Indirect export example. Foreign market penetration strategies
The mechanism is reduced to the transfer of the function of exporting products to a specialized organization. The intermediary assumes responsibility for transportation, customs clearance, risk of non-payment. In most cases, the company is looking for an end customer.
Indirect export forms
Cooperation schemes differ, the following options are common:- Classic cargo sale. The method is relevant for small businesses that are unable to independently enter the foreign market. From a legal point of view, transactions are internal. A professional market participant redeems the cargo for delivery to foreign customers.
- Export through an intermediary. The manufacturer enters into a service contract. The contractor receives a commission for the execution of an order for registration of an international delivery. A specialized organization does not always receive ownership of the goods, but in contracts it acts on its own behalf.
Advantages and disadvantages
Interest in indirect exports from small and medium-sized businesses continues to grow. The mechanism attracts potential clients a number of advantages:- Simplicity and affordability. Execution of a foreign trade transaction requires a specific workflow, registration with the customs service, and establishing contacts with carriers. At the stage of setting up the system, the company needs to spend a lot of money and make tremendous efforts. In addition, it is difficult to find a specialist with the appropriate qualifications in the province. Contacting an intermediary allows you to solve the problem as quickly as possible.
- Risk protection. Customs clearance implies increased responsibility. Even minor mistakes result in fines. In some cases, administrative or criminal cases are brought up against declarants. Since the indirect export is handled by professional participants, the likelihood of trouble is minimized.
- Capital turnover rate. Cooperation with large export houses allows you to get money for products immediately. The manufacturer does not need to deal with sales issues, he can concentrate on improving the product.
- Painless exit from the deal. If the selling price turns out to be low, the manufacturer has the right to refuse to sell. It is easier to terminate a contract with an intermediary, because disputes are resolved using domestic legislation in Russian courts.
Main menu:
Beef burgers;
Chicken burgers;
Homemade soups and stews;
French fries;
Baked potato;
Breakfasts;
Children's menu.
Service.
The style of service was developed specifically for the fast pace of the big city. The guest of the establishment himself chooses the filling of burgers and other dishes at the checkout, like other fast food restaurants. There is also a self-service drinks system.
Export Opportunity Analysis
Wendy wants to bring its brand to the Russian market.
Here's what Wendy "s are looking for in their future franchisees:
$ 5 million (equity):
2 million dollars of liquidity (not borrowed cash availability);
Interest in developing multiple cafes in a market or a combination of markets;
Appropriate equipped restaurant / retail market experience to be developed;
Trained staff;
All this contributes to the successful export to our country.
Indirect export
Direct export - if the company allows resources, it carries out export operations independently, without intermediaries (transfer of goods to a freight forwarding company; use foreign experience; the product is sold to a foreign distributor, sometimes with the transfer of exclusive rights; a consortium of independent companies; overseas trade mission).
Indirect export - carried out through intermediaries of international trade (agents, distributors) - (an export house that purchases goods locally at its own expense or at the expense of a foreign partner; trade company to distributors assigned abroad; sales to companies with distribution channels for related products abroad). The distributor is the owner of the product, the agent is not. The distributor is rewarded in the form of margin (agent - commission).
For our company, we have chosen indirect export, because this export has the following advantages:
Use of experience and business contracts intermediary;
Use of information about the market held by the intermediary;
Use of warehouses, transport, etc. already available at the intermediary;
The exporter does not need to perform export functions himself (obtain export licenses, adapt to local requirements, etc.);
Penetration into markets inaccessible for establishing direct contacts.
Despite all the advantages, there are a number of negative sides indirect export:
There is no direct contact with the foreign market;
Doesn't gain marketing experience;
Does not develop a positive image in foreign markets;
Often insufficient attention to the goods of the manufacturer-exporter on the part of the intermediary;
The intermediary does not take on complex transactions, which deprives the exporter of the opportunity to take a potential market share.
The practice of indirect export is most common among firms that are just starting their export activities. Independent marketing intermediaries are used for indirect export.
We choose an agent for our business.
The agent-principal (the exporting firm) delegates to the agent certain powers to perform certain legal action, i.e. the agent represents the principal in a transaction.
Provides the purchase of goods by a third party). In the course of counter transactions, opposite flows of goods arise. The one that comes first in time is called the initial export, and the opposite one is called counter deliveries.
Export - the sale by a firm of its goods to another country either with the involvement of the services of independent marketing intermediaries (indirect export), or through independent marketing operations (direct export).
The state, by exempting exporters from paying indirect and some direct taxes, helps to reduce the prices of exported goods, increasing their competitiveness. In accordance with international practice, goods crossing the border can be exempted from indirect taxes. Although the GATT, transformed in 1995 into the WTO, prohibits export subsidies, the state actively influences the size and conditions of export credits, especially medium- and long-term ones. At the expense of the state budget, private firms and banks are provided with preferential export credits at a low interest rate. In the 70s, in the leading countries, the gap between the rates on export and other credits reached 1.5-2 points. The state is extending the term of lending to exporters, facilitating and simplifying the procedure for obtaining loans. Preferential terms for export credits were maintained even with credit and foreign exchange restrictions in the country.
So, several conclusions can be drawn. First, customs duty is an indirect tax. Secondly, customs duties and customs fees are the federal budget (this is enshrined in the Tax Code of the Russian Federation). Third, customs duty is a general tax because it is not intended to cover any specific costs. Fourthly, customs payments are one-time taxes, since their payment depends on the fact of import (export) of goods.
It is recommended that the value of the cost of indirectly measured financial intermediation services rendered by resident financial institutions be distributed among consumers of these services, between intermediate consumption, final consumption and exports, as well as the value of imported financial intermediation services should be determined and distributed among consumers.
Quadrant II of the MOB in the subject has the MOB industry nomenclature. The predicate contains indicators that reflect the final use of products and services in the economy in the context of this nomenclature. These include final consumption expenditures of households, government agencies and non-profit organizations serving households gross fixed capital formation, changes in inventories of producers, consumers and in trade, net acquisition of values (purchases of valuables minus their sales) and exports. All indicators are calculated at buyer's prices (i.e. end-use prices). For reference purposes, the balance contains the indicators necessary for the transition to basic prices for domestic products (imports, trade and transport margins, net indirect taxes, import taxes). The data of quadrant II make it possible to study the structure of the final use in the economy of products and services of individual industries (by rows), as well as the sectoral structure of individual components of the final use of GDP (by columns).
To harmonize indirect taxation great importance has an Agreement of November 25, 1998 on the principles of levying indirect taxes on the export and import of goods (works, services) between the member states of the Commonwealth of Independent States.
Indirect export is a product (s) used in the production of another product as a component part or auxiliary material supplied for export. For example, when analyzing the capacity of the market of welding electrodes, indirect export is considered to be their consumption for the manufacture of products exported abroad - roll blanks, metal welded structures, ships and other finished products in which the volume of welding and, accordingly, welding materials is quite large. Indirect imports are accounted for in the same way as indirect exports. For example, when analyzing the capacity of the market for electric motors, their number is estimated by their completing of machines and equipment or other equipment imported into the country.
When exporting its products, the company enters international markets through national and foreign sales agents, as well as through intermediary firms. In the first case, the company locates its sales personnel in its own country or in countries where the products are exported. This approach is quite rational in those cases when it is easy to establish consumers of products abroad or they themselves go to the marketing authorities of the exporting enterprise. In the case of indirect sales, in order to find and establish contacts with the consumer, the exporting company concludes an agreement with intermediaries who take on all the worries about selling the company's products abroad. As a rule, there is no shortage of intermediaries (for example, in the USA there are more than 2 thousand specialized export management firms), but part of the foreign exchange earnings is lost.
Companies usually start with indirect exports, through independent intermediaries
Indirect export has two benefits. Firstly, for its implementation, significant funds are not required, there is no need to create an export department that will deal with sales abroad or establish contacts with foreign partners. Secondly, such exports are less risky, since intermediaries act on their own initiative, relying on knowledge of the situation in foreign markets, and offer additional services to the manufacturer.
Once a company has selected a specific country, it is necessary to determine how to enter its market by indirect export, direct export, licensing, joint venture or direct investment. Each subsequent strategy implies large commitments, risks, control and potential profit. Usually, companies start with indirect exports and, as they gain experience in the foreign market, move on to a more complex strategy.
Current state industry in Russia has led to the lack of demand for many technological innovations in the domestic market. In this regard, understanding the laws of international marketing and the strategy for bringing products to foreign markets in the form of direct or indirect exports, licensing, joint ventures, investment in new production facilities, etc. plays a special role. In any case, one should not forget that in an open market, any domestic manufacturer competes with a foreign supplier operating in Russia according to the laws of international marketing. Studies show that those of the products that were originally developed for the world market have the best chance in the domestic market.
The reasons for the aspiration of companies to international markets, macro- and microenvironmental factors affecting the choice of a foreign market, strategies for entering international markets (indirect or direct export, licensing, creation of joint ventures, direct investment in the construction of new production facilities or in the acquisition of existing ones) are considered, factors influencing the choice of these strategies, standardization and adaptation of products to international requirements and the development of special marketing measures to promote products to foreign markets.
The main options for the strategy are indirect or direct export, licensing, creation of joint ventures, as well as direct investment in the construction of new production facilities or in the acquisition of existing ones (Fig. 28). These options are discussed in detail below.
The practice of indirect export is most common among firms that are just starting their export activities. Independent marketing intermediaries are used for indirect export. They are
Indirect export has three benefits. First, it is easier to communicate with the exporting organizations of their country compared to the use of intermediaries. Secondly, a decrease in the required capital investment and the degree of risk, in comparison with the creation of our own sales and marketing capacities. Third, the gradual accumulation of experience in the organization for the implementation of export.
| Rice. 10.1. ... Legislation should be enacted to limit the level of profitability of transactions between companies indirectly controlling each other. This will help limit the "washing out" of raw materials from Russia at dumping prices, which mainly concerns the timber and metallurgical industries ... It is also necessary to take tight control over foreign economic relations and pricing in the public sector. It is required to tighten control over the export of raw materials and products of their primary processing, change the tax structure of the extractive industries and oil and gas exporters (From economic program A. Lebeda A New Approach to National Security Problems). |
A firm can export its goods in two ways. You can use the services of independent international marketing intermediaries (indirect export) or conduct export operations yourself (direct export). The practice of indirect export is most common among firms that are just starting their export activities. First, it requires less investment. The firm does not have to acquire its own sales apparatus abroad or establish a network of contacts. Secondly, it is associated with less risk. International marketing intermediaries are domestic export merchants, domestic export agents or cooperative organizations that bring their specific expertise, skills and services to this activity, and therefore the seller tends to make fewer mistakes.
gross output of products in factor prices - 2961 gross output of paid and free services - 1119 interest received by banks on loans - 288 paid by banks for the use of funds - 165 value added tax - 798 other indirect taxes - 312 subsidies - 108 export of goods - 333 exports of services - 96 imports of goods - 321 exports of services - 33 intrinsic value of the sale of imports of goods - 546 import subsidies - 54 material costs for the production of goods and services - 2,175, including depreciation of fixed assets - 396 under-depreciated cost of fixed assets - 42 ...
There are the following conditional data: gross output of products in factor prices - 2020, paid and free services - 372 percent received by banks on loans - 411, paid by banks for the use of funds - 338
With the opening of Eastern European markets, not only large state foreign trade associations, but also industrial enterprises and trading firms began to engage in export-import operations.
Exports in general should be delimited bystraight andindirect , because the mechanisms and tools for its development are different.
Indirect (indirect) export
A simpler form is indirect or indirect (indirect) export, in which foreign trade activities are carried out through intermediaries who buy products from manufacturers. In this case, there are only indirect relationships between the domestic producer and the foreign buyer.
Benefits of Indirect Export
Compared to other forms of entering the foreign market and its development, indirect export requires little resources... Therefore, at the initial stage of export activities, small and medium-sized enterprises willingly attract foreign trade intermediaries, since they do not have the necessary human and financial resources to promote their products in foreign markets in any other way;
Foreign trade enterprises and export firms implement purchased from domestic enterprises products at your own risk. In this case, the manufacturing enterprise is subject to only minor hazards and risks associated with entering a foreign market. One of these risks is a short-term fall in the exchange rate, but it does not have such a negative effect on the exporting company - more on the exporting company;
Foreign trade enterprises and export firms, as a rule, supply goods to specific regions and countries in which they have foreign trade partners. Indirect export does not require much organizational effort, full-time employees... Even if the enterprise has an export department, a small number of employees are employed there, since the main work is carried out by foreign trade partners who have received an order;
Indirect export activities can break off relatively quickly if it turns out that it turned out to be ineffective.
Indirect exports are also characterized bysome disadvantages:
When using it not all goods (services) can be sold on the external market. If, for example, we are talking about technically complex complex goods and services, then indirect export, as a rule, is excluded;
Although with indirect exports, insignificant financial and human resources are used to enter the foreign market, however, it not always effective, because in the long run it leads to diminishing returns. Trading partners in most cases try to get the maximum profit on their intermediary services, which is fraught with the need to transfer goods or services to an intermediary with little profit for the enterprise. In addition, the latter does not have the opportunity to acquire its own experience of working in foreign markets, does not have information about the wishes of customers, the behavior of competitors, the general economic situation in individual countries;
The main disadvantage of indirect exports lies in the fact that not in all cases intermediaries make optimal use of market potential and marketing opportunities, make mistakes and miscalculations in their actions that affect the income of producers of exported goods. For example, for certain foreign markets, “non-optimal” goods are selected from those that can be offered by exporters, prices can be set without taking into account the specifics of the market. An enterprise that exports indirectly has no direct connection with end users. This hinders the transition to other forms of work in the markets.
Direct export
When direct (direct) export foreign trade activities are carried out without trade intermediaries.
There are two options for direct export:
direct export without an intermediary;
direct export with an intermediary.
About direct export without intermediary speak in the event that the export is carried out to the final consumer (enterprise, institution, private clients) or the goods enter the wholesale and retail foreign country. In this case, the domestic enterprise sends its employees abroad to sell goods and provide services to the end consumer and trade institutions.
If sales representatives, agents or main importers abroad are involved in the export, then there is direct export through an intermediary... Such intermediaries, in contrast to the employees of the domestic exporting enterprise sent abroad, are legally independent, that is, they do not act as employees of the exporting enterprise and are not associated with any directives, on the contrary, they are engaged in independent sales.
As with all other options for entering a foreign market, direct export also has its advantages and disadvantages.
Benefits of direct export
Direct export makes it possible targeted management and control over sales, which is unrealistic in the case of indirect exports. The exporting company establishes direct contact with a foreign trade partner and not only carries out activities through its own foreign trade company abroad, but also has the best opportunities for direct participation in foreign transactions;
The advantages of direct export are especially pronounced when exporting and supplying complex goods and services, the sale of which would not be possible through foreign trade enterprises or export firms. This applies, first of all, to those goods and services that have only a slight degree of standardization and a high interactive scheme;
Direct export is applicable to a wider range of goods and services;
Direct exports cover more financial and human resources than indirect exports.
Disadvantages of direct export
Compared to more complex forms of entering the market, for example, creating our own distribution network abroad or subsidiaries with a full production cycle, the costs of direct export are still not so significant. Certain financial resources are required to establish contacts with clients or business partners, and in the case of direct export without intermediaries, local human resources are required;
Although direct exports are applicable to a wider range of goods and services, direct exports, as well as indirect ones, are considered inappropriate for certain goods and services. This applies to goods that, due to a short shelf life, cannot or can hardly be exported; goods, the export of which may be associated with rather high transport costs; goods requiring sophisticated after-sales service that cannot be provided by resellers;
Direct export is fraught with economic difficulties for enterprises, associated, for example, with a deterioration in exchange rates. If the exchange rate of the domestic currency or the currency of a third country to the markets of which the company is exporting rises, this may lead to the fact that the company will become relatively uncompetitive in foreign markets;
Direct export is often carried out on the basis of orders initiated by a foreign intermediary rather than a manufacturing company. In most cases, foreign orders-inquiries are unpredictable, so the enterprise, when exporting, reacts to them more or less unsystematically. Thus, without being the initiator of foreign trade activities, a particular enterprise becomes an exporting enterprise.
The main types of intermediaries in international trade
Foreign trade operations are often carried out with the help of sales representatives or intermediaries.
Intermediary operations are operations for the sale and purchase of goods or services performed on behalf of the manufacturer (seller) by a reseller for a fee.
Mediator is an entity (legal entity or individual) preparing or executing a transaction on the initiative or on behalf of another entity (legal entity or individual) for a fee.
The use of intermediaries in transactions has its advantages: the seller (manufacturer) saves on sales and organizational costs and, in addition, the intermediary's financial resources can be used in the transaction. However, the disadvantages of such transactions can also be pointed out: an unqualified intermediary may worsen the terms of the transaction; engaging an intermediary naturally raises the price of the product.
Consider the types of intermediaries . It:
Sales representatives of firms(act on behalf of the client company);
Employees of these firms, including itinerant salespeople;
Sales representatives under the agreement - agents (legal entities or individuals);
Prosecutors are agents acting on the basis of a special contract. They are registered in trade registers. They operate in Germany, Switzerland.
Independent intermediaries (brokers).
Indirect representation.
Most transactions in the practice of international trade are carried out with the help of trade representatives under a contract.
Sales representatives under the contract. A representative (agent) acts for another person (principal) and under his control. In the USA and Great Britain, the services of agents are widely used in general and in foreign trade - especially.
Types of agents:
Consignment agent. A distinctive feature of this type of agents is the ownership of the client's goods (he takes the goods for sale or signs the distribution documents).
The Delcredere agent, for an additional fee, guarantees to the principal the receipt of the set price from the buyer. He undertakes to reimburse the principal for losses if he does not receive the purchase price due to the buyer's insolvency (the agent is not responsible if the buyer does not fulfill his obligations or there is a dispute over the price).
Broker - legal or individual, which only mediates. Performs preparatory actions for the contract: prepares a draft contract and transfers it to the parties. He enters into an agreement to pay for his services with the seller or with the buyer.
Auctioneer - an agent to whom the principal transfers the goods for sale at an auction. Has the right to receive the sale price, the amount from the sale and transfers it to the owner of the goods (the buyer can act anonymously).
Distributor - Buys a product from a manufacturer and earns proceeds from subsequent sales to consumers or other intermediaries down the supply chain. This contract often stipulates the quantity of purchased products (not less than the established minimum).
It should be borne in mind that the frequently used term dealer is actually synonymous with the term distributor. The latter is broader and includes such types of intermediaries as reseller, jobber, dealer.
An exclusive agent is most often a distributor who has been granted the exclusive right to sell the company's goods in a certain territory (he can use the services of others when selling, he will still receive a reward).
According to the types of agents, intermediary operations are also called. For example, brokerage, auction, consignment, commission.
Independent intermediaries- brokers (do not enter into transactions). The broker is independent of both parties and carries out pure mediation.
Indirect representation: on the basis of a commission agreement
V In this case, the buyer and seller do not meet in person at all. The intermediary commissioner takes the goods from the seller and for a fee, which is included in the sale price, sells to the buyer, transferring the set price to the seller (which, under certain conditions, can be reduced).
Intermediaries - legal entities can take various organizational and legal forms. Commodity exchanges, auctions, trading houses, etc. act as intermediaries in international trade.
Organization of direct export
Direct export
A commodity producer carries out direct export if he sells his goods directly to an importer or to some buyer in a foreign market. Direct export requires establishing direct contacts with foreign partners, conducting marketing research, development and implementation of international marketing strategies. At the same time, the production of goods and international marketing are carried out directly by the commodity producer. The sale of goods to end consumers and their service can be carried out either directly by the company, or they can be transferred to some structure in the foreign market.
By exporting directly, the firm increases its distribution costs and increases the degree of risk in entrepreneurial activity... However, under favorable circumstances, direct export allows it to receive higher incomes.
Implementation of direct export presupposes the creation of certain structures, the presence of which makes it possible to sell goods directly on foreign markets. These structures usually include:
* export department or division of the company, which
rye carry out sales in foreign markets;
* sales representatives used by the company
to find foreign clients;
* overseas sales department or trade branch;
* foreign trading company;
* foreign intermediaries, usually agents and distributors
Companies representing the firm in a given country.
To ensure a presence on the foreign market and control the state of a separate foreign market, the most effective structures are trade representations, trade branches or trading companies owned by the firm.
Another important way of entering a separate foreign market is international countertrade. This form of implementation of foreign economic
iicheskoe activity involves interdependent exports and imports.
One of the types of international countertrade is barter. This form of implementation foreign economic activity assumes an equivalent exchange of goods. When carrying out barter transactions, each of the countries is both a seller and a buyer.
By directly exporting goods and services, the company creates a number of advantages for itself in comparison with indirect export. These benefits include:
* the possibility of establishing direct con
ticks with potential buyers and consumers
export product;
* creation of distribution channels for export goods
lower level;
* the possibility of providing a higher level of op
sales organization and service;
* obtaining more complete information about the status from
efficient external market, demands and needs of the
beaters;
* possibility of implementation at a higher level
international marketing.
At the same time, carrying out direct export, the firm, as noted, is forced to spend additional funds on sales activities. It may have some problems in the implementation of communication policy, primarily due to cultural differences. There may also be some difficulties in implementation. pricing policy due to the complexity of the international marketing environment.
In each specific case, the company must analyze the above factors and, taking this into account, choose the most acceptable export options for it. At the same time, the practice of carrying out export activities shows that the expediency of using direct exports in certain situations does not raise any particular objections and this method of entering foreign markets is the most acceptable. This is the case, in particular, when:
Purchase of company goods government bodies foreign state;
* purchase of goods by retail chains;
* purchase of large consignments of goods for their direct
consumption by foreign companies
example of goods for industrial purposes;
* purchase of goods by foreign hotel chains and
restaurants;
* sale of goods to buyers of foreign countries at
by mail, via the Internet, by catalogs and using
other forms of out-of-store trade.
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