Oic Trade

Archive for the ‘international trade’ Category

It is impossible to be in international trade without involving your bank for all the services they provide such as advice on financial issues and the potential risks involved. It is true that one critical hurdle for SMEs is the lack of information on international trade processes, documentation and banking procedures necessary to carry on with business abroad. For result oriented and cost effective international trade, you will very definitely need access to accurate and timely information and a sound knowledge of banking.



Payment Options in International Trade

Quite obviously all payments in an international trade are made through bank either by way of wire transfer or check with the latter not being preferred for not being the quickest. The following are some of the common ways of payment modes in international trade.

1. Banker’s Draft is a cheaper option and easier to obtain but there is a risk of loss in transit. The only advantage it has against check is quicker credit that the exporter gets.

2. Letter of Credit. This international trade instrument is mutually convenient for both the parties. The exporter gets paid once he produces the copy of BoL (bill of lading) which he receives from the shipping company and the LoC, to the bank, regardless of whether the consignment as arrived at destination or not.

3. Wire transfer is by far the fastest and the cheapest option in which the importer will instruct his bank to transfer the amount to the exporter’s bank account. The first time, the transfer happens in about 10-15 days depending on the destination country and the routing bank. International wire transfers are made through intermediary banks/correspondent banks.

4. Although not in a big way, some China manufacturers accept Paypal for smaller amounts such as US$5,000 but require 3% extra to compensate for the charges. Paypal is the quickest and easiest mode of payment in international trade.

Banks that are serving international trade, understand the crucial role they are required to play. Many large banks maintain worldwide correspondents to provide quick delivery of actual currency, wired money or drafts. You may choose your bank for international trade account on the basis of whether the bank can extend advances against the account receivables. Bank may, however, require your account secured through export credit insurance provided by Export Import Bank of United States. Banks also let you enter into forward exchange contract with your bank and fix the amount of the foreign exchange you receive when you are dealing in convertible currencies. You need your bank to be with you as long as you are in international trade.

Recent developments in the sophisticated data exchange and communication technologies have made globe flat. Global Markets have become a very popular place for International Trade. Global sourcing requirements whether for manufacturing use or for retail business are increasing day by day. The countries offering low cost attractions whether it is raw or finished material or finished good are having unique advantages. Free markets concept was mooted with a thought for unsealing large opportunities for export and import of commodities and it has been advantageously recognized all over the world.

In International Trade there are numerous opportunities available which if properly and timely explored can change your destiny. In the very recent past the most common source for business information used to be something termed as Business Directory. Every country had its own Business Directory. It often involved you to shuffle through loads of data and turn pages of voluminous directory for searching a buyer or seller or a product. Searching thousands of pages proved to be a tedious and time consuming exercise. Well… No more.

With the advent of Internet things have become pretty easy and fast. The intense task of going through gigantic Business Directory has become history. The Internet is in itself a gigantic Business Directory. It provides you with an exclusive recourse to all your queries related to International Trade. It facilitates free market participants for the entire global sourcing requirements efficiently and economically. The Internet is a door to Global Markets, where there are number of members who are in the B2B (Business to Business) market place. One such member is www.tradeeuropeglobal.com. Beneficiaries of this website have found it to be a veritable tool in the Export Import requirements. This website truly works as a gigantic Business Directory. You can search buyers, sellers, suppliers and products. You can post your profiles, product catalogues as well as buying or selling offers. Trade Leads are available for a variety of products spanning out to number of countries. The search categories are classified product wise as well as Country wise. For example if you are looking to source a Rolls-Royce car, Germany is the obvious choice and this website would provide you with the best leads. Not only Rolls-Royce car but there are so many other sub categories of products available from Germany. It can be very well said that on this gigantic directory, German Business Directory is in itself a mini directory. Lots of efforts and research has been put in to design a well laid out classification into different categories and sub categories. Any lead will show you Brief Description, Expiry Date, Detailed Description, Company Profile, Ratings/Comments, contact details and video presentation.

This website is constantly thriving to supplement various features and security parameters to detect and eliminate abuse and un-professionalism to have maximum safeguards for your business interests.

www.tradeeuropeglobal.com can save your cost by 50%. It can help you in taking a faster decision. It saves precious time and energy. In the current Global Markets, tradeeuropeglobal.com platform has proved itself be a powerful tool in the International Trade. What all you need to do is to register on the website with a valid email address and once you have done it you will join a rapidly growing network to reach businesses anywhere in the world.

The German business market has got high potential to offer to the global market. If you want your trade with German partners to be more profitable and effective on a long time basis then you can take the leads presented at the website www.tradeeuropeglobal.com to your best advantage.

Economics of local trade is not necessarily the same as the economics of international trade. This is one reason why there exists international professional marketing. International professional marketing aims to synergize the different countries in which one firm is supplying a product or service.

Exchange Rate – The exchange rate (also known as the foreign-exchange rate, forex rate or FX rate) between two currencies specifies how much one currency is worth in terms of the other. It is the value of a foreign nation’s currency in terms of the home nation’s currency.

Two Kinds of Exchange Rates – International professional marketing recognizes two general types of exchange rates.

1. Floating Exchange Rate – supply and demand for the currency of each country determine the exchange rates. Any change in supply or demand will cause a relevant fluctuation in the currencies purchasing power, and thus its exchange rate. For instance, all other things being equal, if the U.S. exports more from Japan than it imports there, there will be more demand for U.S. dollars (they are desired for purchasing goods) and less demand for Japanese yen-thus, the price of the dollars, in yen, will increase, so you will get more yen for a dollar.

2. Fixed Exchange Rate – countries via mutual agreement utilize pegging to stabilize the exchange rate between their respective currencies. Pegging may be between one currency and another currency or one currency and a group of currencies. An example of pegged currency is that of Argentina, the Argentine currency is guaranteed as to value in dollars. Implementing a fixed exchange rate however, is much more complicated and difficult than that of a floating exchange rate. Making a currency too dependent on the value of another currency poses the biggest problem. To avoid such from happening, pegging on a composite of currencies or another standard of gold is the best solution. For example, the Argentine currency can have a pegged value of 0.25*U.S. dollar+4*Mexican peso+50*Japanese yen+0.2*German mark+0.1*British pound.

International professional marketing recognizes that the maintenance of fixed exchange rates is very difficult and there are times when a government is forced to buy or sell currency on the open market to prevent currencies from going beyond the accepted exchange rate range. Having a big hindrance to market forces becomes the price for stability and predictability. For instance, if a currency is made artificially low by pegging, a country will eventually export too much and import too little to influence the value of the currency.

Trade Balances and Exchange Rates
International professional marketing states that less demand for a currency of a country that is at the brink of falling into a trade deficit will eventually experience a declining value over time whenever exchange rates are allowed to freely fluctuate. The lower exchange rate however, will make exports easier as the lower equivalent price will sure attract more foreign buyers. Import on the other hand will become less desirable.

Measuring Country Wealth
International professional marketing considers two acceptable means of measuring country wealth, the Gross Domestic Product (GDP) and the Gross National Product (GNP). The nominal per capita GDP pertains to the value of products and services of each person in a country if such value in local currency was to be exchanged into another currency, which is generally the US dollar. We can say, for example, the per capita GDP of Japan is 5,000,000 yen and the current yen-dollar exchange rate is 100 yen for every dollar, the per capita GDP is then (5,000,000/100)=$50,000. It is to be noted however that the said $50,000 will be able to buy less in Japan because food and housing will in effect be much more expensive there than in the US.

International professional marketing then developed the purchase parity adjusted per capita GDP that reflects what the nominal per capita GDP can actually buy in the home country. This is usually based on the relative value of a weighted “composite” of goods in a country (e.g., 35% of the cost of housing, 40% the cost of food, and 10% the cost of clothing, and 15% cost of other items). If it is determined that the cost of living in Japan is 40% higher than that in the United States, the purchase parity adjusted GDP will then be measured at ($35,000/(140%) = $35714.

(The Gross Domestic Product (GDP) and Gross National Product (GNP) are almost the same figures. The GDP includes all income earned by people in a particular country regardless of citizenship, and ignores income earned by citizens who are overseas while the GNP includes all income earned by citizens of a certain country regardless of location, and ignores income earned by foreigners even if they are earned within the country. GNP was once the more widely used measurement method, but nowadays, GDP is more commonly used.

Purchasing Power Parity
Purchase power parity is generally more efficient when it comes to measuring the value of products and services which are produced or generated in the country of purchase, at local cost. Gross domestic product on the other hand is more applicable in the determination of the local consumer’s ability to purchase imported products and services. For example, the capacity of Argentineans to buy micro computer chips, which are produced mostly in the U.S. and Japan, is better predicted by nominal income, while the capability to purchase toothpaste made by a U.S. firm in a factory in Argentina is better predicted by purchase parity adjusted income.