International Trade Lawyers in Thailand
Choosing between a distributor and your own entity is a legal decision as much as a commercial one
Choosing between a distributor and your own entity is a legal decision as much as a commercial one
Companies entering Thailand usually frame the choice commercially: appoint a distributor, or set up locally. The consequences, though, are largely legal — who holds the customer relationship, who registers the product, what happens to the market position if the relationship ends, and where a dispute would be heard. We advise foreign companies on that decision and on the agreements that follow, and Thai companies dealing with counterparties abroad on contracts, payment terms and what recovery would actually involve if something goes wrong at distance.
Service Scope
Distributor or own entity: what actually differs
A distributor is faster and carries less fixed cost, but the customer relationships, and often the product registrations, sit with them. Your own entity costs more to establish and carries ongoing obligations, but the market position remains yours. The decision is usually made on cost and speed, and regretted on the day the relationship ends and it becomes clear who controls what. Deciding it with the exit in view produces a different answer surprisingly often.
The end of the agreement should be drafted at the beginning
Distribution disputes concentrate at termination: what notice is required, what happens to stock in the channel, who may approach the customers afterwards, and what becomes of registrations held in the distributor's name. Agreements that are detailed about targets and silent about all of that are common. The clauses that matter most are the ones neither party expects to use.
Recovery across a border is a question of planning, not litigation
Whether a foreign judgment is worth obtaining depends on where the counterparty's assets are and what recognition would require there. That is a question best answered when the contract is drafted — through the choice of governing law and forum, and through security or payment terms — rather than after a default. Where it was not, the practical options narrow to negotiation and to whatever can be reached locally.
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Further reading
Choosing a market-entry route before committing capital. Who is the importer of record and what that commits each party to, the distributor agreement terms nobody drafts until it is too late, warranty exposure by route, and a decision table by volume, margin, control and speed.
10 min readForeign Investment GuideBefore you incorporate, someone has to decide what your company actually does. The classification interview we run, the four routes a service or trading business realistically chooses between, and what a formation agent offering you a Thai 51% is really selling.
11 min readDebt Recovery GuideA companion guide for creditors sitting outside Thailand: the power of attorney and its legalisation, the evidence pack your own systems must produce, choosing between a civil claim and a criminal complaint, the limits of tracing a debtor who has moved to Thailand, and getting recovered funds out to the parent company.
10 min readForeign Investment GuideCash gets trapped in Thai subsidiaries for structural reasons decided at incorporation, not banking ones. The debt-versus-equity choice you cannot cheaply reverse, where IP should be owned before the brand has value, the substance behind any charge to the Thai entity, and how these structures fail.
10 min read