Methods of Foreign Trade, страница 2

Indirect sales are sales through intermediaries or mediators. This method is used by less experienced or smaller firms because of absence of their own sales network abroad. Their purposes are to achieve serial production and reach remote or small markets for promotion of new goods. Indirect sales include sales through associations and companies at the government level, agents and distributors, auctions, tenders, fairs and exhibitions.

Associations and companies at the government leveldeal in raw materials such as oil, gas, ores and some foodstuffs and consumer goods, as well as carry out all kinds of construction work (joint ventures at home and turn-key factories and works abroad).

Commodity exchangesare the places where raw materials, some manufactured goods and some items of produce, such, as cotton, wheat, vegetable oils, etc. are bought and sold. The goods that can be accurately graded are bought and sold at commodity exchanges according to grades or standards (under standard descriptions), and on the basis of standard contract terms. The grades remain practically unchanged every year.

Commodity markets were originally places or buildings, where traders could come together, which facilitated comparisons of price and quality. Commodities, which need to be physically inspected, are often still traded in such markets; in other cases names such as the Corn Exchange commemorate former physical centers which have been replaced by systems of traders linked by telephones and computers. Commodity markets include both spot markets, where goods are traded for immediate delivery, and forward or futures markets, where prices are agreed in advance for trading at various dates in the future. Such trading is facilitated by market conventions on the specification and quality of the goods traded, and systems for adjudicating disputes. These are clearly essential for spot trades, where the buyers do not physically inspect what they are getting, and even more so for forward and futures trading, where it is impossible to inspect crops which have not yet been grown or minerals which have not yet been mined. Thus, nowadays commodity exchanges are losing their role as markets of physical goods and are becoming mainly futures exchanges where deals are chiefly made for speculation purposes or for hedging.

Non-standard goods like tea, fur, bristles, spices which cannot be accurately graded are sold at auctions, where dealers are supposed to inspect every lot for sale. But in fact they deal with a certified stock. A certified stock is a commodities stock which was checked and acknowledged proper for delivery. The quality of the goods traded at auctions may vary from year to year and from lot to lot so they are sold according to sample. The delivery is usually performed on a tale quale basis (i.e. on "as is" terms) which means selling without the guarantee of quality whereas the seller is not liable for quality deterioration in transit during transportation of cargoes. An auction is the way of buying and selling things by offering them up for a bid. It is the sale where the price is fixed by an auctioneer who invites bids and awards the article being auctioned to the highest bidder.

Competitive tendering is the system of purchasing goods or services by inviting bids or "tenders" and choosing the supplier from among the bids received, i.e. trade by tenders implies one buyer and a number of sellers. It is frequently used for construction work or for delivery of goods. General terms and conditions of the future deal are announced beforehand. Other things being equal, the cheapest tender is chosen and the contract is given to the suppliers who offer the lowest price and the most favorable terms. But purchasers will also be guided by their views on the technical and financial capacity of the bidder to deliver the goods and services reliably. Such a scheme guarantees the efficient execution of a contract at the lowest price because it employs free competition principles.