Exlm and Countertrade PDF

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Exlm and Countertrade...

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INTB 200 Week Ten Exlm and Countertrade

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Pitfalls of Exporting A. Common Pitfalls for Exporters 1. Poor Marketing 2. Poor understanding of competitive conditions 3. Failure to customize the product offering 4. Lack of an effective distribution program 5. Poorly executed promotional campaign 6. Problems securing financing 7. Voluminous paperworks, complex formalities, potential delays and errors a) Trouble with shipping exports due to legality b) Department of commerce (export.gov and exim.gov) Improving Performance A. International Comparisons 1. Firms fail to consider export opportunities 2. Not educated enough a) Germany and Japan have developed extensive institutional structures for promoting exports B. Information Sources 1. State and Local commissions 2. Private organizations C. Service Providers 1. Freight forwarder, export managing companies, export packaging, etc. D. Export strategy Exporting and Import Financing A. Lack of Trust 1. Exporters and importers have to trust each other 2. Exporters prefer to be paid in advance 3. Importers prefer to pay after shipment arrives B. Letter of Credit 1. Bank is involved, the bank vauges for the client because they have a relationship. 2. Steps a) Importer goes to the bank and applies for a letter of credit b) Bank of importer informs bank of exporter about letter of credit c) Exporter bank informs the bank of the importer that they are good for their word. d) Exporter gets paid and goods are shipped e) Once goods are received they pay their bank back. f) Risk is between the banks.

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Countertrade A. Types 1. Barter a) a direct exchange of goods and/or services between two parties without a cash transaction 2. Counterpurchase a) a reciprocal buying agreement 3. Offset a) similar to counterpurchase—one party agrees to purchase goods and services with a specified percentage of the proceeds from the original sale 4. Switch Trading a) occurs when a specialized third-party trading house buys a firm’s counterpurchase credits and sells them to another firm 5. Compensation or Buybacks a) occur when a firm builds a plant in a country (1) or supplies technology, equipment, training, or other services to the country (2) agrees to take a percentage of the plant’s output as a partial payment for the contract...