The Qatari Commercial Agency Law (Law 8 entered into force in 2002) regulates and governs the appointment of commercial agents in Qatar.
The law highlights the definition of a commercial agent, what constitutes a commercial agency and the process of the law: It is a condition that the companies which are not based in Qatar should assign an agent in order to make sales to Qatar. Especially for the sales to the government, it is a strict condition.
However, some companies which have direct agreement with some of the ministries of the State of Qatar have the opportunity of not assigning an agent.
The person to be assigned agent should be a Qatar citizen; and the companies should be Qatar originated. Also, it is compulsory for the people and companies to be registered to the Ministry of Business and Trade in order to be agents. Additionally, these people and companies should deliver the agency agreements (written in Arabic) to the Department of Commercial Affairs at the related ministry and have it registered.
Main duties and responsibilities of the agents; are to distribute the goods and products or put them on sale or circulation, and fulfil the procedures. Moreover, agents have to keep spare parts for the goods/products they represent; and give maintenance and repair service. The maximum commission rate of the agents is %5, however it is possible to decide mutually the articles about the expenses, commissions, etc. with contrary agreement.
The termination of agency agreement signed for a period of time is possible. In response to this, for the termination of the agreements signed for an indefinite period, two parties’ approval is necessary. The party not compromising has the right sue.
The law also dictates that the state of Qatar Courts are only the authority for any disagreement; and abroad court decisions are not applicable. However, disputes can be determined by arbitration.
On the other hand, there is no limitation for distributors and franchises. There isn’t a special law for them; so it shouldn’t be understood that companies exporting to Qatar have to contact a Qatari citizen or Qatari company.
This uncertainty brings so many problems and disputes within the frame of sales from abroad to Qatar; and cases in this frame are solved based upon the Agency Law.
Personal imports according to laws can only be done by Qatari citizens and/or local companies based in the country. And for the sales to the public enterprises, this law is strictly applicable.
There are plenty of foreign and local import and export companies with a local partner operating in Qatar. In order these companies to be able to import, they should have been established based on the Qatari laws, registered to Chamber of Commerce; and receive an importer registration numbercard. Foreign companies established with a Qatari partner are admitted as a Qatari company and considered within this frame by the laws.
If the theory is ignored and the implementation is examined, foreign companies entered to Qatar market in order to make sales rarely accredit agency organization and the presence of the law; they mostly prefer foreign companies established with Qatari partner as agent or dealer.
However, besides the richness country economy involves and excess demand there are less agent or dealer companies as a result of Qatar to be a small country geographically. Agents to be limited and working with other producers at the same sector cause disadvantages for the sellers.
Accordingly, this situation means that the producers eager to sell their products to Qatar to meet the obligation of working with distribution channels, which also work with the rival producers. The presence of this situation (assigning dealer or franchise instead of agents) brings serious failures when making sales especially to the biggest customer, the government; many problems stated below.
It is so crucial in Qatar to choose the marketing network so that the success on the sales is directly related to this choice. The country is physically small but demand and richness of the economy is bigger. This situation necessitates only one distributor, agent, or dealer choice throughout the country. The distribution and sales channel to be chosen should be aware of country and customer habits, rivalry and market conditions; and have strong trade connections and a significant distribution network.
Because of Qatar’s being physically small as stated above, problems occur on finding dealer, agent, etc. The producers have to cooperate with the agents/dealers which also cooperate with the rival producers.
situation of agents/dealers using this as a marketing strategy restricts the producers’ sales volume and turnover.
Within this framework, the producer licensing a firm to distribute, or offer for sale or circulate goods and product or render specific services should absolutely check whether this firm cooperates with the producers on the same subject/goods/service etc. from the same or another countries. As a result of this situation enabling superiority to the seller, some distribution channels demand agency in order to hinder these producers to be rival and/or control them and their products.
For this purpose, the firm having the right of agency generally places a symbolic order; limits the sales in the country by overcharging; and so leads up the other product, which is sold with high profit. By this way, the sales of new product is controlled and the main product is highlighted and the firm’s profit decrease is prevented.
It should not be forgotten that, Qatar is a market procuring almost all of its needs from abroad except petrol and natural gas; and demand is bigger than supply as a result of investments and richness of the economy. So entering to Qatar market properly will bring the producers positive results for their future.
Our suggestion under all these issues’ light and presence is that companies eager to enter Qatar market should form an organization of selling their products by themselves. The most proper organization shape is to firstly open a contact office. Thus, producer companies can both benefit from the incentive of Turkey; finance advertisement, promotional etc. expenses and have enough time to Qatar market conditions properly.
At the second stage, companies reaching proper information and observation results will establish an agent company by themselves in order to sell their products. This will enable them to sell their products directly overcoming the problems mentioned above.
It should be considered that Qatar is a country where agents haggle with producers. However, these agents are both experienced and advantageous on the subject of selling to Qatar with high profit ranges. The most prominent proof of this statement is the inflation increase of every year. Due to the increasing inflation depending on demand and rarity of the goods, the agents earn the main income since their procurement expenses don’t change and they have the opportunity of increasing the prices.
In addition, the physically smallness of Qatar enables companies to establish their distribution network with less investment expenses and average strategies.