The Pros and Cons of Exporting

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Monday - 30 April 2018 - 1:57 PM

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Export offers many features to companies and countries, but not all companies benefit from the excellent opportunities in the global market. The re-establishment of political borders, the opening up of new consumer markets, the historic trade agreements and the World Trade Organization created opportunities for export that were not before available. The global economy is affected by the arrival of global manufacturing technologies that have created rival manufacturers that are able to produce cheaper, faster and better, and so many developing countries are seriously able to compete with established economies because of their links to global communication systems, television development, printing and electronic access to information.

 

 Exporting Pros:

 

 

 

- Increase sales and profits

 

- Acquire a share in world markets

 

- Reducing dependence on local markets: In the case of expansion in foreign markets, the company increases its marketing base and reduces dependence on local customers only.

 

- More guarantee for exporting companies to be nationalized by the government of the importing country.

 

- Minimizing the impact of market fluctuations: By working in global markets, the company is not captive to economic changes, changing customer requirements and seasonal fluctuations in the local economy.

 

- Utilization of excess production: Export can be increased by using productive capacity, which reduces the unit cost rate and enhances the economy of large quantity production.

 

 

 

 

- Enhancing competitiveness: Exporting enhances the competitive advantage of the company and the state. While benefiting from the recognition of new technologies, methods and processes, the state benefits from improving its trade balance.

 

- Development of quality and quality: to follow the quality and quality standards, in accordance with the requests and contracts with the importer, which provides for the production of products of specific types, and conform to international standards.

- Increasing access to these economically important currencies such as the dollar and the euro.

- Economic growth

 

Increase export -> Increase access to foreign exchange -> Increase national income -> Increase revenues and material surpluses of the state -> Increase public spending -> Improve the standard of living.

 

Exporting cons:

 

Sales may not be as expected.

Competition may be greater than expected.

Customers may be delayed in payment or may not pay at all.

The state may not want to export, especially if it relies on it as a strategic product (energy or food), or export is harmful to its interestfor example exporting weapons.

It may be prohibited or not possible to remit earnings from the target country.

A change in the currency exchange rate may cut or end interest or may cause loss.

The instability in the target country leads to losses due to wars or civil conflicts or nationalization by the foreign government.

The product may not be accepted or popular in other markets.

 

 

 

Exporting needs:

·         Shipping:

Export depends in large part on shipping, since each product has its own export method. For example, the export of iron and steel is different in the way and method of shipment from the export of fish, agricultural crops, and rosesThe smaller the cost, the greater the number of exports.

·         Banks (banks):

It is not possible to export without receiving a money order representing the value of the goods to be exported. The more procedures they facilitate, the greater exports and quality

·         Other Services :

Easy clearance of goods, quick documentation ... etc. 

 

          Re-exporting:

There is nothing different in export, except that instead of selling local products,  selling the products of other countries, the intermediary state imports products from one country and exports them to another, especially if there is a difficulty in importing and exporting between the two countries.

It is beneficial to intermediate countries, especially if their procedures and services are easy to re-export, such as the city of Dubai in the UAE, such as, imported from the world and exported to Arab countries and others.

We need active Arab institutions to export their products to the world, which will inevitably affect the standard of living in Arab societies.