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    Exporting, Importing and Countertrade

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    ABU YEROME

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    © All Rights Reserved
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    Exporting, Importing and Countertrade

    Uploaded by

    ABU YEROME
    2 views10 pages

    Copyright

    © © All Rights Reserved

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    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    2 views10 pages

    Exporting, Importing and Countertrade

    Uploaded by

    ABU YEROME

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    You are on page 1of 10

    Exporting,

    Importing and
    Countertrade
    Slide
    1

    Key Issues
    • What are the opportunities and risks associated with exporting?

    •How can companies improve their export performance?

    •What information programs and government resources can help exporters?

    •What are the basic steps in financing exporting?

    •How can countertrade facilitate exporting?


    Slide
    3

    Exporting Pitfalls
    •Poor market analysis
    •Superficial understanding of competitive conditions
    •Underestimation of time and expertise needed to develop a foreign export
    market
    ◦ Some customers require face-to-face interactions
    ◦ Lack of allocation of sufficient managerial resources
    ◦ Underestimation of need/value to develop local relationships (“let the agent deal with this”)

    •Failure to customize the product to the needs of foreign users (industrial or


    consumer)
    •Ineffective distribution system
    •Weak promotion program
    Slide
    4

    Exporting Pitfalls (cont.)


    •Poor understanding of involved logistics
    ◦ specialized paperwork
    ◦ labyrinthian regulations that may involve for typical
    transaction
    ◦ need to have staff competent to produce and check
    ◦ Can by up to 10% of cost of exported product

    •Lack of excellent documentation system


    Slide
    5

    Export Performance Improvement


    •Government information sources
    ◦ In other countries similar organization
    ◦ Embassies and consulates have commercial sections
    •Export management companies
    ◦ Act as the export marketing department of firms
    ◦ Experienced specialists
    ◦ However, not exclusive
    •Focused export strategy
    Slide
    6

    Export/Import Financing
    •Service that allows exporter to be assured of payment
    and importer to be assured of product
    •Banks offer financing intermediary service
    ◦ Letter-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 move product from A to B
    ◦ Bill-of-Lading issued to exporter by the carrier: is a receipt, a
    contract and a document of title issued to the exporter by the
    carrier
    Slide
    7

    Export Assistance
    •Export-Import Bank (Exim bank)
    Independent agency of US Government
    Provides financing for exports, imports, and exchange of
    commodities
    Guarantees repayment of medium, long term loans to foreign
    borrowers for purchasing exports
    •Export Credit Insurance
    Covers the exporter who must deal with an importer who insists on
    no letter-of-credit
    Issued by the Foreign Credit Insurance Association
     Grouping of private commercial banks
     Under the guidance of Export-Import Bank
     Coverage against commercial and political risk
    Slide

    Countertrade
    8

    •A range of barterlike agreements


    ◦ Trade goods/services for other goods/services
    ◦ Used when currencies not convertible
    ◦ Used when the currencies are too unstable
    •Types of Countertrade
    ◦ Barter: direct exchange of goods
    ◦ Counter purchase: reciprocal buying agreement
    ◦ Offset: similar to Counter purchase but more than one set of
    exchanges can be involved
    ◦ Switch trading: involves the use of a specialized third party trading
    house in a countertrade agreement
    ◦ Buybacks: a firm builds a plant, supplies technology or equipment or
    training or other service in a country and agrees to take percentage
    of output as partial payment
    Slide

    Countertrade: Pros and Cons


    9

    •Pros
    ◦ Can offer a way to finance exports when other forms of financing
    are not available
    ◦ Can be the preferred financing method in cases where cash deals
    are too risky
    ◦ May satisfy the need to build good will with the host government
    •Cons
    ◦ May involve the exchange of poor quality goods
    ◦ Importing firm must find a market for goods in an unrelated
    industry
    ◦ Can involve building a marketing infrastructure to dispose of a stream of
    such goods
    ◦ More suitable to large firms
    Thank You

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