Entering the Kuwaiti Market
Entering the Kuwaiti Market Last updated on Tuesday 20th April 2010
In order to enter the Kuwaiti market, two options are available:
1. Direct sales
This is the most flexible way to enter the market, but it does require regular visits to Kuwait. It is preferable if you have a few major clients such as showrooms or supermarkets or if you deal in luxury items with a limited market.
You will select a local company as your agent. There are two types of agents:
a. A commission agent who acts purely as an intermediary, or
b. An agent who imports directly from outside Kuwait and serves as distributor, wholesaler or retailer within Kuwait.
The agency agreement
There must be agreement on a contract or document endorsed according to the requirements of the Kuwait Ministry of Commerce and of the relevant authorities in your own country. As both of these are subject to change from time to time, you should be in touch with your embassy in Kuwait, your local Chamber of Commerce or your Ministry of Foreign Affairs (Department of State in the USA).
The contract should be very specific as to the extent of exclusivity agreed upon. In other words, does the agreement cover only Kuwait or other countries as well? It is also possible to give exclusivity to only one line of your products and use different agents for others.
The agency agreement is of course for a pre-determined period but a minimum of one year is generally expected. It is also advisable to have a minimum quantity per annum purchase clause. Should the contract be dissolved, indemnity must be paid to the agent if there has been no default on his part.
On the other hand, if you break the exclusive agency agreement, you risk being banned from dealing in the Kuwaiti market. It is not unheard of to dissolve agreements by mutual consent. Further, if both parties consent, the Chamber of Commerce can act as arbitrator. If not, court proceedings will be involved. It will be obvious that it is always wise to employ a local lawyer where important contracts are concerned.
Contracts must be in writing and must be authenticated by the Kuwaiti Embassy in the exporter's country of residence and also registered with the Ministry of Commerce. The contract should state the activities to be undertaken, the duration of the partnership, the agent's scope of authority and the agent's remuneration. Both parties are free to arrange their own financial terms.