Working with Export Partners in the European Union

Western Europe is a continent in flux as it undergoes transformation to a single market system - the European Union (EU). The pace of change in Europe leads to confusion and requires US exporters to be cautious when choosing agents and distributors for their products to ensure success. The use of English as the universal language of business is increasing. In addition, single currency accounting (the Euro) is fostering cross-border markets and distribution. Nonetheless, much of the pre-EU system, including the old national markets and distribution systems, varying regional business customs and national legal differences, is still firmly in place. The reduction of market barriers and borders has increased competition. In addition to finding a distributor who is knowledgeable about your specific products or industry, it is highly advisable for to work with individuals who are willing to keep you abreast of changing EU requirements.


US business relationships are relatively straightforward to navigate and enter/exit, whereas Europeans spend more time building rapport and trust prior to entering partnerships. Agents and distributors are viewed as partners to a manufacturer, and the European legal system reflects this greater emphasis on relationships. Examples include:

Agent vs. Distributor

Despite greater entitlement to termination payments, an agent isn't necessarily better than a distributor for the US exporter in Europe. A distributor has control of pricing, whereas using an agent provides a manufacturer with:

How to decide which one to choose? A rule of thumb is that distributors are generally recommended for companies who are new in a market or seeking to grow, and agents are preferred for a manufacturer's more mature/developed markets. In Germany, the best solution is for a company to set up a direct sales office, due to that market's large size and the competition from European-made products. Germans have a reputation for taking a company less seriously if it does not establish a presence in Germany.

Legal Counsel

Good, clear legal agreements are the best protection for American businesses working in Europe. It is vital for your business to work with attorneys familiar with EU regulation, as well as the legal systems and judicial trends for the individual countries in which you currently or are planning to export. In addition to the complexity of navigating notice periods and contract termination payments, non-competition clauses and protection of intellectual property rights are key components of any contract with a European representative. A growing legal tendency in cases regarding termination disputes is for European courts to rule that the representative was actually an employee of the manufacturer, making exporters liable for accrued social security, fines, and interest.


American businesses are encouraged to invest time in the process of finding the right representative for their product. Once the relationship is established, remaining in close communication with the partner and responding quickly to requests to help mitigate the distance factor. A personal relationship with a representative is useful, as well. While a strong legal foundation protects your interests, it will not necessarily build your business. The EU is an exciting growing market with tremendous opportunity and strength. It is well worth the investment necessary to enter. For more information about the EU, see reviewed websites under this heading.

More information about International Business and doing business in the Europe Union can be found in World Trade Magazine. The full article "The European Minefield" by Andrea Knox may be found in the September 1999 issue.

Article by: Jessica Brown
Web Editor: Shuai-Hua (John) Chen