V. MARKETING U.S. PRODUCTS AND SERVICES Distribution and Sales Channels International trade is centered in Colombo, as more than 90 percent of all imports and exports pass through the Port of Colombo. While hundreds of trading firms are involved in internal distribution, 20 to 30 relatively large firms do most international trading. In addition, there are many medium to small importers. Only a few private sector importers have branches or distribution networks elsewhere in the country; Most simply wholesale direct to regional distributors or to retailers. Inland transport is dominated by independent truckers. Use of Agents/Distributors; Finding a Partner Most foreign firms active in Sri Lanka select their local agents on the basis of financial stability. Sales on a commission basis are common. As the largest trading houses represent many foreign principals, medium and smaller firms often make better representatives. If products require stocking, servicing or spare parts, however, large firms will do better. Commissions paid to agents range from 5 percent to 20 percent depending on sales volume and the product. Agency relationships, can be terminated for inefficiency, misappropriation, or incapacity of the agent to fulfill contractual terms. Franchising Franchising is not as common as agent/distributorships. The few U.S. franchises that are in operation in Sri Lanka include Coca-Cola, Pepsi, and Pizza Hut. Direct Marketing Direct marketing usually takes place when the product is sold on a one-time or irregular basis. Recruiting an agent is crucial to winning government tenders. Joint Ventures/ Licensing Joint ventures have become popular in recent years, particularly in export oriented projects. Joint ventures are eligible for the same preferences and tax benefits etc. as domestic companies. There are no restrictions on the share of ownership, except for certain specified sectors. Steps To Establish an Office A foreign company may transact business in Sri Lanka through a branch or a representative office. Before it can establish and carry on business, the branch must be registered as a foreign company under Sri Lanka's companies act. The Registrar of Companies is the authority. The branch must file the statutory company documents (annual accounts, returns to be filed) as well as copies of accounting statements compiled under the company's country of origin. There is also legal provision for a company to be registered as an off-shore company, in order to carry on business outside Sri Lanka. Selling Factors/Techniques Price is the most crucial marketing tool. Advertising is becoming increasingly important as new T.V. channels and radio stations are opened. Companies with wide distribution networks enjoy a competitive edge. Advertising and Trade Promotion Newspapers, magazines, radio and television all accept advertising. There are several English language newspapers, as well as dailies in Sinhala and Tamil. International newspapers and magazines of general and business interest are readily available. Until recently both radio and television media were government monopolies, but the private sector now operates 3 or 4 radio stations and an equal number of T.V. stations. BBC, CNN, Star, French, and Australian satellite programs are regularly relayed over UHF and VHF channels. Both radio and T.V. utilize commercial advertising. Major Newspapers English: Daily News, The Island, Sunday Observer, Sunday Island, Sunday Times, Sunday Leader Sinhala: Dinamina, Silumina, Divayina, Lankadeepa Tamil: Thinakaran, Virakesari Selling to the Government Most Sri Lankan government purchases are made by public tenders, which are usually advertised in the local media. The U.S. Embassy in Colombo transmits these tenders to the Department of Commerce for dissemination to interested U.S. firms. Local agents are often the key to winning these tenders. Protecting Your Product From IPR Infringement All trademarks, designs, copyrights, and patents must be registered with the government's Registry of Patents and Trademarks. Sri Lanka has also signed a bilateral agreement with the U.S. to protect intellectual property rights and is a signatory to the Paris and Berne Conventions. Registered trademarks are valid for 10 years, patents for 15 years, and industrial designs are valid for 5 years. Need For a Local Attorney The Embassy's Consular section maintains a list of attorneys in Sri Lanka, a copy of which may be obtained on request.