Ch. 14 EXPORTING, IMPORTING, AND COUNTERTRADE

Resources for helping export

-At little or no cost, for example, you can get product and country market surveys, worldwide market exposure, specific trade leads, and find qualified overseas distributors -Low-cost help is also available from federal, state and local trade assistance organizations. They typically offer one-on-one export counseling, export seminars and matchmaking services.

Indirect exporting

-most common form -Selling goods in other countries by using another company to carry, market, or sell the goods for you

Countertrade

A range of barter-like agreements that facilitate the trade of goods and services for other goods and services when they cannot be traded for money

Sources of information and assistance for exporters

Get financing aid from the export-import bank Get export credit insurance from the foreign credit insurance association

Export credit insurance from the foreign credit insurance association

Insures exporter against risk that foreign importer will default on payment Provided by Foreign Credit Insurance Association Provides coverage against commercial risks and political risks

Letter of credit

Issued by a bank at the request of an importer stating the bank will pay a specified sum of money to a beneficiary, normally the exporter, on presentation of particular, specified documents This system is attractive because both parties are likely to trust a reputable bank even if they do not trust each other

Common pitfalls of exporting

Poor market analysis Poor understanding of competitive conditions Failure to customize the product offering to foreign customers Lack of an effective distribution program Poorly executed promotional campaign Problems securing financing Voluminous paperwork, complex formalities, potential delays and errors

Direct exporting

everything is done by yourself (only few companies do this method)

Export management companies

handle all aspects of exporting Export trading company, Export packaging company, Customs brokers, Confirming houses (buying agents), Export agents, merchants, remarketers, Piggyback marketing

Bill of landing

issued to the exporter by the common carrier transporting the merchandise

Financing aid from the export-import bank

wholly owned US gov. corporations Designed to supplement, not compete, with capital lending Provides financing aid that will facilitate exports, imports, and the exchange of commodities between the U.S. and other countries Has a direct lending operation to lend dollars to foreign borrowers for use in purchasing U.S. exports

Draft

written by an exporter instructing an importer, or an importer's agent, to pay a specified amount of money at a specified time Also called a bill of exchange