Global Export by Using an Export Trading Company
Some products are in such demand that global export may be desirable for the manufacturer. An example of this would be cell phones made in China, which appear for sale in most other countries. The varying requirements of each country may present some difficulties when shipping globally, no matter what the item might be.
Why Export Controls are a Concern for global Exports
Export controls are imposed by all countries to restrict certain materials or equipment from exportation. In the United States, most controls concern military defense and national security. Global Export controls may also be attached to anything that is scarce or products that are to be sent to restricted destinations. Controls may also be placed on food or fuel to assure that enough remains in the country for the use of its citizens.
Countries Blacklisted from Global Export
Even when an item is considered for global export, there are some places where it cannot be sent. Some countries are embargoed because of blacklisting by the international community. Others have restricted trade, which only allows certain items to reach their borders. While the United States may limit or withhold shipments to some countries, other nations may not. This is the case with Cuba.
Benefits of Using an Export Trading Company
If a company is to begin global export of products, an export trading company (ETC) can be a valuable asset in this venture. The ETC works with other companies involved with exporting goods, and may handle such things as billing, shipping, warehousing, and other items. The ETC will often handle other business for the entity it is representing, which can include handling legal requirements for shipments, insuring the goods, and gathering marketing information.
Handling Global Export Shipments through Multiple ETCs
A global export generally requires more than one export trading company to handle interpreting and negotiating regulations. Depending on the geographic locations involved and the size of the company doing the exports, a different ETC could be used for every country. Most ETCs are separate from the companies they represent, but there can be a crossover when a parent company is involved.
Formation of ETCs as a Branch of a Company
An ETC may be paid based on a flat rate or by way of a commission. Often, an ETC is formed by a company in the exporting business to handle one product, and sometimes several companies in the same business will form an ETC to reduce costs in the exporting business. Even though the companies are in competition with one another, the cost savings can make such a joint venture work for all the parties involved.
Using an ETC for some parts of the export process is more economical than attempting everything in house, especially when there are many countries to deal with. A proper arrangement allows for much better communication and saves time because of the familiarity of the ETC with clients and national export policies.
If you enjoyed reading about Global Export by Using an Export Trading Company then see our next article Export Goods.
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