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goods in this country. Since this may be an important element in the contract of purchase, the importer should carefully investigate the dependability of the agent and his ability to fulfill this service. The importer should also ascertain the authority of the agent to act for the seller, and by what acts of the agent the seller will be bound.
EXCLUSIVE RIGHTS OF FOREIGN AGENTS
While the American importer may sometimes make direct contact with the foreign manufacturer or exporter having a selling agent for the importer's territory, the agent frequently has exclusive selling rights, and a commission must be paid by the seller, even though the agent does not handle the transaction. Thus little saving in cost can be effected by buying directly from the producer. However, in cases where, because of the irresponsibility of the agent, shipments are delayed and goods are not received according to specifications the importer might profitably maintain direct relations with the seller.
THE FOREIGN EXPORT MERCHANT
The foreign export merchant is the counterpart of the import merchant. Both may buy and/or sell for their own accounts, carry merchandise in stock, extend credits, and otherwise conduct themselves as regular wholesalers. They may often function in the capacity of agents, on a commission basis for both buyers and sellers. They may be both exporters and importers.
The principal function of the foreign export merchant is the purchasing of merchandise from manufacturers and producers in the interior points of the country of supply and the assembling and packing of these goods at coastal points for export shipment. He takes title to the goods and assumes entire financial responsibility for their distribution. In this capacity the foreign export merchant eliminates the necessity of the American importer's maintaining contact with numerous small foreign producers and manufacturers. By buying in large quantities, the export merchant performs a service which the small importer is financially unable to perform for himself.
The foreign export merchant often specializes in one or more products. This is true in many lines of manufactured and semimanufactured goods which require experts in their selection. For this reason, American import manufacturers, retailers, and wholesalers often purchase from the export merchant direct, eliminating the added cost of purchasing through importing middlemen in the American market. The selection of the foreign export merchant as a source of supply depends to a large extent on the nature of the product and the location of the source. Thus, the export merchant may be the best source of supply for any given product in one market, whereas in another market the same product may be more effectively purchased through an American broker, purchasing agent, or any of the other types of importing middlemen.
The organization of the export merchant depends on the size and character of his business. The larger foreign export merchants usually maintain branches in their principal American selling areas, and American importers may purchase as effectively from them as through the home office. These branches, however, are often estab
lished for sales promotion as well as sales of the exporter's products and in many cases are equipped to render assistance to the importer in developing consumer markets.
FOREIGN BROKER OR FACTOR
Corresponding to the American import broker is the foreign broker or factor. Their functions are essentially similar in nature, except that the latter is located in the foreign market, is close to the source of supply, and locates sellers only in the market to which he is attached. He is frequently employed by all types of importers, even the import broker, and usually specializes in purchasing on the wellorganized commodity markets. In such market centers as London, Amsterdam, or Hamburg, the American importer may find it to his advantage to retain the services of the foreign broker for maintaining contacts with sources of supply. Rubber may thus be purchased by this method in London and Singapore. Wool may also be purchased in London through the foreign broker. In Argentina hides and skins are regularly purchased by this method, and frequently the American tanner will buy through the broker in the United States, who, in turn, purchases through the Argentine broker. In the Netherlands the services of the foreign broker at the tobacco auctions are practically indispensable,
In contrast to the foreign broker, the American importer may employ foreign "commissionaires" to make purchases, assemble, and forward the goods upon order. They are in effect foreign purchasing agents. Commissions are usually paid to the commissionaires" by the purchaser, whereas the broker is paid by the seller.
AMERICAN TRAVELING BUYERS
The large American importer may find it to his advantage to maintain traveling buyers abroad. As the name implies, such an employee travels from country to country as the source of supply and the purchasing season demand, and performs the purchasing function for his employer. He is a specialist in a limited line of goods and is thoroughly acquainted with marketing conditions surrounding their purchase and sale.
DISTINCTION BETWEEN BRANCHES, AGENTS, AND BUYERS ABROAD
The traveling buyer differs from the "American buyer's branch” or foreign agent in that he is not located in one particular country but moves from one source of supply to another. This is considered an advantage over other methods of import purchasing, because the traveling buyer has an intimate contact with world markets which facilitates the location of adequate sources of supply. The American import merchant and also the import broker may be able to contact most sources of supply, but since they act in the same capacity for other buyers of foreign goods their interest in any one customer is not as great as that of the expert traveling buyer in the needs of his employer. The latter is free from undue influence and may be relied upon to obtain the best-quality merchandise.
Traveling expenses of such a buyer must be provided for by the importer, and they are much larger than traveling costs in the United States. Furthermore, unless the American traveler can speak the language of the markets he visits, he must employ an interpreter of good repute. For this reason, only large importers of merchandise may economically maintain a traveling buyer.
The buyer may have full authority to enter into purchase contracts and bind his employer thereby, or he may have only authority to transmit the offers of prospective sellers to his home office for acceptance. In some cases a power of attorney is given as proof of the validity of his status. The authority of the buyer depends, to a large extent, on the customs and exigencies of the trade. When the buyer is traveling far from home, and communication expenses are heavy, he may have full authority, but when there is a narrow market for the goods in the importing country, he may be instructed merely to negotiate for offers so that the home office may make the final decision in accordance with local market conditions. As a general rule, however, an annual purchasing budget is drawn up in advance, and the buyer is advised as to the grades and amounts of merchandise he is to purchase.
RETAILERS' TRAVELING BUYERS
In some cases, notably department stores, the department manager is the buyer for his own department, and makes periodic trips abroad to make purchases for the department. This arrangement is advantageous in that the same person charged with supervising sales is also the buyer. In cases where the combining of this dual function in the same person is impracticable, it is considered advisable to have the buyer spend part of his time in the home office each year to learn merchandising and sales conditions, so that sales and purchases may be effected in line with a definitely established policy.
SUBSIDIARY FUNCTIONS OF TRAVELING BUYERS
Traveling buyers sent abroad do not necessarily do direct purchasing. They sometimes work through the brokers, commissionaires, or merchants in the foreign country. However, they are generally able to supervise the purchasing and are in a position to obtain first-hand market information. The buyer's trip may be, in some cases, entirely justified even when he merely inspects merchandise and establishes personal relations with the seller. Of course, the ultimate objective is direct purchasing by the buyer from the producer or in the primary markets. It is often difficult to establish such relations. Expert buyers in the domestic market may not be qualified as foreign buyers, either, because of language requirements or lack of sufficient knowledge of the peculiarities and customs of the foreign market. Qualified foreign buyers are difficult to retain in many instances, because they hesitate to reside for long periods outside the United States.