chapter 13 Exporting Importing and Countertrade Mc GrawHillIrwin

chapter 13 • Exporting, Importing, and Countertrade Mc. Graw-Hill/Irwin Global Business Today, 5 e © 2008 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved.

Chapter 13: Exporting, Importing, and Countertrade INTRODUCTION • Both large and small firms stand to benefit from exporting • The volume of export activity in the world economy is increasing as exporting has become easier • The decline in trade barriers under the WTO along with regional economic agreements such as the European Union and the North American Free Trade Agreement have increased export opportunities • Firms wishing to export must identify export opportunities, avoid a host of unanticipated problems that are often associated with doing business in a foreign market, become familiar with the mechanics of export and import financing , learn where to get financing and export credit insurance, and learn how to deal with foreign exchange risk 13 - 3

Chapter 13: Exporting, Importing, and Countertrade THE PROMISE AND PITFALLS OF EXPORTING • The potential benefits from exporting can be great--the rest of the world is a much larger market than the domestic market • Larger firms may be proactive in seeking out new export opportunities, but many smaller firms are reactive and only pursue international opportunities when the customer calls or knocks on the door • Many novice exporters have run into significant problems when first trying to do business abroad 13 - 4

Chapter 13: Exporting, Importing, and Countertrade IMPROVING EXPORT PERFORMANCE Inexperienced exporters can gain information about foreign market opportunities from various sources and avoid some of the common pitfalls that frustrate novice exporters. • An International Comparison • Information Sources • Utilizing Export Management Companies • Export Strategy 13 - 5

Chapter 13: Exporting, Importing, and Countertrade EXPORT AND IMPORT FINANCING Mechanisms for financing exports and imports have evolved over the centuries in response to a problem that can be particularly acute in international trade: the lack of trust that exists when one must put faith in a stranger. 13 - 6

Chapter 13: Exporting, Importing, and Countertrade • Lack of Trust • Letter of Credit • Draft • Bill of Lading • A Typical International Trade Transaction 13 - 7

Chapter 13: Exporting, Importing, and Countertrade EXPORT ASSISTANCE Prospective U. S. exporters can draw on two forms of government -backed assistance to help their export programs. • Export-Import Bank • Export Credit Insurance 13 - 8

Chapter 13: Exporting, Importing, and Countertrade COUNTERTRADE • Countertrade is an alternative means of structuring an international sale when conventional means of payment are difficult, costly, or nonexistent • Countertrade refers to a range of barterlike agreements that facilitate the trade of goods and services for other goods and services when they cannot be traded for money 13 - 9

Chapter 13: Exporting, Importing, and Countertrade • The Incidence of Countertrade • Types of Countertrade • The Pros and Cons of Countertrade 13 - 10