a global peerspective of one foreign entry mode.

1. COUNTERTRADE
Jordy Steve Mancilla Castillo
Juan David Ocaña Oviedo
Course:
International Business I
Head of the Course:
Luis Gerardo Pachon
Project Due:
17th/09/2012

2. ¿COUNTERTRADE?
• Means exchanging goods or services which are
paid for, in whole or part, with other goods or
services, rather than with money.

3. HISTORY OF MODERN
COUNTERTRADING
• Throughout history countertrading occurred whenever there
was a shortage of money, or before money even existed.

4. NECESSITY
• Countertrade also occurs when countries lack sufficient hard
currency, or when other types of market trade are impossible.
• ¿WHY COUNTERTRADE?
Elderkin & Norquist, in their book "Creative Countertrade," say
that companies countertrade in order to:

7. USES
• Main reasons why countertrade is used:

8. •
TYPES be a lot of things depending on who is
countertrade can
OF COUNTERTRADE
involved .
• There are six main variants of countertrade:

9. BARTER
• Exchange of goods or services directly
for other goods or services without the
use of money as means of purchase or
payment.

10. SWITCH TRADING
• Practice in which one company sells
to another its obligation to make a
purchase in a given country.

11. OFFSET
• Agreement that a company will offset a hard -
currency purchase of an unspecified product
from that nation in the future.
• There are two distinct types:

12. COUNTER PURCHASE
• Sale of goods and services to one
company in other country by a
company that promises to make a
future purchase of a specific product
from the same company in that
country.

13. BUYBACK
• occurs when a firm builds a plant in a
country - or supplies
technology, equipment, training, or
other services to the country and agrees
to take a certain percentage of the
plant's output as partial payment for the
contract.

14. COMPENSATION TRADE
• is a form of barter in which one of the
flows is partly in goods and partly in
hard currency.

15. PROS AND CONS
• Counter-trade offers three major benefits:
• Countertrade has its pros and cons. A major benefit of
countertrade is that it facilitates conservation of foreign
currency. Other benefits include increased
employment, higher sales, better capacity utilization and ease
of entry into challenging markets.

17. • Counter-trade also involves significant risks:
• A major drawback of countertrade is that the value
proposition may be uncertain, especially in cases where the
goods being exchanged have significant price volatility. Other
disadvantages of countertrade include complex
negotiations, potentially higher costs and logistical issues.

19. COUNTERTRADE STRATEGIES

20. REFERENCES
• Countertrade. (2005) London countertrade round table, Available:
http://www.witiger.com/internationalbusiness/countertrade.htm
Last accessed 9th September 2012.
• Definition of countertrade. (2012) (I) Investopedia, Available:
http://www.investopedia.com/terms/c/countertrade.asp#axzz260E
nBRns Last accessed 9th September 2012.
• Pros and cons of countertrade. (2011) Impexpedia blog, Available:
http://impexpedia.com/blog/2011/09/09/pros-cons-counter-
trade/. Last accessed 9th September 2012.
• The History of Countertrading (2012) eHow.com, Available:
http://www.ehow.com/facts_7151203_history-
countertrading.html#ixzz260LkXGsE. Last accessed 9th September
2012.