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Chapter 13

Chapter 13. Exports, Imports, Countertrade. Opportunities and risks of exporting Steps to improve export performance Information sources/programs on exporting Financing exporting Countertrade as an export facilitator. Exports, Imports, Countertrade. Perception: Exports

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Chapter 13

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  1. Chapter 13 Exports, Imports, Countertrade

  2. Opportunities and risks of exporting Steps to improve export performance Information sources/programs on exporting Financing exporting Countertrade as an export facilitator Exports, Imports, Countertrade

  3. Perception: Exports Offer huge revenue / profit opportunities overseas Are “there for the pickings” Large firms are more successful Proactive about exporting to realize promise Systematic effort backed by knowledge of overseas markets Smaller firms are reactive Overseas markets are an afterthought Ad-hoc effort on an opportunistic and often naïve basis Exports require volumes of specialized paperwork Exporting Opportunities and Risks

  4. Government information sources US: various parts of the Dept. of Commerce Other countries: similar entity Embassies and consulates: commercial sections Export management companies Act as the export department of firms Experienced specialists Not exclusive Focused export strategy Export Performance Improvement Factors

  5. Enter on a small scale to reduce risks Add product lines after export operations begin to be successful Hire locals to promote the firm’s products Some Successful Export Strategies

  6. Assures: Exporter of payment Importer of product Banks offer financing intermediary service Letters of credit: bank guarantee of payment to exporter “bought” by the corresponding importer Draft or bill of exchange: instructions to bank to pay at a certain time based on certain documentation Carriers provide to the exporter Bill of lading: receipt, contract and document of title Export/Import Financing

  7. Structures an international sale when means of payment are difficult, costly, or non-existent No currency convertibility Weak reserves prohibit access to hard currency Barter-like agreements Trade goods and services for other goods and services 8-10% or world trade by value is in the form of countertrade (up from 2% in 1975) Countertrade

  8. Main attraction: way to finance an export deal meet requirement of local government to support exports Main drawback: risk of disposal / sale of goods at less than full value disposal of imports may require resources other than those that the firm possesses Countertrade

  9. Barter Counterpurchase Offset Switch Trading Compensation or Buyback Types of Countertrade

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