V. MARKETING U.S. PRODUCTS AND SERVICES Distribution and Sales Channels The primary channel for selling U.S. merchandise in Bangladesh is through a resident agent (indentor, wholesaler, or distributor). More than half of Bangladesh's imports are made through competitive tender or sole-source 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 overseas 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 an overseas 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 edible oil, chemicals, and metals, where brand names are not important. Retailers located in populous areas usually purchase or obtain on credit supplies sufficient to last them for a week. Representatives of firms in rural areas generally travel to large cities, such as Dhaka and 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, for example, 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 As mentioned earlier, the primary channel for selling U.S. products or services in Bangladesh is through a local agent. U.S. firms may appoint a Bangladeshi firm or individual as an exclusive or non-exclusive agent. The local agent should be 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 use the U.S. Department of Commerce's Agent/Distributor Service (ADS) system before deciding on a local representative. U.S. firms should carefully check potential agents' financial soundness, sales capabilities, and contacts with public and private sector organizations. Potential agents should also be asked for market information. Personal interviews are useful in discussing a business proposal with a potential agent or distributor. Franchising There is no franchising in Bangladesh, although there are no trade barriers or laws that restrict franchise operations. Franchising is considered as foreign investment in Bangladesh. Due to weak potential markets, franchising is generally considered non-viable for U.S. firms in Bangladesh. Direct Marketing Direct marketing in Bangladesh is difficult because of illiteracy and inadequate media services. Most imports are made through local agents. Government procurement, which is more than half of total imports, is also mostly done through local agents. Joint Ventures/Licensing Bangladeshi businesses are eager to collaborate with foreign partners, and the BDG has amended conditions for joint ventures to make them more attractive in recent years. Joint ventures in which the foreign partner provides the foreign exchange capital, equipment, technology and expertise are particularly welcome. One hundred percent foreign ownership is permitted for both export-oriented and domestic market investments. The Industrial Policy of 1991 ensures equal treatment for local investments, joint ventures, and one hundred percent foreign investments. 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). 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. 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 50. Any overseas firm incorporated outside of Bangladesh needs to be registered in Bangladesh in order to carry out business. Business firms are incorporated and registered under the provisions of the Companies Act of 1913, as amended. The incorporation/registration is done by the Registrar of Joint Stock Companies, 24-25, Dilkusha C/A, Dhaka 1000, telephone: 236398. Any overseas 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, telephone: 230590. 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. 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 importantly, close contacts 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 a lot of paper work, advance notice is essential to be competitive in bidding. U.S. firms should also consider promoting their products through the annual U.S. trade show held in Dhaka. Details on the trade show are available from the Executive Secretary, American Bangladesh Economic Forum, Room 319, Dhaka Sheraton Hotel, 1 Minto Road, GPO Box 504, Dhaka 1000; telephone: 863391, fax: 832915. Advertising and Trade Promotion Bangladesh has a small but growing advertising market research sector. 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. Government regulations do not permit certain ads and trade promotions permitted in developed country markets. 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 Daily Star, Morning Sun, New Nation, Bangladesh Observer, Financial Express and Bangladesh Times. The primary Bengali dailies are Ittefaq, Inqilab, Banglar Bani, Dainik Bangla, Janakantha and Sangbad. Television and radio operate under government control and broadcast nationwide. Radio Bangladesh offers commercial advertisements in Bengali only, but Bangladesh Television (BTV) also carries advertisements in English. BTV charges 40 percent extra for ads promoting imported products. Radio Bangladesh broadcasts over 20 hours per day; BTV broadcasts primarily in the evening. U.S. Cable News Network (CNN) and British Broadcasting Corporation (BBC) have been transmitted a combined seven hours a day via BTV on a trial basis. Market research is in its infancy in Bangladesh. Nevertheless, an increasing number of firms are able to undertake market research and consulting companies are becoming more numerous. Pricing Product Since most government purchases are through open public tenders, contracts are usually awarded to the lowest bidder. The private sector is also very price sensitive. Other than a few essential pharmaceutical products, the government does not have price controls on most consumable items. The only price controls for bulk commodities in on petroleum products, sold by the state monopoly, Bangladesh Petroleum Corporation. Inflation is currently low (under two percent). Sales Service/Customer Support Sales service and customer support is 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 a sufficient spare parts stock to support their customers. Selling to the Government The Bangladesh government is the 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); Bangladesh Sugar & Food Industries Corporation (BSFC); Trading Corporation of Bangladesh (TCB); Bangladesh Power Development Board (PDB); Bangladesh Telephone & Telegraph Board (BTTB); and 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 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 (202) 377-2954. Protecting your Product from IPR Infringement 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 govern patents, trademarks, and copyrights in Bangladesh. These laws are antiquated and do not give adequate protection. Drafts of new legislation are under review by government committees. Although the government has not given the intellectual property rights issue a high priority, Bangladesh has been a member of the World Intellectual Property Organization (WIPO) in Geneva since 1985 and is represented on two of its permanent committees. Intellectual property infringement is common, but is of limited significance for U.S. firms, with the possible exception of pharmaceutical products and audio and video cassettes. Other foreign investors have suffered considerable trademark infringement. Need for Local Attorney Legal assistance may be required to settle business disputes. A representative list of Bangladeshi attorneys handling commercial law cases follows below. No responsibility for the professional ability or integrity of those listed is implied, but the firms have been chosen with care. They are listed alphabetically. -- Chamber of Law B-167, Malibagh C/A Dhaka-1015, telephone: 402935 -- H & H Company 47/1 Purana Paltan Dhaka-1000, telephone: 232447, fax: 832915 -- Huq & Company 46/1, Purana Paltan Dhaka-1000, telephone: 232196, fax: 235953 -- Dr. Kamal Hossain & Associates Chamber Building (2nd floor), 122-124 Motijheel C/A Dhaka-1000, telephone: 864966, fax: 863409 -- Syed Ishtiaq Ahmed 69/1 New Circular Road Dhaka-1000, telephone: 230479