Types of International Business
On the basis of sale and purchase of
goods and services, international trade can be divided into three kinds. They
are export trade, import trade and entrepot trade. It has been exhibited in the
chart drawn below
These trades are briefly stated
hereunder
When the firm of country sells goods and
services to a firm of another country it is called export trade. Export trade
indicates selling of goods and services from the home country to a foreign
country. For Example; the sale of handicraft, leather products, electronic
goods, herbal products, etc., by Indian company to other countries is known as
export trade.
When the business firm of a country
purchases goods from the firm of another country it is called import trade.
Importing means purchase of foreign products and bringing them into one’s home
country. For example when Indian enterprise purchases petroleum products,
electrical goods, machinery, and medical equipments etc., from other countries,
it is termed as Import Trade
When the firm of country imports goods
for the purpose of exporting the same goods to the firms of some other country
with or without making any change in the goods meant for export it is known as
entrepot trade
For example, If an Indian company
imports crude oil from Iran and exports it as petroleum after refining it in
India, to Nepal it is called Entrepot trade. In this context crude is converted
into petrol and exporter as petrol to Nepal
Now you must be thinking why India comes
between Iran and Nepal. Why does not Nepal directly import crude oil from
Iran?. Let us explore what could be the possible reasons for this.
A country cannot import goods directly
from the others because of the following reasons.
a.
The country may not have any accessible
trade routes connecting the importing country
b.
The goods imported may require further
processing or finishing before exporting, and these facilities may be lacking
in the exporting or importing country
c.
There may not have any bilateral trade
agreement between both the country
d.
Importer and exporter may not share good
economic relation with each other
The following are the special features
of Entrepot trade
a.
Import duty is not levied on such goods
b.
These goods are reprocessed and repacked
for re- export
c.
Such goods are kept in the Bonded
warehouse till they are re-exported.
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