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International Trade Definitions

  1. Direct export sales: This is what most companies are looking for. In some cases, however, a company has to start with the options below to best sell the product.

  2. Distributor/Importer: Also called jobbers, dealers or wholesalers, they will always be the party responsible for payment of the product that is exported.

  3. Representative/Agent/Broker: The firm is selling and taking orders without being responsible for payment, no matter how great the responsibilities might be otherwise.

  4. Overseas retailers: Sales to foreigners are usually limited to consumer goods and might be sold at a lower price, since no agent commission is involved. Remember to sell to the retailers at a price that will permit you to pay an agent in the future.

  5. Licensing: A version of your product is placed in the foreign market without actually shipping it there. A license is a contract to provide all or part of the licensor's trademarks, patents, copyrights and expertise. The contract should clearly spell out what is being licensed and under what terms.

  6. Franchising: All that can be said of licensing can apply to franchising, except that most foreign franchising is done by companies for whom franchising is also the primary domestic objective.

  7. Contract manufacturing: You enter into a contract with a foreign manufacturer to produce your product in the region to which you would otherwise have exported. This indirect form of market entry can help you gain market share through competitive prices, while maintaining full control of the product quality.

  8. Joint venture and coventure: Joint ventures are usually a partnership between an American firm and a foreign counterpart in the host country, each with a common commercial objective. In coventures, the emphasis is on the partners cooperating in terms of production and marketing, using existing facilities or resources, with less emphasis on new equity.

  9. Wholly owned subsidiaries and branches: A foreign subsidiary makes you one of them. You are an accepted part of the marketplace, just as in the case of a joint venture; however, your firm enjoys sole control of all decisions concerning marketing and production. Your technologies, patents, trademarks and expertise have the maximum protection available under the host country's laws.

  10. Alliances: An alliance does not result in the creation of an independent business organization. Rather, it might represent a minority equity stake; distribution or trading agreement with features for mutual product development, cross-licensing or production; and technology-sharing agreements.

  11. Investment: A monetary purchase or an exchange for a share of a company or development project.

  12. Other: Provide an explanation in the detailed description of export objectives.