What is meant by countertrade?
What Is Countertrade? Countertrade is a reciprocal form of international trade in which goods or services are exchanged for other goods or services rather than for hard currency. This type of international trade is more common in developing countries with limited foreign exchange or credit facilities.
What is countertrade quizlet?
Countertrade refers to a range of barter-like agreements that facilitate the trade of goods and services for other goods and services when they cannot be traded for money.
What are the forms of countertrade?
There are several types of countertrade, including barter, counter purchase, compensation trade, switch trading, offsets and clearing agreements.
Who uses countertrade?
Most countertrade is conducted by big companies with foreign markets to defend, such as McDonnell Douglas, Pepsi-Cola International, General Motors Corporation, Caterpillar Inc., as well as oil, telecommunications, and computer firms. Many of these firms have in-house countertrade departments.
What is a characteristic of countertrade?
The common characteristic of counter- trade arrangements is that export sales to a particular market are made conditional upon undertakings to accept imports from that market. For example, an exporter may sell machinery to country X on condition that he accepts agricultural products from X in payment.
Who introduced counter trade?
Explanation: Counter-trade was introduced by the government led by Ibrahim Babangida.
What are three forms of countertrade?
Offset. Buyback. Switch trading. Barter. a direct exchange of goods and/or services between two parties without a cash transaction.
Which is not a part of countertrade?
If we lived in Japan, we’d measure GWP using Japanese currency, yen (¥). However, when we measure global trade only in terms of currency-based transactions, we omit a portion of the market known as countertrade. Countertrade is a system of exchange in which goods and services are used as payment rather than money.
Why is countertrade used in international trade?
Companies that consider countertrade typically want to expand into a foreign market, increase sales, build customer and supplier relationships, and overcome liquidity challenges. With that being said, countertrade is used primarily to: Enable trade in countries that are unable to pay for imports.
What is countertrade switch trading?
Switch trading: Practice in which one company sells to another its obligation to make a purchase in a given country. Example: Party A and Party B are countertrading salt for sugar. Party A may switch its obligation to pay Party B to a third party, known as the switch trader.
Which is not part of countertrade?
Q. ________is not a part of counter trade. If we lived in Japan, we’d measure GWP using Japanese currency, yen (¥). However, when we measure global trade only in terms of currency-based transactions, we omit a portion of the market known as countertrade.
What is a part of countertrade?
Types Of Countertrade It can be classified into six broad categories: barter, buyback, clearing agreement, counterpurchase, offset and switch trading. Barter: Bartering is the oldest and most common countertrade arrangement.
What is the meaning of countertrade?
Countertrade Refers to a range of barter-like agreements that facilitate the trade of goods and services for other goods and services when they cannot be traded for money Forms of Countertrade
Why do companies use countertrade as a growth strategy?
Regardless of the complexity, companies still use countertrade as a strategy for growth because it: Allows for entry into difficult markets. Increases company sales where you might not otherwise have business. Overcomes credit difficulties.
Should your company consider countertrade?
Only if they have exhausted other payment means and can absorb the delivery delays, contract negotiation challenges and product quality issues. Countertrade is most attractive to large, diverse multinational organizations that know the lay of the land on exporting.
What is the oldest type of countertrade?
This is oftentimes referred to as bartering, which is the oldest type of countertrade arrangement. Many governments reduce imbalances in trade between countries through the use of a countertrade system of international trading.
