable of covering Macau as well.