WILS Published with the approval of the Director of the Budget Legal Information is a Business Necessity Comparative Low Series THE DIVISION OF COMMERCIAL LAWS SUPERINTENDENT OF DOCUMENTS. WASHINGTON, D. c. U. S. DEPARTMENT OF COMMERCE HARRY L. HOPKINS, Secretary BUREAU OF FOREIGN AND DOMESTIC COMMERCE JAMES W. YOUNG, Director By John P. Hoover, American Vice Consul, Habana American exporters engaged in business in the Cuban market usually distribute their products through independent representatives in the Island, subsidiary concerns in Cuba, or branch offices. The decision as to which method is to be used must necessarily rest with the exporter, and depends on the type of merchandise to be distributed, the volume of business, the general sales policy of the exporting firm, and other factors. Independent Representative To discuss the most usual method first, one must take up the independent representative in Cuba. This may be a resident sales agent or an importing distributor, the first selling on a commission basis for the principal's account, the second buying and selling on its own account. In the former case the credit risk in local sales is incurred by the exporter; in the latter, the exporter's risk is restricted to sales to his representative, who in turn carries the credit risk in other sales within his territory. The most common method of selling1 in Cuba is through a resident sales agent, who sells his principal's products on a commission basis. It is safe to say that most of the American products sold in Cuba are sold through such agents, although the total volume of their sales measured in dollars is probably not as great as the volume of sales of commodities handled in other ways. The classes of goods sold through resident sales agents run the whole gamut of commodities which are the subject of international trade, including notably a great variety of pharmaceutical, chemical and other specialties, textiles, hardware, glassware, leather, paper, foodstuffs, * In this article the following terms are used in the sense defined: Resident Sales Agent-An individual or firm in Cuba who represents one or more foreign exporters, whose products he sells on a commission basis. Importer (or importing distributor, or distributor) - An importing firm in Cuba, which buys and sells on its own account, sometimes working under a sole agency arrangement for a specified territory. Wholesaler-A wholesale distributing firm, which buys and sells on its own account, stocking merchandise against retail demand, but which does not undertake to represent foreign principals as sole agent. 1 See: The Contract of Purchase and Sale in Cuba, by H. P. Crawford, COMPARATIVE LAW SERIES, Vol. II, No. 8, August 1939, p. 369; also, The Contract of Sale in Latin America, by H. P. Crawford, Ohio State Law Journal, Vol. 6, December, 1939. 295 industrial materials-in general, those of which the sale requires the exercise of a certain degree of salesmanship, or of which the exporter's interest makes the services of a representative desirable. Importing Distributors Many products are distributed through importing distributors who buy and sell on their own accounts, thereby assuming the credit burden for local sales. Among the products sold through importing distributors are certain specialty items, hardware, notions, novelties, drugs and pharmaceuticals, toilet preparations, paints, fertilizers, hospital and medical supplies, paper products, office equipment, automobiles, radios, refrigerators, etc. In certain cases, the importer is not a wholesaler or jobber, but a retailer. This is especially apt to be true of department store lines, which are purchased to a great extent through buying offices maintained in the United States by the several leading stores of this classification, some sugar mill and railroad supplies, etc. It may be pointed out that it seems to be a general policy on the part of the leading department stores and certain other retailers, and notably of wholesalers of drugs and pharmaceuticals, to make purchases direct from exporters or manufacturers without the intervention of agents or distributors in Cuba, whenever possible. Subsidiary Concern Selling through a subsidiary concern2 in Cuba is a common method of distributing in this market, used principally by exporters or manufacturers enjoying a large volume of business. The local subsidiary may be either wholly or partially owned by the principal. It is the form of organization customarily employed by firms performing manufacturing operations in the Island, by public utilities and others holding franchises or concessions of one kind or another. Many of the sugar-producing companies are organized in this manner. It may be said that there is a trend toward the formation of local subsidiaries on the part of American firms doing business in Cuba rather than the opening or maintaining of branch offices. The products of which the distribution is handled through subsidiaries include motion pictures, soaps and toilet preparations, paints and paint products, fertilizers, packing-house products, office machines, electrical products and supplies, petroleum products, and others. Telephone service and, to a predominant extent, electrical power are supplied in Cuba by subsidiaries of American corporations. Branch Office Other commodities, likewise those of which the volume of sales is large, are sometimes sold through branch offices, including electrical specialties and supplies, steel products, automobiles, textiles, petroleum products, motion-pictures, pharmaceutical specialties, shoe machinery, and others. The sale of air and water 2 See: H. P. Crawford, The Corporation Law of Cuba, 10 Tulane Law Review 568 (1936); Registration of Corporations in Cuba, Commerce Reports, August 5, 1939; Cuban Law of Notaries Public, Commerce Reports, January 8, 1938 (requiring that corporation secretaries be lawyers). See, also, Cuban Law of Notaries, Comparative Law Series, Vol. I, No. 7, July 1938, p. 275; and Regulations Governing Registration of Cuban Corporations Modified, id., July 1938, p. 340. |