If you want to export or import any goods or services, this guide created by the Swintfair team will provide you with extensive information on how to do so. Continue reading to learn more.
Definition of export and import
Exporting is the act of producing goods or services in one country and selling or trading them in another country. The term export originates from the Latin words ex and portare, meaning “to carry out.” The opposite of exporting is importing: buying goods from one country and selling them in your own.
Exporting is just one of the methods companies use to influence and enhance their presence in foreign markets. Importing is the method used to acquire products that are not readily available in a country or to acquire products at lower costs than if they were produced in that country. The latter occurs mainly when labor costs are lower in a foreign country, so that they can manufacture and sell at lower prices than those in the country of destination. Another factor that leads to the decision to import is the fact of being able to produce larger quantities than can be produced in the country of destination.
Export and import of products
Import and export of products and services make up a country’s international trade. The trade balance is the difference between the amount exported and imported. A trade surplus occurs when exports exceed imports, whereas a trade deficit occurs when imports exceed exports.
Both exporting and importing manage to combat possible monopolies that may exist in different countries. In addition, many markets are in saturation processes, so exporting can open a new window of growth both internally and externally, and importing can improve the range of products and services offered and thus create a new line of business.
There are two main forms of export, direct and indirect export.
It is distinguished by the fact that the manufacturing business handles the export and sells directly to companies and consumers in other nations. The exporting corporation may control the entire export process, from start to finish, using this strategy. The majority of exports, however, do not use this strategy and instead rely on indirect exporting, which we shall discuss in the next section.
There is also the concept of a direct agent, although less used. A direct agent is someone, who may be a natural or legal person, who buys goods in a foreign country and resells them in the country of destination. Agents often offer complementary services to their buyers, such as maintenance, parts sales and technical assistance. A direct agent usually has a close relationship with the exporter and is able to obtain more favorable prices. Other direct agents receive a commission from the companies, have a contract and do not usually sell competing products.
On the other hand, there is the related concept of representative, which is an agent, trained by the company, sent abroad to buy products for your company. Purchasing agents are only in the country of destination long enough to intermediate the purchase.
Exporting indirectly entails working through an agency in the country to which you wish to export, who is responsible for locating buyers in that country. Because it is very straightforward to start and has a low initial capital commitment, this form of exporting entails the least danger and expense. On the other hand, because the agent seeking purchasers also wants to make a profit on the price, it implies a lower profit margin.
Export and import of goods
The import of goods is different for each country, and involves in many cases communication with customs agencies to determine the legal issues of each import and export, as it depends on the product, the goods or service may be different each case. Often companies usually have a customs broker, who will be the person in charge of managing the customs affairs of the companies.
Export and import barriers
Governments usually establish different types of barriers for the export and import of goods. In democratic countries these barriers serve mainly for domestic industrial protection, control of employment levels and improvement of the balance of trade. On the other hand, in less developed countries or countries with high levels of corruption, barriers are mainly aimed at the personal enrichment of members of the government. While some countries strive to reduce entry and exit barriers, others do the opposite, thus hindering the global movement of goods and services.
The main types of barriers are tariffs and non-tariff barriers. Tariffs are duties imposed on goods entering or leaving a country. Among other uses, tariffs are used to penalize other countries for trade or political actions. Non-tariff barriers include quotas, taxes and exchange rate controls. They fall mainly into six categories of constraints: specific trade limitations, customs and administrative restrictions on entry, standards, government involvement, import levies and other miscellaneous categories. In many developed or developing countries, most governments support specific industries or companies to enable them to export and import in the most favorable way, either through financial aid, lower tax rates, loans or subsidies.
International trade in exports and imports
The main reason why a company exports is to enter new markets and thus maximize its profits. A product may reach a point where it is relatively difficult to sell in one country, but it may work perfectly well in another. When markets begin to mature and become saturated, producers can continue to receive ongoing sales and profits through exporting. Foreign markets can help growth not only because of saturation of domestic markets, but also in the face of increased competition.
Exporting can also be a coping measure in the face of economic crises, as a company can increase its geographic presence and target other countries not hit by the crisis. Exporting also reduces the risks associated with the seasonality of some products, for example, warm weather-related products could be marketed in the southern hemisphere when it is winter in the northern hemisphere.
As barriers to entry and exit are reduced, exporting will become much more lucrative for companies, thus creating an ever-expanding market for the global marketing of goods and services. If what you are looking for is to show your products at an international trade fair, Swintfair is your place. Discover us!