What does exporting mean?
The sale of good by wholesale to customers in another country; the goods are exported by plane, land, or by sea. In order to export goods, you require an exportation license, the exportation process being controlled by the customs and excise of your country in the same way that the importation of the goods is controlled on arrival at their destination.
When you own a large scale business, the exportation process will be controlled by an export management company as well as a logistics company. With advances in tracking that are now available from logistics companies, the exportation of goods is now a safer and more secure process, the goods being tracked throughout transit.
Exports have been occurring for almost as long as trade and commerce has existed. It occurs on a global scale, and is most common where nations have less trade restrictions such as tariffs. Almost every large company in advanced economies derive a portion of revenues, sometimes quite substantial, from exporting to other countries. Exporting is one of the keys to help economies grow, and one of the key functions of foreign diplomacy is the increase of trade between nations.
Through exports, a country can boost their domestic economy, by increasing sales of products that create additional corporate revenues, increases the tax base, and creating employment opportunities. Global exports total in the trillions of dollars, with China exporting roughly $2.2 trillion alone. In addition, the U.S. exports roughly $1.6 trillion and Germany has exports totaling roughly $1.4 trillion. Other large global exporting nations include Japan, South Korea, Australia and Mexico.
Advantages of Exporting for Companies
There are a number of reasons that lead a company to make the decision to begin exporting. The most obvious is the increase in sales and profits that can come from exporting. There is also the chance to increase a company’s market share. By spreading into different markets companies also decrease their risk through diversification. When production volumes increase to satisfy global demand a company may also see per unit costs decreasing as a function of economies of scale. Finally, companies gain new knowledge when expanding into new markets that may help them become more competitive as well as helping discover new technologies.
Challenges of Exporting
Exporting isn’t without its challenges. Additional costs are a given, due to the resources needed to research the new foreign markets. There may be modifications needed to products to meet local regulations and tastes. Exporting also introduces additional financial risks, as payment collection will typically be slower and more complex than when dealing with domestic customers.