INTERNATIONAL MARKETING 6e Chapter 22 Countertrade Copyright 2001 by Harcourt, Inc.. All rights reserved. Requests for permissions to make copies of any part of the work should be mailed to the following address: Permissions Department, Harcourt, Inc, 6277 Sea Harbor Drive, Orlando, Florida 32887-6777
Copyright © 2001 by Harcourt, Inc.. All rights reserved. Requests for permissions to make copies of any part of the work should be mailed to the following address: Permissions Department, Harcourt, Inc., 6277 Sea Harbor Drive, Orlando, Florida 32887-6777. INTERNATIONAL MARKETING 6e Countertrade Chapter 22
Countertrade n Countertrade A parallel transaction involving a direct linkage between imported and exported goods or services that is the most advantageous way to exchange goods rather than the use of money as an intermediary. Copyright@ 2001 by Harcourt, Inc. All rights reserved
Copyright © 2001 by Harcourt, Inc. All rights reserved. 22-2 Countertrade Countertrade • A parallel transaction involving a direct linkage between imported and exported goods or services that is the most advantageous way to exchange goods rather than the use of money as an intermediary
Why countertrade 强个个 Advantages Disadvantages Avoidance of debt and Does not reduce exchange rate volatility commercial risk Covert reduction of May mask dumping pnces activities Circumvention of price Does not allow for and exchange controls multilatera/ settlements Increasing popularity Trade is restricted to two bilateralism concept parties, each with A method of market entry specitic goods to trade Stability for long-term Is non-competitive and sales can erode the quality Improves quality of and efficiency of transaction production Copyright@ 2001 by Harcourt, Inc. All rights reserved 22-3
Copyright © 2001 by Harcourt, Inc. All rights reserved. 22-3 Why Countertrade? Advantages • Avoidance of debt and exchange rate volatility • Covert reduction of prices • Circumvention of price and exchange controls • Increasing popularity of bilateralism concept • A method of market entry • Stability for long-term sales • Improves quality of transaction Disadvantages • Does not reduce commercial risk • May mask dumping activities • Does not allow for multilateral settlements • Trade is restricted to two parties, each with specific goods to trade • Is non-competitive and can erode the quality and efficiency of production
Counterpurchase or parallel barter simple exchange of goods reverse reciprocity grants access to resources Buyback or compensation arrangement One party purchases the output of another party that is derived from technology or equipment supplied by the purchasing party. o Clearing account arrangements Trading parties maintain restricted purpose drawing accounts for the deposits of their countertrade activities Copyright@ 2001 by Harcourt, Inc. All rights reserved
Copyright © 2001 by Harcourt, Inc. All rights reserved. 22-4 Types of Countertrade Counterpurchase or parallel barter • simple exchange of goods • reverse reciprocity grants access to resources Buyback or compensation arrangement • One party purchases the output of another party that is derived from technology or equipment supplied by the purchasing party. Clearing account arrangements • Trading parties maintain restricted purpose drawing accounts for the deposits of their countertrade activities
n Offsets Purchases by a governmental buyer are matched offset) to investments by the seller in non-related industries in the buyer's country n Debt swaps debt-for-debt swap debt-for-equity swap debt-for-purchase swap debt-for-nature swap debt-for-education swap Copyright@ 2001 by Harcourt, Inc. All rights reserved
Copyright © 2001 by Harcourt, Inc. All rights reserved. 22-5 Types of Countertrade… continued Offsets • Purchases by a governmental buyer are matched (offset) to investments by the seller in non-related industries in the buyer’s country. Debt swaps • debt-for-debt swap • debt-for-equity swap • debt-for-purchase swap • debt-for-nature swap • debt-for-education swap