Direct export is selling by the manufacturer own products abroad without an intermediary. It requires a certain knowledge of commercial contracts, outlets and foreign trade techniques. As it develops, these contacts usually become more intense, which affects the possibility of transition to other forms of internationalization that require greater involvement.
In the recent period, direct exports have been growing, especially when it comes to trade in investment goods. Sales of this type of goods are often related to the provision of additional services, e.g. in the area of consulting, maintenance and repairs, which requires close contact between the producer and the recipient. This contact is also necessary due to the fact that trade in investment goods usually takes place on a loan. The choice of this distribution route may be determined by lower costs in relation to the sale with the intermediary.
The subject of direct export is the majority of investment equipment (from small electric motors to large turbines, cranes, seagoing vessels or machine tools), as well as mechanized household appliances, electroacoustic, audiovisual, passenger cars, etc. Direct export is also used in the fields of production and trade, in which the wholesaler can not be an exporter, e.g. in the case of export of machines manufactured for individual orders. Direct export is carried out where it is justified to create their own sales channels abroad. The following areas can be counted here:
- among consumer goods:
- export of passenger cars
- export of audio and video equipment
- among industrial goods:
- export of mechanical farm equipment (tractors, combines)
- truck export
- bus exports
- export of pharmaceuticals
- export of some chemical products.
The export process
Direct export is used when the products of a given manufacturer are marked with its brand name and are known and recognized in the countries to which they are addressed.
Direct export requires the creation of appropriate organizational bases in the enterprise. With its larger dimensions it is necessary to create in the company its own export department, employ specialists in the field of advertising, marketing, acquisition and conducting research on foreign markets.
With this form of export is associated with a greater commercial risk than in the case of indirect export. Additional capital involvement is required due to the longer cash flow from the sale of raw materials to receiving receivables and due to the need to have its own mailing warehouses, spare parts stores and even the opening of a company branch abroad. Direct long-term loan guarantees for the supplier are connected with direct export.
Organization of export
The company can conduct direct export in several ways, for example:
- An organized sales or branch: a sales department deals in sales and distribution. It can also deal with storage and promotion. Also fulfills the function of the exhibition center and customer service center,
- Domestic office or export department: it may take the form of a separate export department constituting a profit center,
- Traveling agent: an enterprise may send its representative abroad to establish business contacts,
- Foreign distributors or agents: an enterprise may give them exclusive rights or limited authorizations to represent their interests in a particular country.
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- Kokko, A. (2004). Markusen, JR: Multinational Firms and the Theory of International Trade.
- Bernard, A. B., Eaton, J., Jensen, J. B., & Kortum, S. (2003). Plants and productivity in international trade. American economic review, 93(4), 1268-1290.