Podcast
Questions and Answers
What best describes credit risk in international trade?
What best describes credit risk in international trade?
- The risk of obtaining payment from a trading partner. (correct)
- The risk of price changes in the market.
- The risk of receiving damaged goods.
- The risk of fluctuating exchange rates.
Which type of risk involves fluctuations in exchange rates over time?
Which type of risk involves fluctuations in exchange rates over time?
- Market Risk
- Exchange Risk (correct)
- Credit Risk
- Mercantile Risk
What is mercantile risk in the context of international trade?
What is mercantile risk in the context of international trade?
- The risk of loss due to unexpected market price changes.
- The risk associated with the receipt of goods not meeting quality standards. (correct)
- The risk of a buyer failing to pay for goods ordered.
- The risk of changes in customs regulations affecting shipments.
Which of the following risks is NOT a component of international trade risks?
Which of the following risks is NOT a component of international trade risks?
What is the main consequence of the time lapse in international trade transactions?
What is the main consequence of the time lapse in international trade transactions?
What is the primary purpose of the United Nations Convention on Contract for the International Sales of Goods (CISG)?
What is the primary purpose of the United Nations Convention on Contract for the International Sales of Goods (CISG)?
What do INCOTERMS refer to in the context of international trade?
What do INCOTERMS refer to in the context of international trade?
Which of the following sets of rules pertains specifically to air transport?
Which of the following sets of rules pertains specifically to air transport?
Which convention relates to rules governing combined transport documents?
Which convention relates to rules governing combined transport documents?
What is the primary concern of the Marine Insurance Acts (1968)?
What is the primary concern of the Marine Insurance Acts (1968)?
What do the Uniform Customs and Practices for Documentary Credits (UCP 600) primarily address?
What do the Uniform Customs and Practices for Documentary Credits (UCP 600) primarily address?
Which of the following was established specifically in 1968 to modernize existing maritime transport rules?
Which of the following was established specifically in 1968 to modernize existing maritime transport rules?
Which of the following represents key terms related to the interpretation of trade terms?
Which of the following represents key terms related to the interpretation of trade terms?
What color is associated with good luck in Chinese culture?
What color is associated with good luck in Chinese culture?
What is the primary consideration when selecting target items for export?
What is the primary consideration when selecting target items for export?
In the hierarchy of relationships in China, who is likely to be seen above extended family?
In the hierarchy of relationships in China, who is likely to be seen above extended family?
Which phase involves assessing whether a market is fully opened or not?
Which phase involves assessing whether a market is fully opened or not?
Which date is noted for its significance in Chinese culture due to the number 8?
Which date is noted for its significance in Chinese culture due to the number 8?
In the process of international trade, what step comes immediately after selecting trading partners?
In the process of international trade, what step comes immediately after selecting trading partners?
Which color is often associated with misfortune in Chinese culture?
Which color is often associated with misfortune in Chinese culture?
What term best describes the highest tier in the Indian caste system?
What term best describes the highest tier in the Indian caste system?
What is a secondary consideration when evaluating goods for export?
What is a secondary consideration when evaluating goods for export?
Which of the following best describes the 'Mature' phase in market demand?
Which of the following best describes the 'Mature' phase in market demand?
Which of the following emotions is NOT commonly associated with the color yellow in Chinese culture?
Which of the following emotions is NOT commonly associated with the color yellow in Chinese culture?
What is the common perception of 'Strangers' in the hierarchy of relationships in China?
What is the common perception of 'Strangers' in the hierarchy of relationships in China?
What consideration reflects the likelihood of competition in the market?
What consideration reflects the likelihood of competition in the market?
In which situation is government interference likely to be strongest?
In which situation is government interference likely to be strongest?
Which characteristic is NOT associated with the color jade green in Chinese symbolism?
Which characteristic is NOT associated with the color jade green in Chinese symbolism?
Which factor is least likely to be considered when selecting a target market for exports?
Which factor is least likely to be considered when selecting a target market for exports?
Which of the following is NOT a source of market research information?
Which of the following is NOT a source of market research information?
What is a method to conduct import/export marketing?
What is a method to conduct import/export marketing?
Which of the following activities is associated with discovering trading partners?
Which of the following activities is associated with discovering trading partners?
What is a common tool used for credit investigation?
What is a common tool used for credit investigation?
Which of the following is a channel for import/export marketing that involves direct interaction?
Which of the following is a channel for import/export marketing that involves direct interaction?
Which organization can assist in gaining consumption information by product?
Which organization can assist in gaining consumption information by product?
What type of report helps analyze purchase trends?
What type of report helps analyze purchase trends?
What is a function of a Credit Information Agency in the international trade process?
What is a function of a Credit Information Agency in the international trade process?
Study Notes
International Trade
- International trade is the exchange of goods and services across international borders.
- It is carried out by firms, individuals, and governments.
- International trade is a complex process, with many risks and challenges.
Risks of International Trade
- Transactions between strangers in different countries can lead to higher risk.
- Trade requires time to complete, which increases risk factors.
- Credit risk is the risk of not receiving payment.
- Mercantile risk is the risk of not receiving the goods.
- Exchange rate risk is the risk of losing money due to currency fluctuations during the trade process.
- Market risk is the risk of prices fluctuating during the trade process, potentially affecting the value of the goods.
International Trade Law
- CISG (United Nations Convention on Contract for the International Sales of Goods): Provides a universal set of rules for buying and selling goods across borders.
- INCOTERMS (International Rules for the Interpretation of Trade Terms): Defines commonly used terms for international trade contracts, such as FOB (Free On Board) and CIF (Cost, Insurance, and Freight).
- Hague Rules and Hague-Visby Rules: Regulate carriage of goods by sea.
- Warsaw Convention: Regulates carriage of goods by air.
- Marine Insurance Acts and Institute Cargo Clauses (ICC): Cover insurance contracts for goods transported by sea.
- Uniform Rules for Collection and UCP (Uniform Customs and Practices for Documentary Credits): Provide rules for collecting payments and using documentary credits.
International Trade Process
- Step 1: Item Selection & Overseas Market Research: Determine the most promising products and markets for international trade.
- Analyze product factors including price, quality, usage, design, and major consumer.
- Identify potential markets based on market demand, economic development, market opening, competitive environment, government interference, and cultural considerations.
- Step 2: Import / Export Marketing: Create awareness and promote goods and services in overseas markets.
- Use trade portals, websites, blogs, online ads, exhibitions, and personal visits to reach target customers.
- Step 3: Discovery of Trading Partners & Credit Investigation: Find reliable and trustworthy partners.
- Use search engines, emails, faxes, exhibitions, credit reports, and financial statements to identify potential partners.
- Step 4: Negotiation and Acceptance of Trade Terms & Conditions: Discuss and agree on the terms of the trade contract.
- Step 5: Sign a Trade Contract: Formally bind both parties to the agreed-upon terms.
- Step 6: Issuing & Accepting of L/C (Letter of Credit): Secure payment for the goods by using a letter of credit from a bank.
- Step 7: Selection of Transportation Company & Sign an Insurance Contract: Choose a reliable transportation company to ship the goods and obtain insurance to protect against potential losses.
- Step 8: Import / Export Customs Clearance and Payment & Acceptance: Complete customs procedures and handle payments for the goods.
- Step 9: Claim & Arbitration: Resolve any disputes that may arise during the trade process.
Market Research Techniques
- Trade Statistics
- Consumption Information by Product
- Market Research Reports
- Business Trips & Field Surveys
- Purchase Trend Reports
- Trade Associations
- Chambers of Commerce
- Trade-related Organizations
- Trade Portals
- Economic Publications
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Description
Test your knowledge on international trade, its complexities, and the various risks involved. This quiz also covers important legal frameworks such as the CISG and the implications of international buying and selling. Assess your understanding of how international transactions function and their potential challenges.