read more : global business, B2B ,trade ,buy and sell , supply, factory ,import ,export , manufacturers
There are many risks inherent with international trade, and the wise entrepreneur would do well to study and evaluate them before launching onto the international commerce stage. All aspects of life involve risk, and incorporating international trade into your company's business repertoire is much akin to adding small cap tech stocks to your retirement portfolio. While there is much to be gained with their addition, there is also the very real chance of losing your shirt.
Risks in international trade can be divided under several types, such as,
Economic risks
- Risk of concession in economic control
- Risk of insolvency of the buyer
- Risk of non-acceptance
- Risk of protracted default i.e. the failure of the buyer to pay off the due amount after six months of the due date
- Risk of Exchange rate
Political risks
- Risk of non- renewal of import and exports licenses
- Risks due to war
- Risk of the imposition of an import ban after the delivery of the goods
- Surrendering of political sovereignty
Buyer Country risks
- Changes in the policies of the government
- Exchange control regulations
- Lack of foreign currency
- Trade embargoes
Commercial risk
- A bank's lack of ability to honor its responsibilities
- A buyer's failure pertaining to payment due to financial limitations
- A seller's inability to provide the required quantity or quality of goods
Others Risks
- Cultural differences e.g., some cultures consider the payment of an incentive to help trading is absolutely lawful
- Lack of knowledge of overseas markets
- Language barriers
- Inclination to corrupt business associates
- Legal protection for breach of contract or non-payment is low
- Effects of unpredictable business environment and fluctuating exchange rates
- Sovereign risk - the ability of the government of a country to pay off its debts
- Natural risk – due to the various kinds natural catastrophes, which cannot be controlled
Beyond doubt, doing business in a foreign country entails major business risks. The key is to assess these risks properly in order to eliminate the failure factor in the firm’s global operations, but also to be prepared to anticipate the cost of such a failure.
Global B2B buy sell website: http://www.bytrade.com
没有评论:
发表评论