Indirect exports

Indirect exports
Primary topic
Related topics
Methods and techniques

Indirect exports is one of the three export patterns among direct exports and total exports. Indirect exports means that exports are done through trade intermediaries, both meaning export to or export from a country. Reasons of choosing indirect export might be as below[1].

  • conditions of home market are not preferable to produce goods,
  • at home market there is poor availability of resources,
  • production costs at home market are high,
  • property rights are not protected by the law,
  • governance regulation is not supportive,
  • there does not exist supporting industries.

Partners engaged in indirect exports[edit]

Indirect exports are happening through cooperation with specific partners (marketing representatives). They might be located in domestic country or foreign country. Partners have specific responsibilities related to distribution and sales. They receive part of margin for their work. These partners might be[2][3]:

  • agents or agencies,
  • wholesalers,
  • distributors,
  • dealers,
  • resellers,
  • multinational offices,
  • *also purchases might be done directly abroad.

Indirect exports in European Union[edit]

In European Union countries indirect export is understood as situation when good is leaving European Union countries. They are controlled by Export Control System (ECS)[4].

Indirect exports for Small and medium-sized enterprises[edit]

Dutch SMEs were researched in case of using indirect export. The survey showed that it does not matter if company is old or new (established less than 8 years). What matters is how big the company is - bigger companies are, they are more willing to use indirect export[5]:

  • Company size: up to 9 employees with indirect export 5%,
  • Company size: 10-49 employees with indirect export 12%,
  • Company size: 50-250 employees with indirect export 21%.

Other outputs of the survey were that researched companies used mostly foreign intermediaries (81%) instead domestic intermediaries (42%). 25% of companies were using both domestic and foreign intermediaries, 16% only domestic and more than 50% only foreign[6].

Footnotes[edit]

  1. Schröder P. J. H., Trabold H., Trübswetter P. (2003), p.8-10
  2. Schröder P. J. H., Trabold H., Trübswetter P. (2003), p.15
  3. Bryan C. (2012), p.167
  4. Rimmer A. (2016), p.189-190
  5. Schröder P. J. H., Trabold H., Trübswetter P. (2003), p.15
  6. Schröder P. J. H., Trabold H., Trübswetter P. (2003), p.15

References[edit]

Author: Andżelika Stefańska