Countertrade Assignment Example | Topics and Well Written Essays - 250 words

Countertrade - Assignment Example cting countertrade in that deals can be discussed and online and even technical support to buyers can be provided online without incurring travelling expenses. 1. Only option: Trade can be financed with counter-trade when other means are unavailable. Either supplier or buyer credit may be impossible to arrange. Performance or payment bank guarantees may be too costly. The project might call for longer term financing then government-supported export credit facilities allow. The political situation in host countries might preclude other government financial aid. The host country might not permit currency repatriation. 3. Non-trade benefits. Long-range management and technical benefits from joint venture partnerships can often be achieved through buyback counter-trade arrangements, specifically coproduction transactions. In most cases a host-country partner brings to the partnership local management techniques and protocol that might take a foreign company years to develop on its own. In some cases, the partner brings technical or application techniques unique to the host-country cultural environment. 1. Disposal of goods: Counter-trade contracts involving the exchange of goods that cannot be consumed internally require the sale or trade of these goods on the open market. Even with an in-house trading specialist and assistance from an international consultant, the process is time-consuming and costly. Using a third-party broker increases the cost of disposing of the goods. 2. Internal expertise: To achieve long-term success in counter-trade transactions, a company must establish internal expertise. This means setting up a department dedicated to arranging and managing counter-trade deals. This can be costly addition for a smaller company, and unless it engages in several counter-trade deals, these personnel add unabsorbed