What Are Exporting And Exporting Channels In Commerce?
THE PROBLEMS OF EXPORTING – The selling of goods overseas is a much more difficult task than selling them on the home market. The reasons for this are as follows.
Appreciation of the market: is vital as it is likely that the overseas market will be different from the home market in terms of customs, tastes and living standards. However, because of the distances involved, such information is very often more difficult to obtain.
Financial arrangements: are more complex because they involve carrying out transactions in foreign currencies which must be exchanged for Naira. Fluctuations in the values of these foreign currencies can cause uncertainty about the exact sum that will be received in payment for the goods sold. It is also often more difficult to check on the creditworthiness of overseas customers and to take legal action to secure payment for goods if this proves to be necessary.
Trade regulations: strictly control trade between countries. This entails the use of many lengthy and complex documents and an up-to-date knowledge of any changes in these regulations.
Transport: is more difficult to arrange as often several different carriers are used. This means that further careful documentation is necessary to ensure that the goods are transferred successfully from the producer to the eventual consumer. Special packaging is often necessary to combat the difficult conditions encountered on long journeys.
Products: may have to be modified to meet overseas conditions or example clothes designed for Nigeria are unlikely to be suitable for the climatic conditions in Iceland. Some of these modifications are so considerable as to require the design of goods especially for the overseas market, while others are merely minor adjustments to goods that are otherwise the same as those sold on the home market.
Because of the difficulties involved in exporting, many specialist bodies have arisen to help exporters, and especially those with small and medium-sized businesses who would otherwise find the administration involved in exporting too complicated.
Export houses tend to specialize in selling certain goods to certain markets. They act as:
1. Merchants buying the company,’s goods and selling them overseas on their own account.
2. Agents for a company responsible for all or part of the overseas promotions, documentation, insurance, overseas servicing and distribution.
3. Agents for a foreign buyer, looking for sources of supply in this country.
Overseas agents – have the advantage of on-the-spot knowledge of the market, customs procedures and currency regulations. They will be authorized to make contracts for the sale of the goods.
Overseas subsidiaries – are often established by large companies to handle their overseas operations.
Export clubs – are informal groups of companies who help one another by pooling experience and sharing marketing services. Licensing overseas companies to allow them to produce the goods often occurs as a result of the problems of penetrating heavily protected markets. Royalty payments on the designs may be considerable and substantial orders for complex parts may be won.
General assistance – to exporters may be given by commercial banks, freight forwarders and government agencies in the exporting or importing country.