COUNTERTRADE

Tatiana Hernandez Cifuentes

Alejandra Varela Melo

What

is

Counte

rtra

de?

Foreign Entry Mode

where goods or services

can be exchanged for

others of equal valor in

form of payment instead

of using money.

Chara

cteristics

• The mode of payment.

• Oftenly used by under

developed countries.

Why

Counte

rtra

de? • Currency• Stimulate the output of

domestic industries.• Clean up bad debt situations.

• Gain a

competitive

advantage.

Types o

f

Counte

rtrade

• Pure Barter

• Switch Trading

• Counterpurchase

• Buyback - Offset

Pure

Bart

er

It is the main and

simplest form

of

countertrade where two

parties have a direct

exchange of goods and

services for other goods

and services and no use

of money is made as

mean of purchase.

Sw

itch Tra

din

gIt’s trade involving three

or more countries. Two

parties exchange some

goods and then one of

them is going to sell the

traded products

to

another one.

Counte

rpurc

hase

This kind of purchase

happens when a country

or a

company

compromises or agrees

to make a future

purchase of goods or

services from another

company (the importer).

The majority of the

goods are paid for in

cash.

Buyb

ack - O

ffset

It is a contract where a

firm has a plant or

supplies one in a different

country and instead of

payment takes

an

output as partial payment

for the contract or when

it’s an investment in

actions that give benefits

to the society.

Adva

nta

ges

• New markets can be developed.

• Gain experience in foreign

markets.

• Surplus and poorer quality

products can be sold through

countertrade whereas they could

not be sold for cash.

• Countertrade can strengthen

political ties.

• Countertrade can be used to

enter high-risk areas.

• It allows companies to circumvent

government restrictions.

Dis

adva

nta

ges

• Countertraded products

are often of poor quality,

overpriced or

are

available due to surplus.

• Products taken in

exchange can differ

from the

firm’s

objectives, or may be

difficult to sell.• Countertrade deals are

difficult to evaluate in

terms of profitability.

Exa

mple

sCoca-Cola

General

Electric

Refe

rence

s

Doole, I. (1008). International marketing

strategy. (5th ed.). United Kingdom:

Cengage Learning. DOI: 

www.cengage.co.uk/doole5Phatak, A. (2004). International

management: Managing in a diverse

and dynamic global environment. (1st

ed.). McGrawHill/IrwinCzinkota, M., & Ronkainen, I.

(2007). International marketing. (8th

ed.). Cengage Learning.