Exporting and Importing
Exporting is the sale of products and services in foreign countries that are sourced or made in the home country.
Importing is the buying goods and services from foreign sources and bringing them back into the home country. Importing is also known as global sourcing.
Exporting, Importing, and the business opportunity
Exporting and importing are low-cost, low-risk strategies for entering a foreign market. These are good strategies for small to midsize companies that are unable to make large financial investments in international markets. Companies can buy from and sell into a foreign country either through a local distributor or through their own salespeople. The internet has also provided a more efficient way for foreign companies to find local distributors and enter into commercial transactions.
Distributorsare export intermediaries who represent the company in the foreign market. Often, distributors represent many companies, selling products, providing customer service, and receiving payments. Another option is anexport management company (EMC)which is an independent company that performs the duties that a firm’s own export department would execute. The EMC handles the necessary documentation, finds buyers for the export, and takes title of the goods for direct export. In return, the EMC charges a fee or commission for its services.
Even with so many ways for a company to receive help and guidelines to exporting and importing. Mistakes can be made including: waiting until after a competing company has fully saturated local markets before thinking of entering, waiting until the world comes to you rather than proactively developing foreign markets, and lack of experience combined with attempting to export alone.
Exporting and importing and the risks and challenges
Exporting and importing does have some draw backs like Not being in the market to see who your competition is gives local businesses the chance to swoop in. There can be transport delays or damage to goods in transit. Suppliers may change, or you may be unable to supply. Currency fluctuations can be rather frustrating along with political or economic instability in the country you are doing business with. These risks are important to address because in the long run if an exporter or importer isn’t prepared the loss of payment or especially the damaging of goods could destroy the trust built with your distributor and your business. It’s very difficult for exporters to trust one another because in many cases they have never met. Trust is also difficult to develop because the importer and exporter live in different countries, speak different languages, may abide by different legal systems, and it can be very difficult to track then down if a default occurs.
Why It Matters
Exports are an important part of Utah’s economy, and the good news is they are growing. In 2015, Utah exported $13.3 billion worth of goods, an 8 percent increase from the previous year. While primary metals make up a large portion of Utah’s exports, the state has been working to diversify and grow exports in other areas as well. Some of Utah’s top export products include computer and electronic products, chemicals, food and kindred products, and transportation equipment.
The private and public sector put international business as a top state priority a decade ago with the creation of World Trade Center Utah—and it has paid off. Utah is one of the few states in the nation with a trade surplus of $4 billion, and it ranks ninth for export growth in the United States. This is an impressive feat for a small, landlocked state.
So, what does this all mean for Utah? According to a policy brief produced by the Kem C. Gardner Policy Institute at the University of Utah, the state’s 2014 international goods exports generated $4.1 billion in earnings, supported more than 95,000 jobs and contributed almost $7.6 billion to the state’s gross domestic product. These impacts represented 4.8 percent of total earnings in the state, 5.3 percent of total employment and 5.4 percent of total GDP. It is hard to argue with those economic benefits.
Examples Here in Utah
Importing and Exporting
So now that we understand importing and exporting and we’ve looked at why it matters in general. Howdoes importing and exporting affect us here in Utah at a national and international level.
Importing
Utah is one of the many states in the US that has no access to the ocean, and due to many of our
seasons we can only grow our produce for a set time every year making our food one of our majorimports. Having experience in the culinary field I know that local grown produce and local caught fish isavailable however many restaurants, cafes, and homes enjoy seafood, and produce such as pineapple,mangos, and oranges. And unfortunately, Utah’s climate cannot support the conditions needed forthese plants. So, we import food both nationally and international specifically from countries in LatinAmerican. When it comes to seafood, well that’s an import too, without importing seafood into Utah wewould have the vast assortment we see in stores today. We would have to settle with trout and otherwild caught fish native to Utah.
Along with things as simple as food Utah also imports a large variety of cars, bicycles, technology, andmany other things that we take for granted in our everyday lives.
Exporting
Utah is a landlocked state that has a wide variety of national resources including copper, silver, gold,salt, and other minerals that we regularly mine. These minerals are then exported all over the worldboth inside and outside of the United States. A major company that deals in these minerals in KennecottCopper which is owned by the global company Rio Tinto. Utah also participates in the global marketthrough Boeing the aircraft manufacturing company. Factories here in Utah produce many differentparts needed to help the company build their airplanes.
Both of these companies are only a small chunk of the international exporting done in Utah howeverthey make up a large amount of Utah jobs, and overall income to the state.
References
Kimberly Amadeo, “Why Isn’t America the World’s Largest Exporter?”,The Balance,March 3, 2018
NIBusinessInfo.CO.UK,Advantages and Disadvantages of Exporting,NIBusinessInfo.CO.UK
Anonymous Student, Advantages and Disadvantages of Importing and Exporting, UKEssays, May 24, 2017
LICENSES AND ATTRIBUTIONS
International Business OER by Lumen Learning is licensed under CC BY-NC-SA 4.0
