Distribution

Distribution refers to a seller granting a buyer (distributor) the right to sell products in a specific region or market through a distribution agreement. The distributor purchases the goods outright in its own name, assumes profits and losses, and resells them. Unlike agency, a distributor takes ownership of the goods and earns a profit margin from buying and selling rather than a commission. This is commonly used when companies expand into overseas markets by selecting local distributors to handle distribution, after-sales service, and marketing. Key points: specify the distribution territory, term, exclusivity or non-exclusivity, minimum purchase quantities, price restrictions, intellectual property protection, and termination clauses. Compared with 'exclusive sales', distribution is not necessarily exclusive; compared with 'agency', the distributor bears the risks itself. Practitioners should review the distributor's creditworthiness to avoid brand damage from cross-territory sales or low-price dumping.