Export management company (EMC)
Independent private company that acts like an export department for several non-competing manufacturers and suppliers. Export management companies can be quite varied.; they can be either local or foreign-owned, and operate on either a commission (as an agent), a fee basis (as a consultant) or taking possession of the goods for direct export. The EMC also has the ability to appoint sales representative in importing countries, promote goods and services of its clients, arrange transportation, provide warranties and after-sales-service, and extend import credit. The Export Management Companies can act as:
- An external export sales department, which represents the product of its clients along with various other non-competitive manufacturers. The relationship with its clients is established through an International Sales Representative Contract.
- An agent for those exporters that are domestic. The EMC establishes the marketing presence in foreign markets soliciting orders from foreign customers in the name of the manufacturer. Invoicing is done of the name of the manufacturer and the EMC helps the manufacturer with all details of the export transaction. The EMC may suggest the export price, but the principal has the final say on even whether to accept the order. The relationship with its clients is established through a International Commercial Agency Contract.
- A consulting company with a broad experience and knowledge in the field of exports. Export management consultants typically do not hold title to exported goods, making money instead from commissions paid on each export. The relationship with its clients is established through a International Consulting Contract.
- An exclusive distributor on a buy-sell basis. The EMC buys manufacturers at a set price and resells to foreign customers at a price established by the EMC. In this case, the EMC is responsible for invoicing and bears the risk on nonpayment. It is very important to note, that the EMC is acting as a distributor, the manufacturer may have no control over the export price and not even know the foreign clients are. The relationship with its clients is established through a International Distribution Contract.
Export management companies are similar to trading companies, but have some important differences because trading companies:
- Specialize mainly in international purchasing and selling on behalf of foreign clients, while an ETC has no loyalty to a particular manufacturer. They are seeking the best terms for their clients.
- Usually buy products in big orders and pay cash to suppliers.
- Identify what foreign buyers want to spend their money on and then searches domestic sources willing to export, in comparison with Export Management Companies, which attracts buyers.