Appointment of Canvassing Agent for Territory Outside the Republic

The model contract accessed on www.LawyersEzyFind.co.za provides for the option to appoint a canvassing agent outside of South Africa to market a
product. This involves encouraging potential customers to buy the product being marketed by the agent. Canvassing is often one of the
most effective means of obtaining new customers.

The use of an overseas canvass agent is a very successful and yet underrated strategy.

The key benefit of using an overseas canvass agent is the added advantage of their extensive knowledge of the target market.

The agent also provides support to the principal in the matter of transportation, reservation of accommodation, appointment with the
government as and when required. It is therefore essential that one should very carefully select overseas agent.

Merits of appointing a canvass agent
There are various types of merits associated with appointing a canvass agent:
• The appointment avoids the recruitment, training, time and payroll costs of using own employees to enter an overseas market.
• an agent is a better option to identify and exploit opportunities in overseas export market.
• an agent already have solid relationships with potential customers, hence it saves the time of the principal to build its own contacts.
• an agent allows the principal to maintain more control over matters such as final price and brand image - compared with the other intermediary option of using a distributor.

Important points to consider when appointing a sales agent:
Appointing the right canvass agent not only enhances the profit of the principal but also avoids any of risks associated with a canvass agent.
So it becomes important for the principal to take into consideration following important points before selection an appropriate canvass agent for his product.
• size of the agents company;
• date of foundation of the agents company;
• companys ownership and control;
• companys capital, funds, available and liabilities;
• name, age and experience of the companys senior executives;
• number, age and experience of the companys salesman;
• other agencies that the company holds, including those of competing products and turn-over of each;
• length of companys association with other principal;
• new agencies that the company obtained or lost during the past year;
• companys total annual sales and the trends in its sales in recent • years;
• companys sales coverage, overall and by area;
• number of sales calls per month and per salesman by company staff;
• any major obstacles expected in the companys sales growth;
• agents capability to provide sales promotion and advertising service;
• agents transport facilities and warehousing capacity;
• agents rate of commission: payment terms required;
• references on the agents from banks, trade associations and major buyers.

A key factor in any export business is clear understanding and detail knowledge of products to be exported. The selected product must be in
demand in the countries where it is to be exported. Before making any selection, one should also consider the various government policies associated with the export of a particular product.

Whether companies are exporting first time or have been in export trade for a long time, it is better for both the groups to be methodical and
systematic in identifying a right product. It is sufficient to have all necessary data "in your mind", but equally important to put everything on
paper and in a structured manner. Once this job is done, it becomes easier to find the gaps in the collected information and take necessary corrective actions.

There are products that sell more often than other product in international market. It is not very difficult to find them from various
market research tools. However, such products will invariably have more sellers and consequently more competition and fewer margins. On the
other hand - a niche product may have less competition and higher margin - but there will be far less buyers.

The fact of the matter is, all products sell, though in varying degrees and there are positive as well as flip sides in whatever decision you take.

Export Controls and Trade Sanctions

There are also risks associated with distribution and agency relationships pursuant to export controls and trade sanctions laws. Many
countries around the world have export control rules, whose objective is to ensure that sensitive items do not end up in the hands of problematic countries or terrorists.

A prior licensing requirement is imposed on the export of controlled military goods, software and technology and certain sensitive dual-use
goods (namely, items that have a genuine civilian application, but can also be put to more sensitive nefarious uses, such as terrorist or military uses).

The list of controlled items is usually set out in the relevant legislation (for example, the EU Dual Use List contained in Annex I to
the EU Dual- Use Regulation 428/2009 as amended, or the US Commerce Control List set forth in Part 774 of the US Export
Administration Regulations).

Even in relation to items not on relevant product control lists, there may be a prohibition on the export of such items if they will or may be put to a
sensitive end use (such as a military end use or an end use related to weapons of mass destruction). It is important to note that an export can include both physical shipment of tangible items and also intangible transfers of software and
technology/data (for example, by email, fax, web download or making software/technology available on an intranet site).

Export controls exist in many countries around the world. The primary international export control arrangement (the Wassenaar Arrangement)
is adhered to by 41 countries, including most EU countries, Argentina, Australia, Russia, South Africa, South Korea, Switzerland, Turkey and Ukraine.

In addition to export controls, trade sanctions restrict dealings with certain countries/territories, groups and/or individuals based on certain
foreign policy or national security concerns. Thus, by way of example, the US has a comprehensive embargo in place against Cuba, Iran,
Crimea, North Korea and Syria; no US person can do business with the foregoing countries and, furthermore, US persons are prohibited from
facilitating business by non-US persons with the same countries.

The EU also has tight restrictions in place against certain countries, such as Iran and Syria, albeit not an outright ban on doing business in these
countries. Moreover, both the US and the EU restrict dealings with other countries, including Russia and Venezuela. In addition to the country
restrictions, both the EU and the US prohibit dealings with certain designated groups, entities and individuals (for example, terrorist
groups, entities facilitating Iran’s nuclear proliferation program or individuals violating human rights in Zimbabwe).