Countertrade

Topics: International trade, Trade, PepsiCo Pages: 2 (514 words) Published: October 22, 2013
Counter Trade
Counter Trade is about buying one from another country and those countries also buying in return for goods or services. There are many ways to trade reciprocal and the five types of them are mentioned; Barter; This method is the exchange of goods and services for goods and services without any use of money, like the trade relationship between China and Thailand where fruit has been traded by Thailand for buses made by China. For example, Pepsi Company has exchanged their products to vodka (Stolichnaya vodka) and then Pepsi took those Vodkas to sell in America in 1990s, because Pepsi was an interesting product and also famous in Russia at that time. During that time, Pepsi thought this solution was better than exchanging by Russian money. Counter Purchase; the exporter sells goods, technology or services to an importer and agrees to purchase from the latter, within a specified period, a specific total value of goods selected from a list that excludes those produced by the technology being exported. For example, Fred Krupp Huttenwerke AG of Germany won a$ 9 million order for big capacity hydraulic cranes from Machinoimport in the USSR by agreeing to buy back 15 percent of the contract value in Soviet machine tools and equipment. Krupp was prepared for the counter trade demand and ether used the machines and equipment in its Germany plants or resold them. Krupp’s competitors in the deal, which included Grove Manufacturing Co. and Harnisachfeger Corpn of the United States and Coles Crane of England, were not prepared to accept the counter trade requirements. Buyback; In this type of counter trade, a company builds a plant, supplies technology, training, etc. In exchange they take a part of output of the plant. For example, Levi-Strauss had negotiated a buy-back arrangement with the Hungarian government. The Hungarian government had purchased jean production equipment and technology from Levi’s, in return the firm agreed to purchase a percentage of...
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