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Country Commercial Guides
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CHAPTER IV. MARKETING U.S. PRODUCTS AND SERVICES
Distribution and Sales Channels
Belgium has an excellent network of distributors who are often regarded by the French and Germans as a neutral source of goods. In addition, Belgium adheres to EU laws and directives, and Belgian business continues to benefit significantly from a single European market in the 1990s. However, the openness of the Belgian market should not mislead American companies into thinking that doing business in Belgium is the same as in the United States. The cultural, linguistic and economic differences found among various regions of Belgium strongly influence their styles of conducting business. A good distributor must be able to operate within all these environments.
Belgian distributors tend to be small and specialized. They do not have ready access to inexpensive capital and are somewhat conservative when it comes to risk taking. Consequently, potential Belgian representatives will look to their suppliers for lenient credit terms. (See Section VIII Trade and Project Financing).
Belgium has also established legal protection for distributors (as defined below) against sudden or unjustifiable termination of their distribution agreement. This includes measures ensuring the right to receive reasonable notice of termination and compensation for loss of income. In addition, the EU (European Union) has passed similar legislation protecting agents (as defined below). American companies should consider consulting a legal expert before drawing up a representation agreement in Belgium.
The Belgian industry sectors most oriented towards foreign markets were affected by a slowdown in French and German production in 1996. These sectors include semi-finished goods, such as iron, steel, non-ferrous metals, and chemicals. However, figures show that industrial output began growing again in 1997, this trend continued throughout 1998, and is expected to continue through 1999.
The capital goods sector has benefited from strong investment demand in Belgium. Despite this, demand in the consumer products sector is weak, although the favorable economic trend in 1998 signals a strong potential for improvement. In 1996, the services sector grew 2.0 percent. Sectors such as accounting, fiscal expertise, advertising and maintenance are doing particularly well. Conversely, sectors largely dependent on household consumption, such as retail, healthcare, and the catering industry, still suffer from the sluggish growth of consumer demand.
Use of Agents and Distributors: Finding a Partner
Several thousand U.S. companies are selling on the Belgian market through distributors and agents. The new-to-market U.S. company will find a large number of well-established representatives in virtually every industry sector in Belgium. On many occasions, their territory is larger than just Belgium; often it includes the Benelux (Belgium, Netherlands, and Luxembourg) and one or more neighboring European countries. European purchasers often perceive Belgian agents and distributors as being neutral sellers. This places them at a distinct advantage vis-a-vis their German or French counterparts. However, many well-established distributors in certain sectors are reluctant to take on new product lines due to various business constraints, notably the lack of access to quick and affordable financing and high social costs for additional employees.
Considering the host of distribution options available in Belgium, it is important for the would-be exporter to select the method best suited to his or her product. Belgian buyers generally prefer to purchase through an intermediary; making sales directly to the end-user a scarce practice. However, sales of expensive, technically sophisticated goods are an exception to this rule.
Intermediaries may take one of three primary forms under Belgian law: Distributor, Agent or Salaried Representative.
Distributor
The Law of July 27, 1961 defines the parameters of a distributorship agreement as any agreement under which the supplier reserves to its distributor(s) the right to sell, in their own name and for their own account, products manufactured or distributed by the supplier. The distributor (concessionaire) operates independently and is only bound by the written provisions of the distribution agreement. Several types of agreements exist, one is exclusive distributorship. Other agreements include those whereby the distributor is responsible for selling nearly all products specified by the supplier; and other agreements that place significant responsibilities on the distributor to the extent, in the case of termination, the distributor would be likely to incur substantial losses. However, these agreements are subject to specific rules and regulations regarding exclusive distribution and price-fixing.
The conditions of contract termination are an important concern, and vary with the type of distribution agreement. Either party, without prior notification or indemnification may terminate a distribution agreement of specified duration at the end of the contract period. If the termination takes place before the end of the contract period, the terminating party may be sued for breach of contract.
A distribution agreement with an unspecified duration may be terminated by either party without indemnification, after a fair notice period, usually six months. The termination of such a contract by the producer without fair notice may be grounds for damage claims by the distributor. In addition, the Law of 1961 provides an additional fair indemnity to be paid by the supplier to the distributor. This additional indemnity applies in cases where: 1) the distributor's activities result in a substantial increase in customers (provided they remain with the supplier after termination), 2) the distributor's investment costs will benefit the supplier after termination, and 3) the distributor pays severance indemnities to its personnel laid off at the time of the contract's termination.
Agent
This category covers commercial agents, as well as those persons acting as agents but not fulfilling the requisites for commercial agent status. As opposed to distributors, agents do not actually purchase goods for resale. Instead, they match up buyers and sellers on a commission basis. In 1995, new legislation concerning commercial agency agreements was enacted in support of the 1986 EEC (European Economic Community) Directive 86/653. This new legislation defines a commercial agency agreement as a contract where the principal assigns the commercial agent negotiation and possible signatory responsibilities. Thus the agent is able to act in the name and on behalf of the principal, on a permanent basis and in exchange for compensation. All agents exercise their activities in an independent manner, and their principals are exempt from payment of payroll taxes. Agents assume their own fiscal charges (business license tax and value-added tax) and social charges (health insurance, social security and retirement/pension benefits). For a more detailed explanation of the European Union and its governing European Directives (laws) please reference Chapter II: Economic Trends and Outlook of the EU Commercial Guide.
Commercial Agent
Agents with a written contract have the status of commercial agents if they exercise their activity as a sustained independent profession and fulfill the following conditions: 1) do not have a written employment contract; 2) negotiate sales and purchases on behalf of producers, manufacturers or dealers; and 3) are registered with the Tribunal of Commerce as commercial agents. A commercial agent is independent and free to act on the behalf of any other firm. However, in the case where the agent wishes to represent the principal's competitors, consent of the principal must be secured.
The principal may justifiably terminate the commercial agent contract only if the agent shows substantial deficiency in carrying out his or her obligations. An agency agreement with an unspecified duration may be terminated by either party without indemnification, after a fair notice period. This period is one month during the first year of the agreement, two months during the second year and so on with a maximum of six months unless another agreement is reached between both parties. Otherwise, contract termination gives the agent a right to indemnification, often equal to two years' commission.
Other Agents
Persons who do not fulfill all the requirements for commercial agency, and who are not in a position of subordination to the company they represent, are considered agents. Authorization of an agent can be effected by notary act or private agreement. Either party may terminate the agency agreement at will, but the non-terminating party has a right to indemnification of losses.
Salaried Representatives
Unlike agents, salaried representatives have employment contracts. They and their employers share the burden of payroll taxes contributing to social security, unemployment compensation and retirement/pension plans.
Statutory Representatives
Whatever their qualifications or title, persons are considered statutory representatives if they exercise their activity as a sustained independent profession and fulfill the following conditions: engage in the activity of a sales representative for the account of one or more employers; desist from executing commercial operations on their own behalf; institute mutual commitments with employers regarding the nature of: the goods or services offered for sale, the region of activity or the category of clients, and the rate of compensation.
Non-statutory Salaried Representatives
Representatives who are subordinate to their employers and who do not fulfill the requisites for statutory representative status fall into a separate category and are considered regular employees.
Finding a Partner
The U.S. Department of Commerce's International Trade Administration offers several services to help the would-be exporter identify potential foreign representatives. The three primary services available from the Foreign Commercial Service in Belgium are the Gold Key Service, the Agent Distributor Service (ADS) and Industry Targeted Mailings. To request any one of these services, firms should contact the nearest U.S. Department of Commerce District Office.
Contacting and Evaluating Potential Representatives:
Once the American company has identified several potential representatives, it should contact them directly in writing. Just as the U.S. firm is seeking information on the Belgian representative, the representative is interested in corporate and product information on the U.S. firm. The U.S. firm should provide full information on its history, resources, personnel, the product line, previous export activity and all other pertinent information.
At the same time the firm is providing information on itself, it should also engage in a thorough investigation of the potential representative. Following is a list of important facts the firm should endeavor to find out: current status and history, including background on principal officers, personnel and other resources, sales territory covered, current sales volume, typical customer profiles, methods of introducing new products into the sales territory, names and nature of U.S. firms currently represented, trade and bank references, assessment of whether U.S. firm's special requirement can be met, and view of in-country market potential for the U.S. firm's products.
The U.S. firm should not hesitate to ask potential representatives or distributors detailed questions; exporters have the right to explore the qualifications of those who propose to represent them overseas.
Franchising
Although Belgium is a relatively small country of ten million inhabitants, it is an excellent test market for launching new products in Europe. Belgian characteristics are very close to European averages regarding private and public expenditure, GDP per capita, age distribution, and activity of its population. This has led American franchisers to explore the market in ever greater depth. For example, the Belgian franchising market for fast food is growing at an annual real growth rate of twelve percent.
There are no particular restrictions on opening franchise operations in Belgium. The European Union's Directive 4087/88 of November 30, 1988 provides the legal framework for the franchising business in the EU.
In March 1992, the Belgian Franchising Federation was established. The Federation is open to both domestic and foreign franchisers operating in the country. The European Franchise Federation has developed a European code of ethics for its members. It outlines a series of provisions on fair behavior, but does not have the effect of law. Its provisions include arbitration in the case of disputes. Furthermore, it can provide prospective franchisers with considerable information on the franchise market in Belgium. The address is:
Belgian Franchising Association
Boulevard de l'Humanité, 116/2
1070 Brussels, Belgium
Tel: 32/2/523.97.07
Fax: 32/2/523.35.10Direct Marketing
Direct marketing is a steadily growing technique for selling directly to the consumer. Telephone calls at home, personalized letters and massive door to door letter-drops are all on the rise. There are signs, however, that consumer sensitivity is beginning to resist the onslaught. Belgium has several direct marketing organizations and is the home of the European Direct Marketing Association.
Federation of European Direct Selling Associations
14, avenue de Tervuren
1040 Brussels, Belgium
Tel: 32/2/779.42.68
Fax: 32/2/779.42.69The following multi-range consumer mail order catalogs are also available in Belgium:
Trois Suisses 11, Chaussee de Lille 7501 Doornik Tel: 32/2/760.58.58 Fax: 32/69/88.22.11 La Redoute 4, rue de Menin 7730 Estaimpuis Tel: 32/56/85.15.11 Fax: 32/56/85.15.11 Neckerman Luxembourgstraat, 20 9140 Temse Tel: 32/3/710.88.11 Fax: 32/3/710.89.33Joint Ventures/Licensing:In addition to the Commercial Service, there are numerous banks, professional organizations, service companies, financial organizations, and prepared to advise and assist parties considering joint ventures and licensing in Belgium. The American Chamber of Commerce in Belgium, which has over 1000 members, can provide assistance and professional advice. The AmCham can provide practical advice and assisstance to businesses of all sizes. Belgium has a very sophisticated business community with many highly qualified potential joint venture and licensing partners.
Steps to Establishing an Office
The American Chamber of Commerce, in conjunction with the U.S. Embassy, operates an outstanding service called the AMCHAM Investment Service. Drawing upon experts from the financial, accounting, real estate, legal, and business world, the AIS can be used by American companies considering opening an operation in Belgium. Upon request, AIS members will answer questions regarding a variety of issues either in person or via letter/fax.
U.S. companies considering an investment in Belgium, including opening a sales office or distribution center, should contact the AMCHAM, Sheila Chabeau, (Tel: 32/2/513-6770 or Fax: 32/2/513-3590) to request use of the AIS. In addition, the AmCham publishes a booklet entitled "Doing Business in Belgium", which provides guidance on a host of issues related to setting up an operation in Belgium.
Selling Factors/Techniques
In addition to being very competitive and sophisticated, the Belgian market is marked by the Dutch, French, and German language division and its related consumer characteristics. At the industrial level, where price/technical factors are usually paramount, this is not particularly significant; but at the consumer level, issues such as labeling and marketing strategies take on greater importance. In both cases, personal relationships between buyers and sellers can be influenced by the language factor, so it is important to carefully check claims by importers and distributors that they cover the whole Belgian market.
U.S. companies are advised to quote prices on a Cost Insurance Freight (CIF), based on the Belgian sea or airport basis. This is standard practice for most exporters since it facilitates comparisons with EU supplier prices, which need no further adjustment for import duties and are usually quoted on a delivered warehouse basis.
Advertising and Trade Promotion
The U.S. Commercial Service publishes a professional commercial magazine, entitled "Business Links", which is sent to over 8,000 subscribers throughout the Benelux. These subscribers include Belgian importers of U.S. products and services as well as American companies operating in Belgium. U.S. companies are welcome to advertise in the magazine. Rates are available from the U.S. Commercial Service at the Embassy or from the publisher, David Starr, Computerware, Avenue de la Fauconnerie 60, B-1170 Brussels, Belgium, Tel: 32/ 2/ 660-5468, Fax: 32/ 2/ 672-7749.
The American Chamber of Commerce, consisting of American companies operating in Belgium and Belgian firms with U.S. business interests, also publishes a magazine, which goes to its 1,000 members. The Chamber's magazine reaches a clientele that want interest American exporters. Rates are available from the American Chamber (Tel: 32/2/513-6770 Fax: 32/2/513-3590)
In addition, Belgium has a number of sophisticated newspapers and magazines published in Dutch or French. They are listed below, along with the one English language magazine published in Belgium, The Bulletin. English readers in Belgium can also choose from the International Herald Tribune and the Wall Street Journal Europe.
De Standaard (Dutch daily) Gossetlaan 28 1702 Groot-Bijgaarden Tel: 32/2/467-2211 Fax: 32/2/466-3093 Knack (Dutch weekly) Tervurenlaan 153 1150 Brussels Tel: 32/2/737.51.39 Fax: 32/2/737.51.10 De Financieel Ekonomische Tijd (Dutch Business daily) 3 bus, 9 Posthoflei B-2600 Berchem Tel: 32/2/286.02.11 Fax: 32/2/286.02.10 Trends Magazine (Dutch weekly) Research Park Zellik De Haak 2 1731 Zellik Tel: 32/2/467-5700 Fax: 32/2/467-5758 Le Soir (French daily) 120 Rue Royale 1000 Brussels Tel: 32/2/225-5555 Fax: 32/2/225-5911 La Libre Belgique (French daily) Bd. Emile Jacqmain 127 1000 Brussels Tel: 32/2/211-2777 Fax: 32/2/211-2794 L'Echo (French Business daily) Rue de Birmingham 131, 3rd Floor 1070 Brussels Tel: 32/2/526-5511 Fax: 32/2/526-5526 Trends Tendances (French business weekly) Research Park Zellik De Haak 2 1731 Zellik Tel: 32/2/467-5900 Fax: 32/2/467-5759 The Bulletin (English Weekly) Ackroyd Publications Chaussée de Waterloo, 1038 1180 Brussels Tel: 32/2/373-9909 Fax: 32/2/375-9822Pricing ProductBelgium is a highly competitive market and therefore the Belgian importer is looking for the best quality at the lowest price. American products and technology are highly regarded, but they do not command higher prices than competitive products available from within the EU or other third country exporters. One must consider that, while Belgium is an important market in its own right, it is also the country of entry for many imports destined throughout Europe. This environment gives Belgian buyers access to a wide range of products at competitive prices in their own market.
Sales Service/Customer Support
Belgium has implemented legislation that facilitates the creation of distribution, service or coordination centers in Belgium. Distribution centers can engage in a variety of activities including: the purchase of raw materials for members of the company group; the storage, management, and packaging of raw materials; the sale, transport and delivery of these raw materials to group members; and the handling of certain goods purchased for resale. In addition to enlarging the activities performed at distribution centers, the Belgian government has passed legislation allowing these activities to be taxed at a favorable cost plus rate. Similar tax benefits were also recently passed for service and coordination centers.
A service center is an external and independent entity, set up by a multinational company, with the purpose of exclusively carrying out one or several specific activities on behalf of the companies of the group. These activities include extensive customer support, such as call centers, for the follow-up and the support of the sale of goods, help desks for products, registration and confirmation of orders, data processing, customer information and so on. Qualifying service centers must be set up as Belgian resident companies. In contrast, a coordination center is designed to permit a multinational group to directly perform certain financial activities on behalf of its member companies. In distribution, service, and coordination centers, multinationals can derive significant tax and other benefits from operating in Belgium. Specialized tax regimes for all three types of centers allow international companies to broaden their activities while still benefiting from the system's advantages in terms of attractive tax incentives. See also Chapter VII: Investment Climate. For more information on distribution, service and coordination centers, a U.S. company should contact the American Embassy in Brussels or contact the following:
Ministry of Finance - Administration of Fiscal Affairs Tour des Finances Boulevard du Jardin Botanique, 50 bte 52 1010 Brussels Contact: Mr. Gombeer, Auditor Tel: 32/2/210-2348 Fax: 32/2/210-3307 Ministry of Economic Affairs - Service for Foreign Investors 60, Rue Général Leemans 1040 Brussels Contact: Mrs. Colette Ofstralen Tel: 32/2/206-5863 or 206-5864 Fax: 32/2/514-0389 Ministry of Finance - Administration of Direct Taxes Tour des Finances Boulevard du Jardin Botanique, 50 bte 32 1010 Brussels Tel: 32/2/210-2211 Fax: 32/2/210-4118 Contact: Mr. Patrick Jacobs - Coordination Centers Tel: 32/2/210-2342 Fax: 32/2/210-4118 Contact: Mr. DeKeyser - Distribution and Service Centers Tel: 32/2/210-2354 Fax: 32/2/210-4118 FORUM 187 (Federation of Coordination Centers) Rue Montoyer - Montoyerstraat, 63 2nd Floor 1000 Brussels Contact: Jean-Yves Dopchie, Secretary General Tel: 02/282-00-50 Fax: 02/280-18-16Selling to the GovernmentAlthough the objective of EU directives has been to open government procurement to foreign companies, in practice, it is still advisable to work with a locally established company that has the appropriate contacts and local market expertise. Purchases by government or local entities of over BF 5 million ($130,000) are subject to procurement by public tender. In addition, current EU directives require that tenders for purchases of over $20 million must be published in the EU Bulletin and are subject to procurement procedures established by the EU for all member states. For an explanation of the European Union and its governing European Directives (laws) please reference the EU Commercial Guide.
Protecting Your Product from IPR Infringement
The intellectual property rights granted under U.S. patent, trademark or copyright law can only be enforced in the United States and its territories and possessions. The EU, for its part, has taken a number of initiatives to provide intellectual property protection, but not all measures have been implemented. In cases of non-implementation, national laws still prevail.
Patents
Belgium is a member of the World Intellectual Property Organization (WIPO) and the European Patent Convention (EPC). The Community Patent Convention has only been ratified by Germany and Greece, subsequently a single European patent, valid throughout the EU, does not yet exist. In the meantime, the patent applicant can choose between a national and a multiple-country patent. In the latter case, a single application to the European Patent Office in Munich (European Patent Office, Erhardstrasse 27, D-80331 Munchen, Germany, Tel: 49-89-23990, Fax: 49-89-23994465) is required for obtaining patents valid in a number of countries within the EU, Liechtenstein, Monaco, and Switzerland. A patent thus granted is valid in Belgium only when a copy of the grant is in one of Belgium's three national languages and is filed with the Belgian Office of Industrial Property. To obtain a national patent in Belgium, the inventor or his/her assignee must file a request with the Office of Industrial Property in the Ministry of Economic Affairs. Officially the Belgian Patent Office cannot refuse to grant anyone a patent. Normal Belgian patents last for six years. Those who require a twenty year patent must request a "Novelty and Non-Obvious Search". Once granted, the patent is registered with the Register of Patents, again located in the Ministry of Economic Affairs. However, the validity of the Patent is not guaranteed. The Belgian courts have the power to nullify a patent if the court feels that the patent does not meet the Novelty and Non-obvious specifications.
Trademarks
An EU Trademark Office has been established in Alicante, Spain. Trademark registration can be handled through this office:
EU Trademark Office
Av. Aguilera 20
03080 Alicante, Spain
Tel: 34/ 96/ 513-9100
Fax: 34/ 96/ 513-9173Trademarks in Belgium have been regulated by the Uniform Benelux Law of 1962, which offers protection in Belgium, the Netherlands and Luxembourg. A trademark application can be filed with the Belgian National Office in the Ministry of Economic Affairs or with the Benelux Trademark Bureau located in The Netherlands (15 Bardewyklaan, 2591 XR Den Haag, Tel: 31/ 70/ 349-1111). A search is required to ascertain the existence of a similar or identical trademark for the same category of product. If granted, protection lasts for ten years from the date of application and can be renewed for further periods of ten years each. Trademarks must be used within three years of registration or within any uninterrupted period of five years.
Copyrights
Belgium is a member of the Bern Convention and the Universal Copyright Convention of Geneva (UCC). As a member of the UCC, to which the United States and 50 other countries belong, Belgium accords authors automatic copyright protection throughout all UCC countries when registered with this organization. Protection exists for the life of the author, plus 50 years after death. In addition, Belgium has passed a revised copyright law, which brings Belgian practice into conformity with existing EU directives. However, EU directives permit some variation in each member state and U.S. firms wishing to protect their copyrights in Belgium should consult local legal counsel. This is particularly true regarding reciprocity provisions in the new law.
The harmonization of national copyright legislation throughout the EU has been prioritized for certain sectors in the European Commission's green paper and follow-up paper. Steps have been taken in the fields of:
-- Computer Programs (adopted): Software protected as literary work.
- Satellite Transmissions (adopted and in force): Authorizations from the copyright holder only in the member state from which the transmission occurs.
-- Cable Broadcasts (adopted and in force): Rights for the simultaneous, unaltered retransmission by cable of programs would be negotiated exclusively within collective management societies.
-- Copyright period (in force since July 1, 1995): Copyright protection 70 years after the death of the author, and for neighboring rights: 50 years.
-- Rental/Lending and related rights (adopted): Exclusive right permitting authorities, performers and producers, film and record producers to authorize or forbid the rental or lending of their works. The directive harmonizes member state legislation on certain neighboring rights concerning fixation reproduction, distribution, broadcasting, and communications to the public.
-- Databases (proposal): Harmonization of EU copyright rules affecting databases, including an "unfair extraction" clause.
-- Design and Model protection (proposal): 25-year period of protection for industrial models and designs. Applications for the registration of a design are filed with the Benelux Office for Designs and Models or with the Ministry of Economic Affairs (see Appendix E, Foreign Investment offices).
Need for Local Attorneys
Belgium is not a highly litigious country. Nevertheless, U.S. companies should consult local attorneys for most business transactions. For example, we have already noted above the need for local attorneys when drawing up an agency or a distribution agreement. The standard U.S. agreement, which often applies U.S. law, will not suffice in Europe. Local attorneys are also needed when registering patents, trademarks, or copyrights. Ultimately, local legal advice is essential when setting up an office, or when establishing a distribution, service or coordination centers. The Commercial Service of the U.S. Embassy maintains a list of local lawyers specializing in business transactions in Belgium and Europe.
Performing Due Diligence
To assist American companies in conducting due diligence prior to entering into financial and/or business agreements with Belgian companies, the Commercial Service can recommend several reputable firms that handle credit reporting and collections services. The market leaders in Belgium are Graydon International and Dun & Bradstreet; both addresses can be found in Appendix E.
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[end of document] Note* International Copyright, United States Government, 1998 (or other year of first publication). All rights under foreign copyright laws are reserved. All portions of this publication are protected against any type or form of reproduction, communications to the public and the preparation of adaptations, arrangement and alterations outside the United States. U. S. copyright is not asserted under the U.S. Copyright Law, Title17, United States Code.
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