Countertrade.(international trade)

Reciprocal trade has been an element of trade in the New World since 1492 when Columbus "Sailed the Ocean Blue." In the 500 years since then, reciprocal trade has had many names and has taken on various forms. The current term for reciprocal trade is Countertrade. Countertrade is listening very closely to your international customers' needs and meeting those needs. It can take several different forms, i.e. generating hard currency for them to buy your products, helping them market their products, or the sharing of information--either marketing or technology. Countertrade is a creative marketing tool. In today's quality environment, countertrade is a quality activity.

What is Countertrade?

It makes the most sense to view countertrade from the marketing perspective. Think for a second; the root word of "marketing" is "market." Before money was used, or in cultures where money did not exist, exchanges took place at markets. When the noun "market" is changed into the verb "marketing," other things become involved. Even now, marketing is used to encourage exchange. When markets first evolved, there was no currency to ease the buying and selling process; it was a cashless era. Think about countertrade. Countertrade is a modern variance of bartering, but it is more complicated. If barter is a form of exchange, and exchange is the basis of all marketing, then countertrade is the essence of marketing. Countertrade facilitates the exchange of products. It offers an alternate source for structuring an international sale when conventional means of payment are difficult, costly or nonexistent. Countertrade can be successful in the domestic market as well as the international market.

What is countertrade? Countertrade is a marketing tool--a creative marketing tool. Two things are absolutely critical to be successful in countertrade--creativity and flexibility. To be creative, you must get out of the box you are used to, and let your creative juices flow freely. To be flexible is to realize that things are not always done in the preferred manner. Every international customer is different, and each one of them has different needs to be satisfied. The only consistency in this business is the inconsistency among the various businesses and opportunities. As a creative and flexible countertrader, strive to create a situation that meets and satisfies those needs.

One thing that causes a transaction to be classified as a countertrade is the element of conditionality; the word "if" followed by a condition. For example, the customer will buy a company's product if they have access to hard currency. If a company wants the customer to buy its product, it will probably have to help by using countertrade.

It is always interesting to note who has the power in an international transaction. Most of the time, the purchasing company has the power to award the business. A selling company can gain power over other suppliers by its ability to provide the purchasing company with hard currency through the use of countertrade. A case in point, a foreign government has the power over a US defense company wanting an export sale because the foreign government is the only one with access to the country's military market. A company can use countertrade to gain power and invoke an advantage over its competitors.

Countertrade Size