Indirect exporting refers to the practice of exporting goods or services through intermediaries or third parties rather than directly to the end customer. This can be done through a variety of channels, such as agents, distributors, or trading companies, and can offer a number of benefits to companies looking to enter international markets.
One major benefit of indirect exporting is that it allows companies to enter new markets without having to establish a physical presence in the target country. This can be especially useful for small or medium-sized enterprises that may not have the resources or expertise to set up their own sales and distribution networks abroad. By using intermediaries, these companies can tap into the local knowledge and networks of these third parties, making it easier to navigate the complexities of a new market.
Another advantage of indirect exporting is that it can reduce the risk and cost associated with entering a new market. By working with intermediaries, companies can test the waters in a new market without committing significant resources upfront. This can be especially useful for companies that are unsure about the potential success of their product in a new market, as they can start with a small pilot project and gradually scale up if things go well.
In addition, indirect exporting can also provide companies with greater flexibility in terms of how they structure their international operations. For example, companies can choose to work with different intermediaries in different countries, allowing them to tailor their distribution strategy to the specific needs of each market. This can be particularly useful for companies that want to target a number of different countries, as it allows them to build a customized distribution network that is optimized for each market.
Despite these benefits, there are also some potential drawbacks to indirect exporting. One of the main challenges is that companies may have less control over their international operations when using intermediaries. This can be especially true when working with agents or distributors, who may have their own agendas and priorities that may not align with those of the exporting company. To mitigate this risk, it is important for companies to carefully vet their intermediaries and establish clear agreements and contracts that outline the terms of their relationship.
In summary, indirect exporting can be a useful way for companies to enter new markets without having to establish a physical presence in the target country. By using intermediaries, companies can tap into local knowledge and networks, reduce risk and cost, and gain greater flexibility in terms of how they structure their international operations. However, it is important for companies to carefully manage their relationships with intermediaries and to be aware of the potential risks involved.
Indirect exporters and importers
Plants and imported inputs: New facts and an interpretation. Firms in international trade. The Listerine lawsuit in 2004 deemed the ads as misleading, forcing the company to stop running them, but the campaign had already done its job. The role of intermediaries in facilitating trade. The Quarterly Journal of Economics, 126 3 , 1319—1374. Market size, trade, and productivity. An anatomy of international trade: Evidence from French firms.
Journal of International Economics, 84 1 , 73—85. Who trades with whom? The Blog gets regular update to its content to keep the readers interested and coming back to the blog regularly. In other words, they produce them in one country and ship them to another, which is one way for them to quickly expand their profitable market. Arabica green coffee is generally twice as expensive as Robusta coffee. It will save you the time and effort of setting up the organization and processes. While on the other hand, if the business has the ability to develop its own export method it uses Direct Exporting.
Germany is a significant coffee exporter, acquiring raw coffee from huge coffee exporting companies in large growing areas like Brazil or Vietnam and processing it in Germany. By teaching farmers successful growing techniques, they help increase products quality, yield, and their own personal incomes. How to determine how much money you need? American Economic Review, 100 2 , 444—448. If you want to contact us or want to get in touch with us then mail us at rollingpensofus gmail. A company that exports intermediaries will already have the infrastructure and a network in place. With a total capacity of 570,000 tons per year, the Intimex Group operates 11 factories that manufacture high-quality coffee for export.
Direct exporting and indirect exporting: strategic differences
It can be seen from the above cases that the Indirect Exporting has its own share of benefits for the organizations especially the smaller and the middle size businesses. Firms with small means cannot afford to invest a huge capital in developing their own global marketing structure. How to find the right importer, distributor or sales agent If your market entry plan includes In parallel, we list a broad range of potential distributors or agents. By considering firms involved in both exporting and importing activities, we also find that direct two-way traders are on average more productive than firms trading indirectly on one of the two trade sides. Evidence from firm-level survey data. No need for own market research by the exporter in indirect exporting: The indirect method is more popular with companies which are just beginning their export activities. We also drop more than 5000 observations not reporting either sales or employment.
This firm was renamed Intimex Group Joint Stock Company Intimex Group in 2011. A theory on the role of wholesalers ininternational trade based on economies of scope, Research papers in economics , Stockholm University, Department of Economics. So, the financial resources committed are minimum which is a big advantage in indirect exporting. The easiest method of indirect exporting is to sell to an intermediary in your own country. Imported inputs and productivity CeFiG Working Papers 8 , Center for Firms in the Global Economy. After signing the contract, the buyer will almost always be required to pay a deposit to the seller.
On the other hand, you will loose Especially for small and medium sized companies indirect export is often the best way to enter new markets, at least for markets further away where you may have different cultures, languages and time differences. For example, an EMC might specialize in exporting personal computer business software to educational institutional customers in Asian-Pacific countries. The company that needs to expandin the international market can take advantageof the less costly and almost risk-free mode of internationalization of business by using Indirect Exporting. No exporting experience or abilities are needed, and all the risks involved in shipping and organizing payment from the global market are taken on by the intermediary organization. Selling to visiting buyers: In India, there are resident buying representatives who represent big foreign companies. Indirect exporting also means selling in your territory to an intermediary.
They operate on their own, thereby undertaking all risks involved in exporting. Export mode, firm heterogeneity, and source country characteristics. Joint Stock Company Intimex Group Referring to coffee exporting companies, Intimex is indispensable. Find somebody else who likes to travel, make long hours far away from home and is so flexible to deal with different cultures. Along with that, exports promote the development of the coffee industry and national economic growth.
The Advantages and Disadvantages of Indirect Exporting
Exports of Iranian apple is a good example of this type of export. Manufacturers contact these trading houses for selling in Japan. In particular, it accounts for the possibility that firms can not only export their products, but also internationally source their inputs, either directly or indirectly. Joint Stock Company Intimex Group Contact information: Whatsapp: +84 855 555 837 K-Agriculture Factory K-Agriculture is a Vietnam coffee export company. So indirect exporting is the least expensive entry approach available to such small businesses. It is the responsibility of the exporter to handle sales, logistics of shipment, foreign distribution, and payment collection. Review of Economics and Statistics, 97 4 , 916—920.
It is called a buy-resell arrangement. The exporter will be responsible for handling the sales process, logistics of shipment, foreign distribution, and for collecting payment. Learning by exporting, importing or both? It delivers a roasted coffee flavor that many people enjoy thanks to top-notch roasting techniques. He will benefit from this in order to earn the trust of the overseas market. Wholesalers and retailers in U.
