The use of a specialized third-party trading house in a countertrade arrangement refers to
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Abstract L'idée de maisons de commerce a récemment reçue un renouveau d'attention. Un groupe de travail du gouvernement fédéral a recommandé que le secteur des maisons de commerce soit encouragé afin de stimuler les exportations canadiennes. Dans cet article, nous discutons des raisons qui motivent l'utilisation de ce type d'intermédiare à l'exportation, et nous présentons les résultats d'un sondage récent des exportateurs canadiens sur les arrangements entourant leurs exportations. La théorie ainsi que les résultats de ce sondage mettent en doute la viabilité de l'option des maisons de commerce et leur capacité de stimuler de nouvelles exportations. Les maisons de commerce n'ont pas encore démontré qu'elles peuvent satisfaire les besoins des exportateurs, et c'est précisément une telle démonstration dont on a besoin avant qu'un encouragement gouvernmental soit approprié. /// The trading house concept has recently received renewed attention. A federal government task force has recommended the encouragement of the trading house sector as a way to stimulate Canadian exports. Reasons for using this type of export intermediary are discussed, and the results of a recent survey of Canadian exporters on their export arrangements are presented. Both the theoretical framework and the survey results cast doubt on the viability of the trading house option and its ability to stimulate new export activity. Trading houses have yet to demonstrate their ability to meet exporter requirements, and it is such a demonstration that is needed before government encouragement is warranted. Show
Journal Information Canadian Public Policy is Canada's foremost journal examining economic and social policy. The aim of the journal is to stimulate research and discussion of public policy problems in Canada. It is directed at a wide readership including decision makers and advisers in business organizations and governments, and policy researchers in private institutions and universities. Because of the interdisciplinary nature of many public policy issues, the contents of each volume aim to be representative of various disciplines involved in public policy issues. This quarterly journal publishes interdisciplinary articles in English or French. Abstracts are provided in both languages. Publisher Information University of Toronto Press is Canada’s leading academic publisher and one of the largest university presses in North America, with particular strengths in the social sciences, humanities, and business. The Book Publishing Division is widely recognized in Canada for its strength in history, political science, sociology, Indigenous studies, and cultural studies. Internationally, UTP is a leading publisher of medieval, Renaissance, Italian, Iberian, Slavic, and urban studies, as well as studies in book and print culture. The Journals Division has been an important part of the Press since its foundation and has built a strong reputation for excellence in scholarship and innovation in publishing. We work hand-in-hand with world-class authors, editors and scholarly societies to publish 40+ journals in a variety of disciplines, including the humanities, social sciences, and medicine. We are passionate about high-quality content, digital distribution, and the success of scholarly journals and are making major strides forward in areas such as online peer review systems and multimedia publishing, such as videos and podcasts. Our goal is to be a leading journal publisher in North America, serving the North American and international academic community with superior journals, exceptional services, and customer-focused employees. Rights & Usage This item is part of a JSTOR Collection. What Is a Trading House?A trading house is a business that specializes in facilitating transactions between a home country and foreign countries. A trading house is an exporter, importer and also a trader that purchases and sells products for other businesses. Trading houses provide a service for businesses that want international trade experts to receive or deliver goods or services. A trading house may also refer to a firm that buys and sells both commodity futures and physical commodities on behalf of customers and for their own accounts. Prominent commodity trading houses include Cargill, Vitol and Glencore. Key Takeaways
Understanding Trading HousesA trading house serves as an intermediary. It might purchase t-shirts wholesale from China, then sell them to a retailer in the United States. The U.S. retailer would still receive wholesale pricing, but the price would be slightly higher than if the retailer purchased directly from the Chinese company. The trading house must mark up the price of the goods it sells to cover its costs and earn a profit, however, the t-shirt retailer avoids the hassles of importing. The retailer also may be able to simplify its operations by dealing with one or two trading houses to get its inventory instead of dealing directly with numerous wholesalers. Small businesses that use a trading house can benefit from its expertise and insight into international markets they operate in, as well as get access to vendor financing through direct loans and trade credits. Advantages of Trading HousesEconomies of ScaleA trading house typically has a large portfolio of clients that provide economies of scale benefits. For example, a large trading house can use its significant buying power to receive discounts from manufacturers and suppliers. A trading house can also reduce transportation costs if it ships to customers in large quantities. International FootholdTrading houses have an extensive network of contacts in international markets that help them secure favorable deals and find new customers. They may also have staff working in foreign offices to work with customs officials and manage legal issues to ensure the smooth operation of the business. Currency ManagementBecause a trading house is continually importing and exporting products, they have expertise in managing currency risk. Trading houses use risk management techniques, such as hedging, to avoid getting exposed to adverse currency fluctuations. For example, a trading house that has a future payment in euros may use a currency forward contract to lock in the current EUR/USD exchange rate. Example of Trading HousesJapan is scarce in resources, whether it is food or natural resources, and imports most of them through five trading houses known as sōgō shōsha. The trading houses were developed in Japan during the Meiji Restoration period to bolster its economy during a period of rebuilding. They also helped prop up the country's economy after its defeat and devastation in the Second World War. The role of sōgō shōshas is not confined to a specific sector of Japan's economy. They import goods and services across multiple industries vital to the nation's economy, from automobiles to infrastructure to clothing. The five biggest sōgō shōshas are Mitsubishi Corp, Mitsui & Co. Ltd., Sumitomo Corp., Itochu Corp. and Marubeni Corp. What is it called when one party agrees to purchase goods and services with a specified percentage of the proceeds from the original sale?Offset. is similar to counterpurchase insofar as one party agrees to purchase goods and services with a specified percentage of the proceeds from the original sale. The difference is that this party can fulfill the obligation with any firm in the country to which the sale is being made.
What is a characteristic of countertrade?The common characteristic of counter- trade arrangements is that export sales to a particular market are made conditional upon undertakings to accept imports from that market. For example, an exporter may sell machinery to country X on condition that he accepts agricultural products from X in payment.
What is the definition of switch trading quizlet?Barter. exchange of goods or services directly for other goods or services without the use of money as means of purchase or payment. Switch trading. practice in which one company sells to another its obligation to make a purchase in a given country.
Which of the following is a drawback of a countertrade agreement?A major drawback of countertrade is that the value proposition may be uncertain, particularly in cases where the goods being exchanged have significant price volatility. Other disadvantages of countertrade include complex negotiations, potentially higher costs and logistical issues.
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