1 There are some unique problems in international trade and companies doing business overseas must be aware of them. In particular, there include (a) cultural problems, (b) monetary conversion, and (c) trade barriers.

2 When companies do business overseas, they come in contact with people from different cultures. These individuals often speak a different language and have their own particular custom and manners. These differences can create problems.

3 For example, in France, business meetings begin promptly at the designated time and everyone is expected to be there. Foreign business people who are late are often left outside to cool their heels as a means of letting them know the importance of promptness. Unless one is aware of such expected behaviors he may end up insulting the people with whom he hopes to establish trade relations.

4 A second traditional problem is that of monetary conversion. For example, if a transaction is conducted with Russia, payment may be made in rubles. Of course, this currency is of little value to the American firm. It is, therefore, necessary to convert the foreign currency to American dollars. How much are these Russian rubles worth in terms of dollars? This conversion rate is determined by every market, where the currencies of countries are bought and sold. Thus there is an established rate, although it will often fluctuate from day to day. For example, the ruble may be worth $0.75 on Monday and $0.72 on Tuesday because of an announced wheat shortage in Russia. In addition, there is the dilemma associated with converting at $0.72. Some financial institutions may be unwilling to pay this price, feeling that the ruble will sink much lower over the next week. As a result, conversion may finally come at $0.69. These "losses" must be accepted by the company as one of the costs of doing business overseas.

5 A third unique problem is trade barriers. For one reason or another, all countries impose trade barriers on certain goods crossing their borders. Some trade barriers are directly related to exports. For example, the United States permits strategic military material to be shipped abroad only after government permission has been obtained. Most trade barriers, however, are designed to restrict imports. Two of the most common import barriers are quotas and tariffs.

( liyy )29 Sep,2010

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