Countertrade :: essays research papers

CounterTrade PaperCounter foxiness is a administer between two countries by which goods are exchanged for other goods rather than for hard currency. Countertrade is a lot the solution for exporters that whitethorn not be able to be nonrecreational in his or her home currency and according to the text a few(prenominal) exporters would desire payment in a currency that is not convertible."sometimes both parties are happy with the goods they receive, other times one democracy will liquidate the received asset, ultimately receiving cash in the deal. This is also referred to as "using barter to complete a trade." (www.investopedia.com, 2004)An example of countertrade is, the motive Soviet Union would a good deal countertrade, agreeing to trade, say, Soviet oil for another countrys vehicles. later researching this subject, I have learned that countertrade is an umbrella term covering a wide range of commercial mechanisms for trilateral trade. Reciprocal trading (two -sided trading, trade in return) occurs when the trade customers is also a supplier. The reciprocal trading arrangements may or may not be formally linked. In practice, reciprocal trade may strengthen an existing trading relationship, and may sluice create mutual dependencies, which may create new trade relationship. profession is probably the oldest and best known example of countertrading, however others, such as offset, buyback, tolling and switch trading, have also evolved to meet the requirements of a more sophisticated serviceman economy. All of these generally involve the exchange of goods or serve to finance purchases, rather than using cash alone. "The importance of countertrade as a trading tool has increased since early 1970s -especially in markets where on that point is a shortage of foreign exchange and countertrade may be the wholly effective marketing mechanism for doing business." (www.barternews.com, 2003)"One of the unique chances of countertrad e transactions is that companies often find themselves handling products with which they are not familiar. This is probably the greatest risk in a countertrade transaction." ((www.barternews.com, 2003)Approximately 130 out of 192 countries in the world require countertrade, one form or another, in their procurements. Many of them did so after having undertaken intensive and serious studies. Many global companies have sanctified in-house specialists dealing specifically with countertrade. Some 20% to 30% of world trade is countertrade. The annual global market size for countertrade is estimated to be between US$200 to US$500 billion. No one really knows what are the correct percentages are and how large the true market size is.