Includes typical use of agents and distributors and how to find a good partner, e.g., whether use of an agent or distributor is legally required.
Last Published: 2/17/2019

A commissioned sales agent, or manufacturer's representative, finds customers, passes the order to the foreign company, and receives a commission on the sale.  The amount of commission has historically varied between five and 30 percent depending on the nature of the product and the amount of work required by the agent.  Commissions are established by negotiation, not by legal stipulations.

Where there are multiple levels of customers, employing an agent may be the most practical means of covering the market.  Wholesalers or stocking distributors often have minimal outside sales forces, and rely instead on advertising and walk-in buyers.  Having a distributor may be important where strong after-sale support is needed for the product.
Venezuelan companies at any step in the distribution chain tend to place repeated small orders.  Foreign company requirements as to minimum orders, or even minimum annual sales, may be met with resistance from prospective distributors or agents.  Venezuela has no particular laws or regulations to protect a local agent and no legally binding indemnification requirements.  The written agreement in all principal-agent, supplier-distributor arrangements is binding.  It is common to have medium-term trial agreements with clear performance objectives when entering new business relationships.

Placing a Venezuelan citizen on a company's payroll can be costly in case of separation, due to benefits stipulated by labor laws.  Labor law requires that an employer contribute 60 days of an employee’s wages into a severance account in the first year of employment.  The company must make severance payments equal to 30 days of wages per year of employment retroactive to 1997; it must also make retroactive calculations of benefits (30 days of wages per year of employment).  Venezuelan labor laws make it very difficult to layoff or fire employees, even for good cause, and challenging to utilize independent contractors in place of regular employees.

Employees are allowed a one-month, probationary work period, during which an employer can dismiss a worker without cause.  If the employer fires the employee after the probationary period, the employee has the right to accept dismissal and receive a double severance payment or to challenge the dismissal in court.  If a permanent employee challenges dismissal in court, the employer must prove it was a “just cause” dismissal – the employee voluntarily left the job, committed a “grave error” in work obligations, revealed confidential company information, or committed grave negligence in operating machinery.  If the court finds an employee was fired without just cause, the employer must re-hire the employee and pay a fine.

Potential exporters should study Venezuelan laws on price controls, which limit the overall profit margin to 30 percent through the entire supply chain from importer to retailer and mandate that products may only be valued according to the highly overvalued FX regime.  Potential exporters should also be counselled on risks of criminal liability for actions that may be considered reasonable supply chain management in many countries and should note the frequent difficulties of obtaining dollars through government FX mechanisms.
 

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.