Archive for international trade

Import-export, International Trade Explained

International trade can be generally termed as trading of supplies and services among two countries. Trade in two neighboring countries was also done in prehistoric era. Today, international trade is the basic barometer that tells the entire story of a country’s economy, social and political status. In fact, it can be said that international trade is crucial for overall growth of economy.

Good bilateral relations between the nations significantly influence the success of International Trade. In the past few decades, Import Export was severely suppressed and was considered impossible due to high excise duty and taxes. During that period, countries mainly adopted the policy of mercantilism. The inflow of capital is what affects the prosperity of the nation.

Nevertheless, with the arrival of globalization and industrialization during 19th century, these policies have been relaxed and the idea of free trade has been accepted. Today, all nations are able to bear witness to the benefits that free trade brings about.

Growth wise, the import and export industry is growing at lighting speed. There are 450,000 people involved in the import export business and this generates a massive revenue of almost $656 billion each year.

The top 1,000 of those importers account for 65% of the total import value-some $450 billion, or an average of $400 million each. That leaves the remaining $256 billion in imports to be divided among 349,000 importers. This averages to about $734,000 in production value for each importer. This means the “average” importer has sales of $1-2 million dollars per year.

Currently, international trade is mostly conducted while observing the guidelines set by the World Trade Organization. But, the trade between two countries is also influenced by the economic treaties between the countries.

Some of these agreements include NAFTA between US, Canada and Mexico, European Union between 27 countries in Europe and MERCOSUR in South America.

Despite having rules to regulate international trade, trade between countries still involve quite a few potential hazards at the economic and political fronts. Some of these include termination of international export or import licenses, danger of war, risk of striking a ban on imported products after the shipment of the consignment and currency exchange controls, and more. Therefore, anyone involved in the import export business should be wary about changes to both domestic and international laws and policies.

If you want to make it big in the import export Business, it is recommended that self-employment is the best start. Eventually everyone desires to own his business at some stage. Why not make the import export a dream job for yourself.

85% of American millionaires grow to be rich in their own career, and two thirds of them are self-employed. If you have true passion for trading, the Import and Export business can become your dream career.

A Tip for American Business People Dealing With International Trade

A good tip for business people in international trade dealings is relating to your trading partner and understanding their business methods. Giving importance to that will lead you to an axiom in business relationship which is the common knowledge of and interest in language, religion, or ethnicity of your business partner. American business people that would put this into serious consideration would have an edge over others.  Before venturing in an international trade, it would be valuable to have a basic knowledge of the formalities that apply to a foreign country one is about to deal with. Observance of cultural etiquette specific to the business partner’s country will show respect and care that is seldom expressed in the  international business scene.

It is inevitable nowadays, given its size and power in the business world, for the United States to be a trading partner for almost every nation entering in the international trade. American businesses could be more successful in international trade if they directed their efforts to providing a form of cultural training that could go hand in hand with international trade. Perhaps integrating the discipline of Anthropology would helpful.  Anthropology is the study of people, their culture and how they function in all facets of society, often with a concentration in one particular part of the world. A person with culturally specific knowledge as well as trade knowledge will be an important asset in being a portal to a foreign company’s business and trade methods. Having sufficient cultural knowledge of a foreign country that one is about to deal with would help in understanding their business practices.  This will enable one to do business with them more economically and more sensitively, much more so than someone lacking the cultural training. In effect, this will bring in more business opportunities in the future.

This article is made available so that no business company would have the same pitfall as Chevrolet experienced as it marketed its Chevrolet Nova in Mexico. It is a familiar story in the business industry where had the company had a representative who was familiar with the language of Mexico, they would have learned sooner that Nova in Spanish means “no go”.  If Chevrolet had involved people with knowledge of the customs and language in Mexico when doing business there, they could probably have avoided this mistake, perhaps by simply marketing the car under a different name.

As an American businessman may know what product is important to a specific country, it is clearly useful to note that knowing how that product works in their society and what investments they have in the market that is centered around the product will give the US company a definitive advantage over its competitors. Obviously, further advantage will transpire if a company is willing to invest in the cultural education of their representatives specifically targeting the country with which they are dealing. Chinese businessmen, for example, would most likely prefer a business representative who speaks their language and shows an interest in the cultural attributes of their society. 

Some other examples of cultural differences and formalities: In China, it is rude to begin eating before the host picks up his or her chopsticks. In Japan, it is a norm to show respect for the Japanese culture by offering a slight bow when being introduced. And, in Brazil, it is considered very impolite to cut food with the side of the fork; a knife is required to be used at all times. These and millions of other small cultural practices can be observed, exhibiting an interest in the cultural practices of the country and improving business dealings between international business partners. Because of this, a method of cultural training is becoming increasingly important in trade relations, as the world continues to shrink with technological advances in communication. A system of updating business people interested in keeping up with changing trends in the business world is necessary.  Basic knowledge of language, religious practices, food, and history is already proven (in this article) to be  helpful when interacting in the business world of a country abroad. Now, as the American business will incorporate efforts to become familiar with the specifics of that foreign business, the trade relationship is expected to run suaver.

International Trade: Factors Affecting the Trade

Internet is always thought of as bridging the gap in the international trade system. Standardization of the import/export trade is greatly dependent on the role that Internet plays. It is essential for any business enterprise to implement efficient electronic data exchange techniques, so as to stand for the long run in the international trade market. Customizing the trade according to international standards helps the agencies to learn various aspects of international trade, like legal system, and also explain the flow of the international trade. This will in turn help to bring China much closer to the rest of the world.

-International Payment System

International trade payment is different from that of the internal trade, as it involves credit cards and other electronic means for payment rather than the traditional payment system in internal trade. The conflicts related to payment are solved to a great extent using the electronic payment system. These systems ensure the dignity of both the parties involved. Payment on Internet only requires the transmission and verification of the bill, after which information and fund transfer follows. The problem that China faces while trading on the Internet is the lack of a proper and well organized system for delivering logistics. The solution to this problem is to follow the same transport system in Internet trade as the transport system of international trade. The international trade is carried out by the internationally established shipping companies.

-Switch over to efficient process

International trade is somehow a complex and a choosy process. So, it is effective to use B2B processes for various operations of the trade like custom declaration and billing. The B2B platforms reduce the overall cost of the international trade process.

B2B platform is becoming very popular in international trade. However, China still lacks the basic tools for utilizing B2B processes in the import/export trade. In addition there is also a deficiency in the market and the legal environment that support this type of business process. But China is slowly starting to establish internet business for the international trade, to overcome the differences in international trade with other developing companies.