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Bitter taste: an agency agreement in Vietnam goes awry

Beat Hans Wafler (School of Management, Asian Institute of Technology, Pathumthani, Thailand)
Rian Beise-Zee (College of International Management, Ritsumeikan Asia Pacific University, Oita, Japan)

Emerald Emerging Markets Case Studies

ISSN: 2045-0621

Publication date: 3 June 2017

Abstract

Subject area

The case authentically illustrates a common problem encountered within the business scope of an agent who is representing a European food ingredients manufacturer in an emerging market. The case describes the kind of legal set-up and contracts that are necessary to safeguard the long-term prospective of the business for both parties, the agent and overseas supplier. It explains what each party has to observe in case of a termination of the agency agreement.

Study level/applicability

This is a longitudinal case study of a market entry by a European food ingredients manufacturer through a foreign-owned third agent. The authors studied how sales developed over the first few years and then concentrated the investigation on the fact that after the sales volume was reached, the overseas manufacturer wants to cancel the agency agreement and do the business directly without getting the agent involved.

Case overview

This case describes and explains a common problem encountered frequently by overseas manufacturers who want to enter an emerging market through a third-party agent representation. The overseas supplier uses the agent’s service and solid reputation to enter an emerging market with limited exposure to costs and risk. The agent works towards guarding the relationship with the overseas supplier for as long as possible. The development of the relationship illustrates what kind of conditions have to be stipulated in advance to provide an acceptable solution to both parties concerned once they part ways.

Expected learning outcomes

This research is based on a European food ingredients manufacturer, who was expanding its business in different Asian emerging markets, namely, Vietnam and Cambodia. The agent was a long-time established trading house who acted frequently as agent for overseas companies that wanted to get a foothold in these promising Asian emerging markets.

Supplementary materials

Teaching Notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.

Subject code

CSS 5: International Business

Keywords

Acknowledgements

The case represents disguised actions and anonymous persons based on experience in the food ingredients flavor industry over the past 20 years involving many mergers and acquisitions of suppliers and agents.

Citation

Hans Wafler, B. and Beise-Zee, R. (2017), "Bitter taste: an agency agreement in Vietnam goes awry", Emerald Emerging Markets Case Studies, Vol. 7 No. 2. https://doi.org/10.1108/EEMCS-01-2016-0004

Publisher

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Emerald Publishing Limited

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