2 min read –

When you conduct business abroad, you sometimes engage a local business partner.

You are the Principal; the local partner is the Agent.

You want your Agent to be a James Bond.

If you are not careful, you may end up with Austin Powers, a humorous parody of Agent 007.

Entertaining but with catastrophic consequences for your business.

According to Naval Ravikant, an entrepreneur and Silicon Valley investor:

“The Principal-Agent problem is the single most fundamental issue in microeconomics.

When you are the Principal, you tend to do a great job.

When you are the Agent, you may prioritize your interests over the Principal’s.”

Benjamin Franklin, one of the founding fathers of the USA, famously said:

“If you want something done, go do it yourself. If not, send someone.”

But you don’t always have the resources to personally go and handle the task yourself.

So you recruit an Agent.

Many companies forget that recruiting an Agent is a hiring process.

FIRST, you need to create a profile for the ideal candidate, tailored to your goals.

Whether you need business development, sales support, lobbying, import expertise, setting up an office, a warehouse, or something else.

Consequently, your Agent could be a consultant, a distributor, a company with a workshop, a specialist in your field, a generalist, and so on.

THEN, you hire the Agent: shortlist and select.

To attract potential Agents, you must present a compelling value proposition.

Regardless of how outstanding your products are, don’t expect Agents to line up.

FINALLY, you sign a contract.

Safeguard your interests but maintain a sense of balance.

Be cautious about key clauses such as exclusivity, country of arbitration, etc.

Contracts that are expired, poorly drafted, or even non-existent, can lead to disputes.

Some companies attempt to find their Agents by chance at exhibitions.

While this may save the cost of paying a consultant for the search, the odds of finding a good match are slim.

It may take more than 1 year to realize that this Agent isn’t the right fit.

A crucial clause in the contract is about fees and commissions.

For instance, if you are searching for a distributor of food or beverages, a success fee seems fine.

If you expect your Agent to do business development, adding a monthly fixed fee makes sense.

The reason an Agent may request a fixed fee is not solely for the financial benefit but to ensure your commitment.

Insufficient commitment from the Principal jeopardizes the Agent’s success and harms his reputation.

At CINTASIA , we find your Agent for Indonesia.

➡ We ensure that the strategies and interests of both parties are aligned.

➡ We assist you in avoiding pitfalls related to cultural factors and local practices.

➡ We support you until your first purchase order.

Contact us at bonjour@cintasia.com.