When exporters sell goods to other countries they can come across certain problems.
There are differences in language. Letters, labels and catalogues may have to be translated from, for example, English into German. Currency differencesbring exchange rate problems. A UK exporter might sell a machine for $4500 in the USA. These dollars will then have to be changed into pounds sterling. If the exchange rate is &1 = $1.50 the exporter will receive &3000. When exporters sell goods on credit there is always the danger that customers will not pay what they owe. This is a credit risk. If the foreign firms are far away it becomes more difficult for exporters to decide if they will be paid. Deliverymay be difficult. Longer distances are likely to be involved and more than one form of transport may have to be used. There are risks of damage andtheft. When goods are being transported over long distances there is more chance that the goods will be damaged or stolen. Difficulties with standards of product. For example, cars exported to the USA are usually left-hand drive. Import controls, for example, taxes on imports may cause delays. Differences in language and the longer distances involved make it more difficult for exporters to obtaininformation.
Government help for exporters
The United Kingdom government helps exporters in a number of ways.
The Export Credits Guarantee Department(ECGD) is part of the Department of Trade and Industry, it acts like an insurance company by offering credit insurance. Exporters pay premiums to the ECGD and then will be able to claim compensation if their customers do not pay what they owe.
The British Overseas Trade Board(BOTB) is part of the Department of Trade and Industry. It can give informationto exporters about, for example, the types of products wanted in other countries and the forms which have to be completed when selling to those countries.
The United Kingdom embassiesin foreign countries have staff who can help the United Kingdom firms to sell in those countries.
As well as receiving help from the government the United Kingdom firms can also be helped by various trade associations, institutions or societies.
Chambers of commercearelocal organizations of firms which may provide different goods and services. Thus the London Chamber of Commerce and Industry is made up of firms involved in banking, engineering, retailing and so on. The link between these firms is that they operate in the London area. If these firms wish to export the Chamber of Commerce can give them advice and may provide services.
Trade associationsare nationalorganization of firms providing similar goods and services. Thus the Society of Motor Manufacturers and Traders is made up of firms which make and sell cars. If one of these firms wants to export, advice can be obtained from the trade association.
The British Standards Institution (BSI) gives information about technical standards in foreign countries. For example, cars exported to Japan may have a certain size of headlight.
The clearing bankscan help with the exchange of foreign currency and with receiving money from and paying money to other countries.