Countertrade is an important component for businesses and companies around the world who have adapted different practices of payment instead of using standard ways of using. The purpose of this essay is to discuss briefly on what countertrade is, the various forms of countertrade are and whether it is still practiced today.
Firstly, to identify what countertrade is as explained by Keegan and Green (2015, p. 374) is when international markets are forced to pay exporters of goods and services by means besides money. The purpose of countertrade in some countries around the world is from hard currencies running scarce and there are no other ways for payment. From an international company perspective for instance, if one is not able to pay for goods …show more content…
Offset is said to come from a counterpurchase as Keegan & Green (2015, p. 376) show the Chinese government wanted the US company Boeing to spend 20 to 30 percent of the price of each aircraft on purchases of Chinese goods. In hindsight, in an agreement that a company will offset a purchase of an unknown product from another country. The agreement by one country to buy a product from another, is subject to purchase of some or all of the components and raw materials from the buyer of the finished product, or the assembly of such product in the buyer country. In regards to countertrade being used today, because of the Brexit many of the smaller countertrade similar to when Europe was dealing with the beginning of a debt crisis (The Wall Street Journal, 2012, Aug). Companies in Germany for example BASF (Baden Aniline and Soda Factory) a chemical company as a last resort they would accept countertrade with smaller companies like Greece.
To summarise, countertrade has various forms that are in both the interest of two parties, mainly countries. Countries utilise countertrade when there is limited to no hard currency available in order to exchange. Therefore, large companies in big countries such as the US or China accept other forms of payment in order for smaller countries to utilise countertrade as a form of
Firstly, to identify what countertrade is as explained by Keegan and Green (2015, p. 374) is when international markets are forced to pay exporters of goods and services by means besides money. The purpose of countertrade in some countries around the world is from hard currencies running scarce and there are no other ways for payment. From an international company perspective for instance, if one is not able to pay for goods …show more content…
Offset is said to come from a counterpurchase as Keegan & Green (2015, p. 376) show the Chinese government wanted the US company Boeing to spend 20 to 30 percent of the price of each aircraft on purchases of Chinese goods. In hindsight, in an agreement that a company will offset a purchase of an unknown product from another country. The agreement by one country to buy a product from another, is subject to purchase of some or all of the components and raw materials from the buyer of the finished product, or the assembly of such product in the buyer country. In regards to countertrade being used today, because of the Brexit many of the smaller countertrade similar to when Europe was dealing with the beginning of a debt crisis (The Wall Street Journal, 2012, Aug). Companies in Germany for example BASF (Baden Aniline and Soda Factory) a chemical company as a last resort they would accept countertrade with smaller companies like Greece.
To summarise, countertrade has various forms that are in both the interest of two parties, mainly countries. Countries utilise countertrade when there is limited to no hard currency available in order to exchange. Therefore, large companies in big countries such as the US or China accept other forms of payment in order for smaller countries to utilise countertrade as a form of