Lesson 9
Modes of Trade
Business Knowledge:
(1) Origin and development of counter trade
(2) Current counter trade
A. Barter
B. Counter purchase
C. Buyback
D. Features common to the three forms of counter trade
(3) Major advantages of counter trade
A. Helping to deal with foreign exchange shortage
B. Promoting export
C. Reducing uncertainty regarding export receipts
D. Bypassing international price agreement
E. Helping countries with debt problems to import goods.
(4) The drawbacks of counter trade
Trade Terms:
1. Counter trade 对销贸易、反向贸易
2. Hyperinflation 极度通货膨胀
3. Reichsbank 德国国家银行
4. Cross-border contract 进出口合同
5. Protectionism 贸易保护注意
6. Financial market 金融市场
7. Clearing system 清算系统、清算制度
8. Net positions 实际头寸
9. Compensation trade 补偿贸易
10.Trade credit accounts 贸易信贷往来账户
11.Barter 易货贸易: The direct exchange of goods and services, which is
completed in a short period of time.
12.Counter purchase 反向购买、互购贸易: The assumption by an
exporter of a transferable obligation through separate but linked
contract to accept as full or partial payment goods and services from
the importer or importing country.
13.Buyback 回购贸易: An agreement by an exporter of plant and
equipment to take back in the future part of the output produced by
these goods as full or partial payment.
14.Vertical 竖式地、涉及生产销售全过程的
15.Centrally planned economies 中央计划经济国家
16.competitive devaluation 竞争性贬值
17.Volkswagen 大众汽车公司
18.Xerox Corporation 施乐公司
19.Processing trade 加工贸易
20.Consignment 寄售
21.Leasing trade 租赁贸易
22.Auction 拍卖
23.Agency 代理
24.Money market 货币市场
25.Discount market 贴现市场
26.Capital market 资本市场
27.Securities market 有价证券市场
28.Stock Exchange 证券交易所
29.Foreign exchange market 外汇市场
30.Gold market 黄金市场
31.EPU 欧洲支付联盟: European Payment Union
32.Trade credit accounts 贸易信贷往来账户
33.Foreign exchange shortages 外汇短缺
34.Policy objective 政策目标
Answer the following questions:
1. What is counter trade? Why has it attracted so much attention?
A: Counter trade has become the generic term to describe a set of
cross-border contracts that link a seller’s exports to imports from the
buyer.
Counter trade has attracted so much attention as it is often associated
with policy objectives of relevant economies like dealing with foreign
exchange shortages and promotion of exports.
2. How did counter trade originate? And what was the nature of
early counter trade?
A: Following German hyperinflation, competitive devaluations and
protectionism meant a global collapse in trade and in international
financial and banking markets, then the counter trade originate.
The nature of early counter trade is counter trade partners are familiar
partners and goods exchanged are unrelated
3. Why should Britain use bilateral clearing arrangements after
World War II?
A: During and after World War II, when financial markets were in
disarray, Britain used bilateral arrangements
4. What are the main features of the current counter trade? Can you
summarize the categories briefly under current counter trade?
A: Current counter trade partners are not necessarily familiar partners and
goods exchanged are sometimes vertically related. Current counter trade
can be categorized as follows: Barter, Counter purchase, Buyback.
5. What are the major differences between counter purchase and
buyback?
A: The important difference between counter purchase and buyback is
that in buyback the goods and services taken back are tied to the original
goods exported whereas that is not the case in counter purchase. Another
important difference is that a buyback deal usually stretches over a longer
period of time (as long as 15 to 20 years) than a counter purchase deal.
6. What is meant by bundling? What is the opposite way of doing
business?
A: Bundling means the exchanges of goods and services are bundled
together. In normal market transactions buying and selling of goods and
services is unbundled, and arrangement made possible by the use of
money and the “market” as an institution. Thus, an individual can sell
goods and services to obtain monetary income and con then use the
income for other desired goods and services. Such unbundling greatly
facilitates transactions and allows more efficient economic exchanges.
7. Since bundling is not an efficient way of getting business done,
what should a significant part of the international trade of goods
as well as services still be bundled?
A: major advantages of counter trade:
a. Helping to deal with foreign exchange shortage
b. Promoting export
c. Reducing uncertainty regarding export receipts
d. Bypassing international price agreement
e. Helping countries with debt problems to import goods
8. What are the advantages and disadvantages of counter trade?
A: The advantage of counter trade is in Question 7. The disadvantage of
counter trade is that it can be very risky business. By concealing the real
prices and costs of transactions it may conceal and help perpetuate
economic inefficiencies in the market place. Companies may suffer losses
because they could not get rid of products of poor quality. Finally, counter
trade may be considered as a form of protectionism.
9. What are the basic conditions for counter trade to exist?
A: The basic conditions for counter trade to exist are that the countries
lack mature and competitive markets. In such an environment counter
trade can be viewed as a national form of contracting to deal with
transaction difficulties.
10.What are the other modes of trade mentioned in the text?
A: The other modes of trade are processing trade, consignment, leasing
trade, agency etc.
Translate the following sentences into English:
1. 对销贸易一般是与有关国家的政策目标相互联系的，如应对外汇
短缺和扩大出口之类的问题。
Counter Trade is often associated with policy objectives of relevant
economies like dealing with foreign exchange shortages and promotion of
exports.
2. 实质上，反向贸易指的是各种货物和服务的直接交换。
In essence, counter trade refers to the direct exchange of assorted kinds of
goods and services.
3. 回购贸易和互购贸易之间另一个重要的区别在于回购贸易一般比
互购贸易要延续更长一段时间。
Another important difference between counter purchase and buyback is
that a buyback deal usually stretches over a longer period of time than a
counter purchase deal.
4. 在正常的市场交易中，由于使用货币及市场手段，货物的买与卖
是分别进行的。
In normal market transactions buying and selling of goods and services is
unbundled, because of the use of money and the market.
5. 尽管有很多好处，反向贸易可能是风险很大的事。
Despite all its advantages, counter trade can be very risky business.
6. 在其他贸易方式中还有加工贸易、寄售、租赁贸易、代理等。
Among other modes of trade are processing trade, consignment, leasing
trade, agency etc.