Saturday, 14 September 2013

External Trade: A Trade



 External Trade:

"External trade also called as foreign trade. It refers to buying and selling between two or more countries."

For instance, If Mr.X who is a trader from Mumbai sells his goods to Mr.Y another trader from New York then this is an example of foreign trade.

External trade can be further sub-divided into three groups, viz.

Export Trade: 

When a trader from home country sells his goods to a trader located in another country, it is called export trade. For e.g. a trader from India sells his goods to a trader located in China.

Import Trade:

When a trader in home country obtains or purchase goods from a trader located in another country, it is called import trade. For e.g. a trader from India purchase goods from a trader located in China.

Entrepot Trade : 

When goods are imported from one country and then re-exported after doing some processing, it is called entrepot trade. In brief, it can be also called as re-export of processed imported goods. For e.g. an Indian trader (from India) purchase some raw material or spare parts from a Japanese trader (from Japan), then assembles it i.e. convert into finished goods and then re-export to an American trader (in U.S.A).

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