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Export Trade Notes Form 6 – Commerce Study Guide

Posted by Dastan Anastaz April 23, 2026

Export Trade Notes Form 6 – Commerce Study Guide

EXPORT TRADE

This is one of the branch of foreign trade dealing with selling of goods, raw materials or services to foreign countries.

It involves two main types;

  • Direct export trade: This is when the sellers exports goods themselves it does not involve the use of agents.
  • Indirect export trade: This is when export of goods and services is through appointed agents who work for a commission.

Advantages of direct exportation

1. It involves the exporter himself and therefore reduce the cost of exportation. In this way exports can be sold cheaply in foreign markets and attract many customers hence big sales and profits.

2. It enables the exporter to be familiar with the changing market conditions, in this case he can export goods more effectively.

Disadvantages of direct exportation

1. Exportation may be done inefficiently as the exporter may not be professionally sound enough to carry out exportation.

2. The exporter has to incur more distribution expenses through the use of intermediaries hence fall in profits and high price of exports which may lead to customers not to buy the products.

3. It does not allow the exporter to be familiar with real export process and actual foreign market environment as most of the tasks are performed by intermediaries.

4. Sometimes these intermediaries (middlemen) perform exportation in efficiently which results to losses to the export firms. It makes the exporter busy in both production and actual selling which can lead to inefficiency and diseconomies of scale.

Advantages of indirect export

  1. High degree of assistance is attained in the process of export from professional export intermediaries hence more success in export business.
  2. There is high possibility of establishing and increasing the size of foreign markets through using various intermediaries.
  3. Export agents can perform many activities in the complicated foreign markets situations hence helping much in business.
  4. Export agents can assist in such activities like repacking and assembling of products which is of great help to producer.

INTERMEDIARIES IN EXPORT TRADE   

  1. Foreign commission agents: These are agents who sells the goods on behalf of the principal and remit the balance of money to the exporter after deducting commission and other expenses by them in the course of selling the goods. They are found in the foreign country where goods are to be sold.
  2. Exporters own representatives: These are exporters sales representatives based in the country to which products are to be sold, they collected orders from customers and sent them to the exporter for processing according to the terms of each order.
  3. Exporters brokers: They assist exporters to negotiate on ally terms in exporting the goods in return they are paid brokerage for performing the negotiation. They can be locally based or based in other countries.
  4. Marketing boards: They are mainly dealing with agricultural exports, selling produce to the agents of foreign buyers by auction or opening offices abroad to boost export of their produce e.g. coffee marketing board.
  5. Buying agents: Many overseas firms have their own buying agents in the country who buy the goods for their firms therefore local producers can sell the goods abroad through them.

IMPORTANCE OF EXPORT TRADE

  1. It encourages specialization among countries.
  2. It encourages economies of scale.
  3. It reduces scarcity of goods.
  4. It stimulates international understanding among countries.
  5. Enable a country to earn foreign exchange through export duties.

INFORMATION ON EXPORT TRADE

The type of information which are very important before exporting are as follows;

  1. Place of export (market).
  2. Kind/type of goods to export.
  3. Marketing strategies.
  4. Procedures and documentation.
  5. Rate of exchange e.g. Tshs Vs Kwacha.
  6. Distribution channel to be used.
  7. Trade policy and restrictions.

THE SOURCES OF EXPORT TRADE INFORMATION

  1. Board of external trade (BET): Provides trade information to both local traders and firm intending to buy goods from within the country.
  2. Chamber of commerce: This institution can give important information to intending exporters on firms and individuals who want to buy good from the country. Example in Tanzania chamber of commerce, industry and agriculture (TCCIA).
  3. Consular offices: Can give intending exporters a list of individuals and firms wishing to buy products from the country.
  4. International exhibition: Through which traders can exhibit their products and explain their merits to prospective customers who can place big orders.
  5. Ministries: In Tanzania we have the ministry of commerce and industries through its department of external trade which is responsible for promoting exports in the international market. I.e. from this department prospective exporter can get useful information on what to export.
  1. Other sources like:

-Reading international business newspapers, publications and magazines.

-Having personal inquiries to prospective importers in foreign countries.

-Visiting websites.

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