Jun 18, 2014

Finding a Distributor or Agent to Sell/Market Your Products in the South Korean Market

Finding a quality distributor for your products is not an easy task in Korea.  We regrettably have dealt with numerous issues related to distributors not paying invoices, misrepresenting products, violating intellectual property rights and even selling fake products alongside the real imported products.

The major reason for these occurrences is the client to quickly rushing into "opportunities" without vetting out a distributor and poorly drafted distributions agreements.

Many distributors in Korea are fantastic, others are mere order processors and some are downright criminals.  It is not too difficult to avoid the latter two if you consider, at least, some of the following:

10 Ten Things to Consider Prior to Doing Business with a Distributor in Korea.
  1. Has the Korean distributor worked with other foreign companies? If not, you are, likely, dealing with a very inexperienced distributor.  Check, also, if the distributor was educated abroad.  We find that those with, only, locally experience have a near impossible chance of succeeding in satisfying the needs of foreigners.
  2. Has the Korean distributor worked with major Korean companies? If not, you may be talking to the wrong distributor. 
  3. Is the Korean distributor solvent? 
  4. Does he/she have an office and staff? Too many distributors in Korea are nothing more than a man with a briefcase and a mobile phone. A successful distributor, normally, has an office with staff. 
  5. How long has the distributor been in business? Sometimes you can find distributors with, only, a few years experience with access that you may need, however, this is the exception and far from the rule. This exception is, normally, in products that may be new to Korea. 
  6. Has the distributor provided you with a marketing and distribution plan? If not, he may be just an pamphlet pusher and order taker. 
  7. Does the Korean distributor have a capable sales force? Don't just talk with the company's CEO - talk to the day-to-day sales staff. Look for high turnover. 
  8. Did the Korean distributor provide sales targets for the short, intermediate and long-term? If not, he may, again, be just a order taker. 
  9. Have you conducted a background check on the distributor and the distributor's management? This should be performed by someone who is intimate with the realities of doing business in Korea. 
  10. Have you drafted a distribution agreement that is tailored to the Korean market? Yes, your overseas agreements are not good enough for Korea. 
  11. Have you done a market study by a professional in Korea and does the distributor seem to understand the market that you now understand from the study? Get the market study done by someone on the ground in Korea and coyly review the market study with the distributor in order to gauge his understanding of the market.
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Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. He is ranked, for Korea, as one of only two non-Korean attorneys as a Top Attorney by AsiaLaw.