Many exporters, while they are dealing with overseas companies, are tempted to try importing – but be wary of licensing restrictions.
Ins and outs
The flipside of export is import. Many exporters also double as importers in the same transactions. Products are sometimes manufactured overseas, imported into Australia for packaging or perhaps an additional part and then exported back overseas.
I had a client recently seek my advice about their relationship with a Korean manufacturer, who was manufacturing the client’s children’s product for import and distribution into Australia.
The manufacturer also holds a licence to manufacture and distribute similar products for a couple of large, well known worldwide brands in the Asia/Pacific region.
My client, who is in competition with the other brands, sought to become a sub-distributor of the other brands in Australia so that they may have a monopoly, so to speak, in the market.
There was some confusion about whether my client would act as an agent or a sub-distributor, which from my past blogs you will know is an important distinction for the purposes of determining liability and responsibility for the products.
My first question to them was “what does the manufacturer’s licence agreement say?” They didn’t know.
In situations where you are seeking a “sub” right from the “master” right holder in either an import or export relationship, it is crucial to check to see whether that person has the right to appoint a sub-distributor, agent, sub-licensee or whatever it is that you want to be.
You need to ascertain whether the original licensor needs to approve you as a sub-distributor. Failure to do so could result in you not being able to fulfil orders from retailers because the licensor decides that you don’t have the right to order them.
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