Exporting

Exports are of two main kinds: goods and services, the first being known as visible items and the second as invisible. Over a period of time the total value of exports should balance with the total value of imports. When exports exceed imports we are said to have a favourable balance of payments. But when imports exceed exports the balance of payments is said to be unfavourable.

One complication of the export trade is that every country has its own independent currency system; and another is that many countries impose customs duties or other restrictions on imports.

The exporter is faced with a number of problems. First, there is a need to find a customer for his goods. The actual operation of selling is rather difficult because of language barriers and cultural differences. There are also additional transport problems because of the greater distances and often unfamiliar territories. When the manufacturer turns from selling at home to selling overseas, his problems are magnified.

This is particularly true in terms of finance. The first financial problem facing the exporter is the time taken to deliver his goods. There could be a long delay while his goods is in transit. The second problem is even worse. If he is paid for his goods in a currency other than, for example, dollars, he has to convert that currency. And what if the other currency has fallen in value since the contract was made? These are the perennial problems for the exporter.

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