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Ramaseshan Peter Kudrich. Conference paper. This process is experimental and the keywords may be updated as the learning algorithm improves. This is a preview of subscription content, log in to check access. Angelidis, J. Google Scholar. Bates, C. Carter, J.
Caves, R. CrossRef Google Scholar. An aircraft manufacturer might accept responsibility for finding markets for a variety of consumer goods produced in a host country in return for the sale of its aircraft. In order to sell its products in a particular country, a steel manufacturer might be required to take back products ranging from palm oil to coffee to timber.
These are all examples of countertrades—transactions that link, legally or otherwise, exports and imports of goods or services in addition to, or in place of, financial settlements.
Welcome to the global economy of the 21st Century, where countertrade is being increasingly viewed by firms and nations as an excellent mechanism to gain entry into new markets. Studies by the U. Many countries of the world lack a fully elastic currency capable of expanding with the growth of production to meet the demands of product and service markets.
The money supply in these countries is often controlled by monetary authorities targeting specific economic objects like curbing inflation, ensuring full employment, and protecting the value of its currency in foreign exchange markets.
Countertrade and financing terms in these country markets are becoming as important as the quality and availability of desirable product. To the uninitiated, countertrade is a generic term for parallel business transactions that link a sales contract with an agreement to purchase goods or services as a means of reducing the flow of convertible currency. For marketers suffering from marketing myopia, it is a last ditch sales strategy. For proactive marketers, it is viewed as a respectable, almost essential global strategy tool.
Countertrade is a resourceful way to arrange for the sale of a product from an exporter to a company in a country that does not have the resources to pay for it in hard currency. The main reason that American firms engage in countertrade is to meet requirements set forth by foreign governments or customers. Countertrade, however, can be an effective and excellent mechanism to gain entry into new markets. The party receiving the goods as a mode of full or partial payment of exported goods or services may be instrumental in opening up new international marketing channels and ultimately expanding the market for mutual benefit of both exporter and importer.
Yet, countertrade remains essentially a reactionary trade practice for many companies. All countertrade transactions explicitly link import and export transactions between two traders, but they can differ from each other in terms of whether they involve foreign exchange in the transaction, whether the two trade flows are temporarily separated, and where the trade flows stand in technical relation to each other. These include:. During the s, countertrade transactions were mainly a vehicle for financing trade turnovers with developing countries.
In the s, the practice emerged as a vehicle for financing capital projects and production-sharing ventures for repatriation of profits. Increasingly, multinationals are being forced to pursue countertrade as an alternative mode of payment for products and services exported or marketed. Companies that utilize countertrade enjoy increased sales and increased utilization of plant capacity. Purchasing benefits include a means of supply assurance and the development of world knowledge in the purchasing function.
One of the unique challenges of countertrade transactions is that companies often find themselves handling products with which they are not familiar.
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