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Distribution Channels

There are no regulations in the Federal Republic of Germany which bind foreign suppliers to a specific distribution channel.

In the case of direct distribution, manufacturers supply the goods without any interference by the trade directly to the end user.

Indirect selling methods are mainly used to sell industrial goods in the Federal Republic of Germany owing to the relatively high cost of market entry. Foreign suppliers can sell their goods through independent traders (importers, wholesalers, retailers) or through sales agents such as commercial representatives, commission agents and exclusive representatives (independent dealers). There are special trading companies for importing goods from abroad and selling them to domestic producers and dealers. Further information on these import companies can be obtained from:

Bundesverband des Deutschen Groß- und Außenhandels e. V. (BGA)
National Federation of German Wholesale and Foreign Trade Association
10873 Berlin
Tel: 011-49-30-59 00 99 50
FAX: 011-49-30-59 00 99 519
Internet: www.bga.de
Email: info@bga.de

The import companies mostly specialize in goods and more rarely in countries or economic regions.

Wholesalers and retailers are very active in the import business. This is particularly true of the consumer goods sector. Well over half of imported consumer goods such as textiles, furniture or foodstuffs are sold with the help of supermarkets, mail-order companies, department stores as well as other buying associations of the retail trade and cooperatives.

For foreign business partners who systematically supply the German market, but do not want to set up a branch office of their own, there are opportunities for cooperation with sales middlemen. This group of legally and economically independent sales middlemen comprises commercial representatives, commission agents and dealers.

Commercial representatives have turned into a cost-effective sales alternative and can make it easier for small- and medium-sized companies in particular to gain access to the market. The commercial representative works on a commission basis as a self-employed business entity on behalf of and for the account of third parties. It is a standard procedure in the Federal Republic of Germany for a commercial representative to act on behalf of several companies often supplying mutually complementary product lines. Due to the regional distribution of businesses, it may -- on the other hand -- be advisable for the foreign supplier to cooperate with several commercial representatives at the same time.

Centralvereinigung Deutscher Handelsvertreter-
und Handelsmakler-Verbände (CDH)
Central Federation of the German Association
of Commercial Agents and Brokers
Am Weidendamm 1 a
10117 Berlin
Phone: -49-30/72625600
Fax: -49-30/72625699

Internet:www.handelsvertreter.de

helps to find contacts with suitable commercial representatives.

In contrast to the commercial representative, the commission agent conducts business in his own name on behalf of a third party. He also works on a commission basis but he can claim such commissions generally only when the transaction he has contracted with the third party is actually completed.

The sole/exclusive distributor (often called a dealer) conducts his business on a commission basis or on his own account. When buying and selling imported goods on his own account and in his own name, he is an independent importer and not an agent under German law.

SOURCE: GERMANY INFO