Part II Unit 1. Export and Import Strategy
Remember the words:
- participant - учасник
- transportation - транспортування
- insurer - страхувальник
- to utilize - використовувати
- least-cost supply - постачання за найнижчими розцінками
- production input - виробничі ресурси
- supplier - постачальник
- to diversify - діверсифувати
- dependence - залежність
- to avoid - уникнути
- shipment - відправка, перевезення
- delivery date - дата постачання
- bill of sale - купча
- guarantee of payment - гарантія платежу
- a letter of credit - акредитив
- insurance - страхування
- customs - митниця
- to clear - очищати (товар від мита)
- terms - умови
Read and translate the text:
The bulk of international economic transactions involve exports and imports. In the area of exports and imports there is a huge variety of participants, ranging from the exporter and importer all the way to transportation companies, insurers, and banks.
Exporting and importing is a type of international business open to any size of firm, whereas other types of international activity, such as foreign direct investment, tend to demand greater capital, management time and other company resources.
Exporting can be viewed as a means of foreign market entry. Exporting can be selected to achieve least-cost supply for the foreign market, or to reduce the risk of having all sales in one country, or to establish a base for further production.
Domestic firms can utilize exports both to absorb products that cannot be sold locally and to expand business in new markets.
Importing is an often neglected part of international trade strategy. Any firm may find that it can obtain production inputs from abroad more cheaply or when suppliers are not available locally. Also by using foreign suppliers a firm can diversify its suppliers and avoid dependence on local firms only.
A “typical” export-import transaction takes place as follows. First, the exporter would look for a foreign buyer for its products. When the exporter finds a buyer – the transaction can proceed. The two firms negotiate for terms, such as the price, the quantity to be delivered, the delivery date, and the payment date.
In addition to the payment documents (a letter of credit, a bill of sale), the transaction usually involves an insurance contract (to protect against losses from damage in shipping) and a contract with some transportation company to ship the goods from the exporter to customs in the importer’s country. The goods must be cleared by customs inspectors in the receiving country, after which the importer may pick them up.