What Are the Advantages of International Trade?
If you’re looking to expand your business, have you considered international trade? Depending on your company’s stage and scale, it might be worth considering selling overseas.
International trade refers to the exchange of goods or services between countries. The exchanges can be imports, allowing goods and services to be brought into the domestic country, or exports, allowing goods and services to be sold to foreign countries.
International trade helps countries https://www.tencon2022.org/ expand their markets globally by allowing access to goods and services that may otherwise be unavailable or more expensive in other countries.
5 Benefits of International Trade
Maybe you think it’s safer to focus on trade on your home turf. But trading internationally may make your business stronger, more successful, and more profitable. Consider some of these potential advantages of international trade.
The 2021 FedEx Trade Trend Report, a survey of 1,000 U.S. small business leaders conducted by Morning Consult for FedEx, shows that as U.S. small businesses recover from the pandemic, international trade is increasingly seen as an opportunity.
Three in four respondents view expanding trade between the U.S. and customers in other countries as a positive trend, with nearly half believing that widening trade will help their business or company. (Respondents included business owners and executives at companies with between two and 500 employees.)
1. Increased Revenues
One of the top advantages of international trade is increasing your number of potential clients. Each country you add to your list can open up a new pathway to business growth and increased revenues. Seventy eight percent of respondents to the 2021 FedEx Trade Trend Report agree that increasing trade will generate revenue opportunities and create more jobs.
2. Decreased Competition
Your products and services may have to compete in a crowded market in the U.S., but you may find less competition in other countries, where citizens may be thrilled to see your products available where they live.
3. Longer Product Lifespan
Sales can dip for certain products domestically as Americans stop buying them or move to upgraded versions. Selling a product to an overseas market can extend the life of an existing product as emerging markets seek American products.
4. Easier Cash-Flow Management
Getting paid upfront may be one of the hidden advantages of international trade. When trading internationally, negotiating payment terms with vendors may look different. It could be a general practice to ask for payment upfront, whereas at home, you may generally wait longer to be paid. Expanding your business overseas could potentially help you manage cash flow better.
5. Better Risk Management
A significant advantage of international trade is market diversification. Focusing only on the domestic market may expose you to increased risk from economic downturns, political factors, environmental events, and other factors. Becoming less dependent on a single market may help mitigate potential risks in your core market.