1. Exporting, Importing, and Countertrade
CHAPTER 15
Exporting, Importing, and Countertrade

2. Learning Objectives Simple strategic steps for successful exporting
What is meant by counter trade?
Why do firms enter counter trade agreements?

3. To ship to another country for sale or exchange.
15-4
Exporting
To ship to another country for sale or exchange.
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© 2003 The McGraw-Hill Companies, Inc., All Rights Reserved.

4. Promise and Pitfalls of Exporting
Ignorance
and
Intimidation
Poor market
analysis
Poor understanding
of competitive
conditions
Failure to
customize product
offering
Poor
distribution
program
Poorly executed
promotional
campaign
Problems securing
financing

5. Improving Export Performance
Information from
government sources
Export Management
Companies
Utilizing export
strategies

6. Government Support for Exports

7. US Export Support

8. Utilizing Export Management Companies
EMCs:
Export specialists who act as the export management department or international department for client firms.
Two types of assignment:
Start operations for a firm with understanding the firm will take over after they are well established.
Start-up services with continuing responsibility for selling the firms products internationally.

9. 15-10
Exporting Strategy
It helps to hire an EMC or, at least, someone with experience.
Focus on one or a few markets.
Enter markets on a fairly small scale until you ‘learn the ropes’. Add new lines after initial success.
Need to recognize the time and managerial commitment.
Build strong and lasting relationships.
Hire locals to help firm establish itself.
Keep the option of local production in mind.
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© 2003 The McGraw-Hill Companies, Inc., All Rights Reserved.

10. Trade carried out wholly or partially in goods rather than money.
15-17
Countertrade
Trade carried out wholly or partially in goods rather than money.
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© 2003 The McGraw-Hill Companies, Inc., All Rights Reserved.

11. Countertrade as a Share of World Trade Value
15-18
Countertrade as a Share of World Trade Value %
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© 2003 The McGraw-Hill Companies, Inc., All Rights Reserved.

12. Countertrade Practice
15-19
Countertrade Practice
Percent of companies engaged in each countertrade practice
Figure 15-5
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© 2003 The McGraw-Hill Companies, Inc., All Rights Reserved.

13. Countertrade Typically, 5 kinds of countertrade Barter Counterpurchase
15-20
Countertrade
Typically, 5 kinds of countertrade
Barter
Counterpurchase
Offset
Switch trading
Compensation or Buyback
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© 2003 The McGraw-Hill Companies, Inc., All Rights Reserved.

14. 15-21
Definitions
Barter: direct exchange of goods and/or services without a cash transaction.
Counterpurchase: reciprocal buying agreement.
Offset: like counterpurchase, but can buy goods from any firm in country.
Switch trading: uses third-party trading house.
Buybacks: foreign plant takes products as contract payment.
McGraw-Hill/Irwin
© 2003 The McGraw-Hill Companies, Inc., All Rights Reserved.

15. Pros and Cons of Countertrade
15-22
Pros and Cons of Countertrade
Gives firms a way to finance an export deal when other means are unavailable.
Foreign governments may require it.
Helps countries that don’t have sufficient foreign currency reserves.
However:
May involve defective goods.
Must invest in in-house trading department - expensive and time consuming.
Most attractive to large, diverse multinational enterprises.
McGraw-Hill/Irwin
© 2003 The McGraw-Hill Companies, Inc., All Rights Reserved.