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Unit 15 Agency

Learn how to write effective agency letters for dealing with international trade agencies. This unit covers the structural parts of agency letters, sample letters, and important information to include.

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Unit 15 Agency

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  1. Unit 15 Agency Teaching Objectives:  Knowledge Requirements: 1 To help students to learn and master key words, phrases and sentence patterns 2 To enable students to know the kinds of claims  Competence Requirements: To enable students to know the main points in writing letters to deal with agency

  2. Part One Introduction • In international trade, business is handled not only by direct negotiations between the buyers and the sellers, but also in the way of agencies. An important reason for appointing a foreign agent is his knowledge of local conditions and of the market in which he will operate. He knows what goods are best suited to his area and what prices the market will bear. • The principal pays the reward to the agency according to the sales volume in the form of commission. There are mainly two kinds of the agent’s form: • 1. General agent • The agent does not enjoy the right of selling the goods exclusively in the given area, selling the goods for principals and pays in commission that just accepted.

  3. 2. Exclusive (sole) agent • The principal authorizes the agent enjoys the right, which is under some agreement to sell a certain goods exclusively in a given area over a period. • The first step in choosing an agent is to make sure whether the firm or person appointed has sufficient means to develop the trade and whether the firm or person has reliable connections in the designated area. The company should make searching inquiries into the qualifications, experience and personal agents, for example: •  Their reliability and financial soundness; •  Their market connections and the effectiveness of their sales organization; •  Their technical ability to handle the goods to be marketed; •  The nature and extent of other agencies they may hold, and in particular whether these are connected with the sale of competing products.

  4. Part Two Agency Letters & Samples • Analysis of agency letters & replies may help reinforce the necessary information and strengthen your impression and understanding of the structural parts of agency letters. • 2.1 Structural Parts of Agency Letters • Analysis of Specimen Letters: Asking for Agency (See the following table)

  5. Upon the above analysis, we may come to the impression and conclusion that: • Structural parts of letters for agency consist of the following sections: Section 1: Refer to your source of information; Section 2: Indicate importance of the business & asking for the new partner to offer you their agent; Section 3:Provide detailed information about your firm; Section 4:Promise the recipient that everything will be executed to their satisfaction; Section 5: Express thanks for the help & cordial expectation for a prompt favorable reply. • Besides, all or some of the following matters may be covered in the agency letters: •  nature and duration of the agency •  territory to be covered •  duties of agent and principal •  method of purchase and sale

  6. 2.2 Sample Letters of Agency • Sample 1 Seeking for Agency • Dear sirs, • like to seek a company or individual who would be willing to represent us. • Our company is a leading company specializes in various high quality clothes, and we had many outlets throughout several countries. The color and the style of our brand clothes are very much to the taste of the market. • The representative we are looking for will be experienced in the field of handling clothes, should already be doing business with buyers and having built close links with market. • If you are interested in representing us in China, please contact us. • We look forward to hearing from you! • Yours sincerely, • (signature)

  7. Sample 2 Applying for Agency • Dear sirs, • We understand from B/E Corporation of Kansas city that you are looking for a reliable firm with good connections in the textile trade to represent you in Brazilia. • Having had experience in marketing textiles, we are familiar with customer’s needs and are confident that we could develop a good market for you in Brazilia. We have spacious and well-equipped showrooms and an experienced staff of scales representatives who could push your business. • We should be pleased to learn that you are interested in our proposal and on what terms you would be willing to conclude an agency agreement. • If you require, we can provide first-class references, but for general information concerning our standing in the trade we suggest you refer to B/E Corporation. • Yours faithfully, • (signature)

  8. Sample 3 the Application for Sole Agency • Dear sirs, • We recently attended the International Photographic Exhibition in Shanghai and were impressed by the quality, attractive design and reasonable prices of your cameras. • Having seen your full catalogue, we are convinced that there is a promising market for your products here in China. • If you are not already represented here we should be interested in acting as your sole agents. • As leading importers and distributors of more than 30 years’ standing in the photographic trade, we have a good knowledge of the Chinese market. Through our sales organization we have good contacts with the leading retailers. • We handle several other agencies in non-competing lines, and if our proposal interests you we can supply first-class references from manufacturers in Britain. • We firmly believe that an agency for marketing your products in Jordan would be of considerable benefit to both of us and we look forward to hearing that you are interested in our proposal. • Mr. Wu, our Purchase Director, will be in England during May and will be pleased to call on you if we hear from you positively. • Yours faithfully, • (signature)

  9. Sample 4 Manufacturer’s Reply • Dear Wang, • Thank you for your letter of 28 March and for your comments on our cameras. • We are still a young company but are expanding rapidly. At present our overseas representation is confined to countries in Western Europe where our cameras are selling well. However we are interested in the chance of developing our trade further afield. • When your Mr. Wu is in England we should certainly like to meet him to discuss your proposal further. If Mr. Wu will get in touch with us to arrange a meeting, we can also arrange for him to look around our factory and see for himself the quality of the materials and workmanship put into our cameras. • Yours faithfully, • (signature)

  10. Sample 5Declining a Request for Agency • Dear sirs, • We are obliged to you for your inquiry regarding sole agency for the sale of our product. • After serious consideration, we think it would appear premature to discuss this matter, as the sales volume of business does not warrant entrusting you with exclusive agency at present. • Please do not misinterpret the above remarks. They do not imply dissatisfaction. However, if a bigger turnover can be realized to justify establishing the agency we should like you to represent us. • We hope you will agree with us and continue placing orders with us. • Yours truly, • (signature)

  11. Sample 6 Manufacturer’s Confirmation of Agency Terms • Dear sirs, • We were pleased to learn from your fax of 11 June that you are willing to accept an agency for marketing our goods in Saudi Arabia. Set out below are the terms discussed and agreed with your Mr. Williams when he called here earlier this month, but before drafting the formal agreement we should like you to confirm them. • 1) The agency will operate as form 1 September 2006 for a period of 3 years. • 2) The agency will be a sole agency for marketing our goods in Saudi Arabia. • 3) No sales of competing products will be made in Saudi Arabia either on your own account or on account of any other firm of company. • 4) All customers’ orders will be transmitted to us immediately for supply direct. • 5) Credit terms will not be given or promised to any customers without our express consent.

  12. 6) All goods supplied will be invoiced by us direct to customers with copies to you. • 7) A commission of 5% based on FOB values of all goods shipped to Saudi Arabia, whether on orders placed through you or not, will be payable at the end of quarter. • 8) A special del credere commission of 2% will be added. • 9) Customers will be required to settle their accounts with us direct. A statement will be sent to you at the end of each month of all payments received by us. • 10) All questions of difference arising under our agreement will be referred to arbitration. • Please confirm your agreement to these terms. A formal agreement will then be drafted and copies sent for your signature. • Faithfully yours, • (signature)

  13. Sample 7 Agency Arrangement • Agency Arrangement • between • Bank of China • and • National Bank of York 1. This arrangement is available for transactions in either direction between the following • offices of the above banks: … 2. Control documents • Each Bank shall receive from the other Bank the authorized signatures and the terms and • conditions. The Bank of China shall also supply to branches of the National Bank of York’s the • documents mentioned above for mutual use. 3. Transactions originated with Bank of China: • A. Remittance. All Bank of China’s offices mentioned in (1) may directly draw on National Bank of York’s offices mentioned in (1) by drafts, mail transfers or telegraphic transfers.

  14. B. Commercial letters of credit. All Bank of China’s offices mentioned in (1) any issue by mail or by cable commercial letters of credit directly through National Bank of York’s offices mentioned in (1). Reimbursement for such transactions will be effected according to the stipulations of the specific letter of credit. • C. Collection. All Bank of China’s offices mentioned above may send collections directly to National Bank of York’s offices mentioned above with specific instructions on the disposal of the proceeds. 4. Transactions originated with National Bank of York: … • (signatures)

  15. Summary • Business companies which do not have a branch office or representative in a place may appoint an agent to act on their behalf. The agent appointed must act in strict accordance with the provisions of the agency agreement signed between himself and his principal.

  16. Exercises 1. Translate the following terms into Chinese. • 1) Fiscal year • 2) Purchasing agent • 3) Sole agency agreement • 4) Exclusive distribution • 5) Del credere commission • 6) Brokerage     • 7) Representative      • 8) Validity • 9) Control documents       • 10) Fulfill a duty

  17. Answer: • (1) 财政年度 • (2) 采购代理人 • (3) 独家代理协议 • (4) 总经销 • (5) 保付代理人佣金 • (6)佣金；经纪费 • (7)代表 • (8) 有效期 • (9) 检查文件 • (10) 履行职责

  18. 2. Translate the following sentences into Chinese. • (1) We would appreciate it if you could consider our application to act as your agency for the sale of your shirts in China. • (2) We decide to appoint an agent to handle our export trade with your country. • (3) Having obtained a reputable position and thorough knowledge, we ensure that any goods entrusted to us will be executed to your satisfaction. • (4) We are willing to appoint you as our exclusive agent in your country on condition that the annual sales value must reach US$650,000. • (5) The representative we are looking for will be rich experienced in trade, and should already be doing business of cosmetic, having contacts with suitable outlets. • (6) We shall do all in our power to assist you in establishing a mutually beneficial business relation. • (7) Referring to your request to act as our sole agent for toys, we will consider when business between us has been further extended. • (8) The Agency Agreement has been drawn up for duration of one year, automatically renewable on expiration for a similar period unless a written notice is given to the contrary. • (9) The territory covered by this agent agreement is confined to Switzerland only. • (10) You undertake not to sell any other foreign product of the same line and competitive types.

  19. (1) 如能考虑我们担任贵公司在中国的衬衫销售代理，我们将不胜感激。 • (2) 我们决定指定一家代理商经营我方对贵国的贸易。 • (3) 由于具有良好的声誉和贸易上丰富的知识，我们确信你方委托销售的商品会使你方满意。 • (4) 我们愿意任命你方为在你国家的独家代理，条件是你方每年的销售量要达到650000美元。 • (5) 我公司要联系的代理商，必须在贸易方面有丰富的经验，目前正从事化妆品贸易且与市场有联系的代理商。 • (6) 我们将尽最大努力和你方建立互惠互利的商贸关系。 • (7) 关于你方要求在玩具方面做我方的独家代理的问题，在我方业务进一步扩大后再予考虑。 • (8) 本代理协议签署的有效期为一年，到期时，如果未用书面提出异议,本协议将自动延长一年. • (9) 本代理协议所包含的地区只限于瑞士. • (10) 你方不能销售其他国外相同和与此有竞争性的产品.

  20. 3. Translate the following short passages into English. (1) 已注意到你方要做我方在你处的代理的要求,但在此之前,请把你们的推销计划和在你地市场可能达到的年营业额告知我方. (2) 我们认为在现阶段谈论代理的问题还为时过早. (3) 兹通知你方:这一具体业务有由***代办,该公司做我方独家代理人已很久. (4) 如能考虑我们担任贵公司产品销售代理的申请,我们将非常高兴. (5) 我们很高兴有你方担任我方鞋子在英国的独家销售代理.

  21. (1) We have noted your request to act as our agent in your district, but before going further into the matter, we should like to know your plan for promoting sales and the annual turnover you may realize in your market. • (2) We think it premature for us to discuss the question of agency for the present. • (3) We wish to inform you that this particular line has already been taken by ***, who has acted as our sole agent for quite some time. • (4) We should be glad if you would consider our application to act as your agency for the sale of your products. • (5) We shall be glad to offer you a sole agency for the sale of our shoes in England.

  22. Multiple Choices • (1) We give you the exclusive sales ____ in your country. • A. representative B. agent C. representation D. agency • (2) ____ our general agent, you would also have to look after the advertising. • A. Being B. For C. As D. To be • (3) Your proposal ____ transact business ____ this Bank is agreeable. • A. and; with B. to; with C. to; for D. for; with • (4) Here is a list of our signatures and branch offices ____ your use. • A. for B. to C. in D. of • (5) They ____ that the subsidiary do business with the principal and at the allocating prices. • A. propose B. suggest C. noted D. announce • (6) ____ on our past experience, we suggest establishing a branch office in that city. • A. basing B. based C. relying D. rely • (7) We appreciate your suggestion ____ establish agency relationship between our banks. • A. to B. that C. we D. for • (8) We confirm that we agree ____ your suggestions made in our last letter. • A. with B. on C. to D. that • answer: (1)C (2)C (3)B (4)A (5)B (6)A (7)A (8)C

  23. Letter Composing: • Write a letter applying for sole agency for cotton goods in Middle Eastern, stating your many years’ experience in the business and how well you know the market.

  24. Dear Sirs, • We would like to inform you that we act on a sole agency basis for a number of manufacturers. We specialize in finished cotton goods for the Middle Eastern market. Our activities cover all types of household linen. Until now, we have been working with your textiles department and our collaboration has proved to be mutually beneficial. Please refer to them for any information regarding our company. • We are very interested in an exclusive arrangement with your factory for the promotion of your products in Bahrain. • We look forward to your early reply. • Yours sincerely,

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