What is foreign trade? Foreign trade is the buying and selling of goods and services across national boundaries. Foreign trade can also be termed as international trade. A trade between two countries for the purpose of exchanging goods and services can be a free trade, mutual agreement, bilateral or multilateral.
How is foreign trade carried out?
For Foreign trade to effective there are modalities to follow. There are also international currency for trading between countries which at the present is the US dollars.
To engage in foreign trade you have to understand the international exchange rate and forex trading. The government of any nation is saddled with the responsibility of setting how much they want their local currency to be exchanged with the dollars which is the international trading currency.
Agencies for foreign trade
In every country, there are so many agencies that involved in foreign trade. There are international buyers, shipping companies and local sourcing agents. Its important to understand the various process involved in foreign trade. There are also scammers everywhere so be very careful if you are interested in going into export and import trade.
How to find legit foreign trade agencies
To find a good foreign tradig or import and export companies that are legit, you have to do a due diligence search. The first place to start from is to check your local directories or go to the nearest local government offices around you. You can run an online review and check out the comment sessions. If you cannot find sites on foreign trade then search for international trade agencies around you using Google listings and local directories. There agencies like Alibaba and many more to choose from.
HOW MUCH I CAN HAVE TO START INTERNATIONAL/FOREIGN TRADE?
Sometimes when you take a look at those people that has made big fortunes doing international trade you are tempted to believe the theory of having a large chunk or sum of money before you can engage in international trade but the reverse is the case with modern shipping and online agencies that are scattered everywhere across the globe. With agencies like Alibaba using their website you can start the business of importation with as low as $100. What you need is proper address documentation and a working line preferably for WhatsApp line.
So what are the benefits of engaging in foreign/international trade?
Not to limit or give you a false view of the several benefits of international trade, I am going to list a few importance of foreign trade, these are as follows
- With the help agencies like Alibaba, Ebay, Amazon, Jumia and Konga online shopping you can easily buy stuffs like phone, footwear, clothes, car and anything your purchasing power can afford.
- There also agencies that offers free shipping with coupons
- It creates revenue through foreign exchange using commercial bank forex trading platform
- International trade makes it possible to enjoy products not produced in your country of residence through import trade
- Foreign trade can easily boost local currency
does government control foreign trade/international trade
technically we can say government does not control individual persons involved in international trade but then in every transactions done the government makes money through bank rates, import duties, export duties, duty stamp and through custom charges.
The central bank of any nation directly or indirectly controls international or foreign trade.
TYPES OF FOREIGN TRADE
There are basically two to three types of foreign trade. These are described based on the process involved in the trade. The three types of foreign trade are listed below
- Export trade; this type of trade is the sale of goods like raw materials and finished goods to other nations or countries of the world. Export trade can be visible or invisible
- Import trade; import is a type of trade that concerned with the buying of goods ranging from raw materials, cars, electronics and clothing. It can also be involve in the import of xcservices through corporate or government outfits
- Entrepot; this the act of solely importing goods in order to re-export them to other countries. This topic will be treated in in subsequent posts. An entrepot is also called re-export trade
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Characteristics or features of private enterprises
- Private individuals provide the capital: Private individuals that owned the enterprises are the people to raise capital for the establishment of the enterprise
- Ownership belongs to private individuals: Private individuals, e.g. sole proprietorship or partnership are the ones that own the business enterprise
- Objective of business is to make profits: The purpose of setting up the business enterprise is to make profits for the owners of the enterprise
- Accountability is to the owners: The ions of the business enterprises are usually accounted for and submitted to the owners of the enterprise
- Owners borne the risk of the less: In the event of business failure t ’liquidation, the owners will have to bear entire risks associated with such failures.
- Owners manage the business themselves: The daily operations of a business enterprise is controlled and -managed by the owners of the enterprise.
(b) Public enterprises in: Public enterprises are the types of organisations which are owned, controlled and managed by the government, business organisations are owned by either the local, state or federal government and their major objective is to provide social services to the people. They are associated with such names as authority, corporation, boards and commissions. Examples of public enterprises are public corporations and companies owned by government such as the Power Holding Co-operation of Nigeria (P.H.C.N.), the Nigerian Ports Authority (N.P.A.), Nigerian Television Authority (N.TA.), Nigerian Railway Corporation (N.R.C.) and Nigerian Telecommunications Plc. (N.I.T.E.L.).
Characteristics or features of public enterprises
- Government provides the capital:
Government provides the necessary capital required to set up public enterprises.
- Ownership belongs to the government: Public enterprises are usually set up by Acts of legislation and the enteiprise belongs to the government.
- Objective is to provide social services: The major reason of setting up public enterprises is to provide social amenities and services to the people at reduced cost.
- Management is accountable to the government: The management of public enterprises is directly accountable to the government that set up the enterprise.
- Government and tax payer borne the risks: The risks associated with public enterprises are usually borne by the government and tax payers who provided the capital for setting up the enterprises.
- Board of directors manage the business: The public enterprise is managed by board of directors appointed by the government.
- Public enterprise is a legal entity: Public enterprise is a corporate body or a legal entity, meaning that it can sue and be sued in its own right.