V. Marketing U.S. Products and Services Use of Agents/Distributors - Finding a Partner American firms interested in exporting to Jordan should appoint locally-registered Jordanian agents or distributors. The Commercial Agents and Middlemen Law No. 44 of 1985 stipulates that no foreign firm may import goods into the country without appointing a registered agent. The agent's connection to the foreign company must be direct, without a sub-agent or intermediary. Except for the basic definitions stipulated in the commercial code, there are no regulations governing the contract between the foreign firm and the commercial agent. Most of Law No. 44 affects the dealings of local agents. The most significant provisions affecting the principal/agent relationship are: A. Jordanian agents or distributors of foreign companies are always entitled to compensation for unjustified termination of the agency contract, notwithstanding any agreement to the contrary; B. The Jordanian courts have jurisdiction over all disputes arising out of the agency/distributorship contract, notwithstanding any agreement to the contrary. However, the choice of the foreign law to govern the agency/ distributorship arrangement between the parties is permitted and enforced by the Jordanian courts; and C. It is illegal for a foreign company to appoint an agent and pay commissions if the Jordanian company is selling arms or munitions to the government of Jordan. Once a contract is reached, the agent must take the signed agreement to the Registrar of Companies at the Ministry of Industry and Trade, where it is officially certified and registered. The Ministry issues a registration number, which then must be cited in all subsequent import license applications for goods under the contract. Franchising Jordanian businessmen have increasingly expressed their interest in franchising, although their actual familiarity with the concept is limited; retail and service franchises are rare in Jordan. Direct Marketing Direct marketing of U.S. products and services are usually handled by agents/distributors, importers and registered branch offices of American companies. American businesses also market their products by participating in exhibitions or trade events, using embassy commercial section export promotion services and sending representatives to discuss business prospects directly with Jordanian end-users. Joint Ventures/Licensing The increased availability of domestic capital has fueled The interest of local investors in acquiring industrial licenses and establishing joint-ventures. Promising opportunities include the sectors mentioned in section II, along with electronics, packing and packaging, food processing and machinery building. Some American companies already have licensing arrangements with Jordanian manufacturers. Joint ventures are less common, although one was established in 1993. Steps to Establishing an Office The Companies Act of 1989 provides guidance for registering foreign companies and establishing regional and representative offices. The law distinguishes between two types of foreign companies: "foreign companies operating in the kingdom" and "foreign companies not operating in the kingdom." The former includes foreign firms that have established branch offices in Jordan. The latter includes representative (i.e., regional) offices, which are not permitted to act as commercial agents and middlemen for business activities in Jordan. However, they are allowed to serve as liaisons between their head offices and Jordanian or regional clients. Foreign firms executing contracts in Jordan are encouraged to establish branch offices. The registration fee is JD 250 (USD 360) if the parent company's capital is JD one million or below and JD 500 (USD 720) if its capital is above JD one million. The registration fee to establish a regional office is minimal. Selling Factors/Techniques Thousands of local wholesalers, semi-wholesalers and retailers operate in Jordan. American products must compete in an open trade environment with goods from all over the world. Price-competitiveness is an essential sales requirement. To gain the edge in the Jordanian market, businessmen seeking to sell American capital equipment should focus on financing arrangements and technical support. Sellers must consider shipping and freight charges, as well as delivery terms. They must also show some flexibility in offering industrial design modifications to suit Jordanian end-users' specifications. Advertising and Trade Promotion In addition to using the embassy commercial section as a vehicle for promotion, U.S. exporters may also participate in local exhibitions and trade events. Advertising in Jordanian newspapers and business journals is an additional method for locating agents/distributors or direct importers. The embassy recommends the following Jordanian newspapers for U.S. product advertisements: Jordan Times (English daily) Al-Aswaq (Arabic business daily) Ad-Dustour (Arabic daily) Al-Rai (Arabic daily) Akher Khaber (Arabic evening daily) The Star (English weekly) Al-Forsa (Arabic commercial weekly) Product Pricing Local importers base their product pricing on the export price, freight costs, applicable import tariffs and taxes, the sales tax and their profit margin. Under the Supply Law, the government may set the importer's profit margin by using an internationally-accepted formula. The profit margin on imported foodstuffs, which are price-controlled by the Ministry of Supply, is set at 17 percent, which includes 2 percent in administrative and storage expenses, 8 percent for the importer's profit and 7 percent for the retailer's profit. The Minister of Supply has set the profit margin on imported tea products at 13 percent instead of 17 percent. Goods and services that are not subject to Ministry price controls are left to market-based competitive pricing strategies. The profit margin of domestic goods is usually about 10-25 percent of the domestic manufacturer's total costs. Sales Service/Customer Support The quality of sales service and customer support for American products is often higher than is typical in the Jordanian market, an important selling point. American firms can improve further on customer support by holding workshops for their local agents or sub-contracting to local service and maintenance firms. The availability of technically-skilled labor in Jordan gives the kingdom a competitive advantage as a regional sales and servicing center. Selling to the Government The General Supplies Department is the government's central procurement agency. Direct offer for local bids are not permitted; i.e., a local agent/distributor or representative must be appointed to act on the potential american supplier's behalf. Direct bids for tenders financed by international donors or the world bank are permitted, as stated in the tender documents. Protecting your Product from IPR Infringement Jordanian law requires the registration of copyrights, patents and trademarks. Without registration, foreign products do not have any means of protection. Under the Copyright Law of 1992, all works must be registered at the Department of National Libraries, under the Ministry of Culture. Trademarks and patents must be registered with the registrar of Patents and Trademarks at the Ministry of Industry and Trade. Due to weak government IPR enforcement, the act of registering copyrights, trademarks and patents does not guarantee protection; However, it allows the U.S. company to pursue a court case if its rights are violated. Need for a Local Attorney Firms operating in Jordan through registered branch offices or regional offices may need an attorney to complete paperwork and registration requirements. The local attorney may also provide continuous advice on laws and regulations affecting the U.S. companies' activities. Appointing a local lawyer can also help protect copyrights, patents and trademark rights.