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The ways of entering into international business

Updated on May 12, 2015

International business


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External trade helps in building foreign reserves of a country

International business refers to buying and selling of goods or services beyond the geographical limits of the country. It is called trade between two countries.

Export - It refers to selling goods or services to foreign countries.

Import – It refers to buying goods or services from foreign countries.

Entrepôt (Re – Export) – It refers to import of goods not for consumption in the home country but for exporting them to another country.

International business is considered as an important mean of economic growth of a country. External trade helps in building foreign reserves of a country.

Basic information about ways of entering into international business

Unlike international trade, trade between countries is very complicated because of distance, risk involved and legal formalities. Before entering into any kind of international business the businessman must get some basic information which include:-

Background of importer - Before entering into any contract, the exporter must find out the previous record of importer and if it is satisfactory then only entering into contract.

The financial soundness of importer – The exporter must find out the creditworthiness of importer whether he will able to make payment in time or not. He must find out this information from the banker of the importer.

The type of goods for export – The exporter must find out complete information regarding the size of goods, quantity of goods, quality of goods and other very clearly and if he can supply goods, according to the specifications of importer then only he should accept the order, because if orders are not supplied according to specifications, the importer can reject the whole consignment.

Model and time of payment – Before accepting orders the exporter must find out within what time period importer will make payment and whether he will pay through letter of credit or bill of exchange or cheque etc.

Government policy – Before entering into international business contract, one must find out international business policy of government so that there are no problems later on.

It is always advisable to secure the services of a middleman. This will provide relief to the buyer as well as seller from various botherations and expenses.

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