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FY 1999: Bangladesh |
IV. MARKETING U.S. PRODUCTS AND SERVICES Distribution and Sales Channels The primary channel for selling U.S. goods in Bangladesh is through a resident agent or representative (importer, wholesaler, or distributor). An agent may be appointed on an exclusive or non-exclusive basis. Approximately half of Bangladesh's imports are made through tender or direct purchase by public sector corporations, autonomous bodies, and government-controlled corporations. These agencies prefer to deal with local firms acting as exclusive agents or distributors of foreign manufacturers and suppliers. An exclusive agency or distributorship arrangement ensures that foreign suppliers submit only one bid. In the private sector, deals with exclusive agents generally are preferred to ensure after-sales service, continuous supply of spare parts, and to solve possible future technical problems. It is also helpful for a foreign firm to have an exclusive distributor in order to monitor the progress of major projects, provide information on upcoming sales opportunities, and work out strategies to win tenders. Non-exclusive arrangements are common for commodities such as cotton, wheat, edible oil, chemicals, and metals, where brand names are not as important. Urban retailers usually purchase or obtain on credit supplies sufficient to last them for a week. Rural retailers generally travel to large cities like Dhaka or Chittagong to inspect goods and to place orders sufficient to last a month or more. While many retail stores carry general merchandise, only a few carry a wide enough range to be considered small department stores. The typical retail shop sells a single commodity, such as tires, cooking utensils, or jewelry. It is frequently located in a crowded bazaar area near other shops carrying similar goods and is likely to be small. Use of Agents/Distributors: Finding a Partner U.S. firms may appoint a Bangladesh firm or individual as an exclusive or non-exclusive agent. The local agent should be reputable, imaginative, active, politically astute, and technically competent. A local agent may be authorized to service industrial consumers, to bid on government tenders, or to place orders or book indent orders for his own account. The Embassy's experience suggests that a local organization which represents many foreign companies may not be as effective as a smaller one which can be more aggressive in pursuing a product or product line. An American firm seeking an agent in Bangladesh may wish to contact its district Department of Commerce office and request and pay for an Agent/Distributor Search (ADS) before deciding on a local representative, or contact the Embassy commercial office directly. U.S. firms should carefully check a potential agent's financial soundness, sales capabilities, and contacts with public and private sector organizations. Personal interviews are useful in discussing a business proposal with a potential agent or distributor. Franchising Franchising is generally not practiced in Bangladesh, although there are no regulations barring franchise operation. Because of the limited market, franchising is not generally considered attractive for U.S. firms in Bangladesh. That being said, some U.S. franchisers have expressed interest in the Bangladesh market during the last few years. Several European clothing and fast food operations opened during FY98. Direct Marketing Most imports, especially government procurements, are made through local agents. Joint Ventures/Licensing Bangladeshi business people are eager to collaborate with foreign partners, and the Bangladesh Government (BDG) has significantly improved conditions for joint ventures in recent years. Joint ventures in which the foreign partner provides the foreign exchange capital, equipment, technology, and expertise are particularly welcome. Local partners may provide land, building(s), and knowledge of the domestic market. One hundred percent foreign ownership is permitted. The Industrial Policy of 1991/1992 ensures equal treatment for local investment, joint venture, and 100% foreign investment. According to the policy, no permission of the government is required to set up a joint venture project. However, for obtaining facilities such as import entitlement for raw materials and spare parts, land, and utility connections, all industries are required to be registered with the Board of Investment (BOI), Jiban Bima Tower, 10 Dilkusha Commercial Area, Dhaka 1000, telephone (880 2) 9562414, fax 9562312, e-mail: ecboi@bdmail.net. Aside from completing its two-page registration application, the BOI does not require any additional documentation. Joint ventures with public sector corporations are also allowed, although clear policies and regulations do not always exist. Steps to Establishing an Office A business in Bangladesh may be organized as a sole proprietorship, a partnership, or as an incorporated or unincorporated association. Foreign investors establishing enterprises in Bangladesh normally form corporations. Two broad categories of corporations exist in Bangladesh: public and private. Companies of either type may be limited or unlimited. The liability of the shareholders of a limited company is restricted to the amount of share capital subscribed by them or held in their name. The liability of the shareholders of an unlimited company is not as restricted. A minimum of seven shareholders is required to establish a public limited company; there is no limit on the number of shareholders it may have. A private company requires a minimum of two shareholders, and its total number of shareholders may not exceed fifty. Any foreign firm incorporated outside of Bangladesh must be registered in Bangladesh in order to carry out business. Business firms are incorporated and registered under the provisions of the Companies Act of 1994. The incorporation/registration is done by the Registrar of Joint Stock Companies, 24-25, Dilkusha C/A, Dhaka 1000, telephone: 9556398. Any foreign firm with its corporate head office outside Bangladesh wishing to open a branch or liaison office must apply in a prescribed form to the Ministry of Industries, Shilpa Bhaban, Motijheel C/A, Dhaka, telephone: 9550590. Copies of original or attested (by the Bangladesh Mission in the United States) copies of the certificate of incorporation should be submitted with the application. There may be a fee for attestation. Selling Factors/Techniques One of the most important selling factors in marketing U.S. products is selecting an efficient and effective local agent. U.S. firms should be careful in terms of considering potential agents' financial soundness, sales capabilities, and, most important, close contact with public and private sector organizations. The local agents should be instructed to provide advance information regarding potential government purchases. Since the government's tender procedures are complicated and require considerable paper work, advance notice is essential to be competitive in bidding. Local companies should be given adequate product information and training in order to promote U.S. firms' products/services in the local market. Promotional materials such as product brochures, catalogs, posters for display and specific media advertisements, greatly assist a local agent in selling his principal's products/services. U.S. firms should also consider promoting their products/services through the annual U.S. trade show held in Dhaka. Details on the trade show are available from the Executive Director, American Chamber of Commerce in Bangladesh (AMCHAM), Room 319, Dhaka Sheraton Hotel, 1 Minto Road, GPO Box 504, Dhaka 1000; telephone: (880-2) 863391, fax: (880-2) 832915, e-mail: amcham@bangla.net. The eighth annual U.S. Trade Show will be held February 11, 12 and 13, 1999, at the Dhaka Sheraton. Advertising and Trade Promotion Bangladesh has a small but growing advertising and market research industry. Product and trade advertisements are popular in Bangladesh and are carried primarily through newspapers, magazines, radio and television, billboards, posters, film shorts, and local exhibitions. Newspapers are published in English and Bangla. Over 200 newspapers and magazines, including over 100 dailies, circulate throughout the country. The principal English-language dailies published in Dhaka are "Bangladesh Observer", "Daily Star", "The Independent", "New Nation", and "Financial Express", and "Bangladesh Times." The primary Bangla dailies are "Ittefaq", "Jana Kantha", "Inquilab", "Bhorer Kaqoj" and "Sangbad." Television and radio operate under the government and broadcast nationwide. Radio Bangladesh offers commercial advertisements generally in Bangla, but Bangladesh Television (BTV) also carries advertisements in English. Since 1995, the Embassy has been advocating elimination of a 60 percent advertising surcharge that the Bangladesh government imposes on foreign products. Radio Bangladesh broadcasts over 20 hours per day; BTV broadcasts primarily in the afternoon and evening. Satellite television is increasingly popular among city dwellers, who watch mostly programs beamed from Hong Kong (Star TV) and India (Doordarshan); CNN, BBC and a few other channels from the U.S/Europe are also available. Local cable TV companies have started operations in Dhaka. Bangladesh now has 12 Internet service providers offering full Internet access via 64 kb VSAT connections. Some fax/phone retailers also offer e-mail services. Pricing Product Since most government purchases are through open public tenders, contracts are usually awarded to the lowest bidder. The private sector is also price sensitive. Other than a few essential pharmaceutical products and petroleum products, the government does not have price controls over most consumable items. Current inflation is about eight percent. Sales Service/Customer Support Sales service and customer support are critical, particularly for private sector customers. Marketing products, such as electric generators, capital machinery, and large air conditioning plants requires sound technical support for installation as well as maintenance needs. Agents of U.S. firms dealing with these products should maintain sufficient technical staff and spare parts stock to support their customers. The same holds true for computer hardware and software. Selling to the Government The Bangladesh Government is the country's largest importer. Most government agencies, autonomous organizations, and public sector corporations import directly through public tenders, which are publicly announced or issued to registered suppliers. Major BDG direct importers are the Bangladesh Chemical Industries Corporation (BCIC); Bangladesh Steel & Engineering Corporation (BSEC); Bangladesh Oil, Gas and Mineral Corporation (BOGMC or Petrobangla); Bangladesh Sugar & Food Industries Corporation (BSFC); Trading Corporation of Bangladesh (TCB); Bangladesh Power Development Board (PDB); Rural Electrification Board (REB); Dhaka Electric Supply Authority (DESA); Water and Sewage Authority (WASA); Dept. of Health and Family Planning; Bangladesh Telephone & Telegraph Board (BTTB); and the Directorate General of Defense Purchase (DGDP). Major and bulk purchases to be made by public tender are published in the local media. The Economic/Commercial Section of the Embassy monitors all bid announcements and reports them promptly to the Office of International Projects (OIMP), Room 2015-B, International Trade Administration, U.S. Department of Commerce, Washington D.C. 20230, telephone (202) 377-2373. This office also tracks all multilateral development bank projects valued at over $5 million. Information on tenders under $5 million is received by the Office of South Asia's Bangladesh Desk Officer at telephone (202) 377-2954. Protecting your Product from IPR Infringement The BDG has initiated organizing seminars jointly with the World Intellectual Property Organization (WIPO), the latest occurring in July 1998. Though enforcement of existing regulations is lax, the government is working to generate awareness and update old laws. Intellectual property infringement is common, but is currently of limited significance for U.S. firms, with the possible exception of pharmaceutical products and video products. Bangladesh's intellectual property law dates from the pre-independence era. The Patent and Design Act of 1911, as amended by the Patent and Design Rule of 1933, the Trade Mark Act of 1940, and the Copyright Ordinance of 1962, governs patents, trademarks, and copyrights. An effort to update trademark and patent law has been underway since 1990. The amended draft acts and rules, which ensure compliance with treaty obligations under the Trade-Related Aspects of Intellectual Property (TRIPS), have been submitted to the Ministry of Industries for approval. Bangladesh has been a member of the World Intellectual Property Organization (WIPO) in Geneva since 1985. Need for Local Attorney Legal assistance may be required to settle business disputes. A representative list of Bangladesh attorneys handling commercial law cases follows. No responsibility for professional ability or integrity of those listed is implied, but the firms have been chosen with care. Names are listed alphabetically. Syed Ishtiaq Ahmed 69/1 New Circular Road Dhaka 1000 Tel: 9550479, Fax: 836164 H & H Company Shareef Mansion (2nd floor), 56-57 Motijheel C/A Dhaka 1000 Tel: 9550705, 9552447 Fax: 9569233 Dr. Kamal Hossain & Associates Chamber Building (2nd floor), 122-124 Motijheel C/A Dhaka 1000 Tel: 9552946, 9564954, Fax: 9564953 Huq & Company 47/1, Purana Paltan Dhaka 1000 Tel: 9552196, Fax: 9555953 Lee Khan and Associates City Heart Suite No. 5/7 67, Naya Paltan (4th floor) VIP Road Motijheel Commercial Area Dhaka 1000 Tel: 833508, Fax: 839279 The Law Syndicate Isphani Building (1st floor), 14-15, Motijheel C/A Dhaka 1000 Tel: 9559335, Fax: 815090 Performing Due Diligence To check the bona fides of a bank, agent or customer, U.S. firms can contact one of several chambers of commerce or business associations listed in Annex E. The U.S. Embassy's commercial section may also be able to provide some useful information.[end of document]
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