Commercial Risks and its solution in Export Import business

Posted on 27 March 2023 Category : Export

Commercial Risks and its solution in International Trade.

What is Commercial risk in international Business? How do commercial risks arise in export import trade of international business? What are the factors caused for Commercial risk under import export business?

In this article I am also going to explain, how to solve commercial risks under import export trade.

One of the major commercial risks is lack of knowledge about the international market. If an exporter who does not have proper knowledge about the area of sales where he markets his product, no doubt, he may fail in international business. So, an exporter should have studied thoroughly about the foreign market about selling of his export product.

Adaptability of your export product in foreign market plays a vital role in international market. Means, if your product can not have adaptability to change to the conditions of foreign market requirements, you may fail in exporting such product. With a simple example, I can explain about this commercial risk under international business. Suppose you are a mobile manufacturer. As you know, the models and application features are changed daily basis globally. So, if you fail to update features of your product, your market to sell such mobile comes down. So taste and preference of end users of your product plays an important role in any business market especially in export import trade.

We have discussed two commercial risks involved in export import business under international trade. Both commercial risks are common in any business. But the impacts of such commercial risks are more in international business. Now I am going to explain about another commercial risks involved in international business. As you are aware, international business is taken place from one country to another country where the distance between exporter’s place and importer’s place is too far. So meeting requirements of your overseas buyer is a crucial one. Due to longer transit time, if shipped by sea or delay in transit to inland destinations may lead to reject the export goods as your overseas buyer may not be able to use goods based on his commitments to customer.

I would like to point out one more situation under commercial risks in international business. Suppose, you have exported a consignment to your overseas buyer. But in between, due to various reasons, changes in order happened - amendments in export order, cancellation etc. In this situation, exporter should be in a position to handle the issues which had not anticipated before export.

In a nutshell, most of the commercial risks are not predictable. The changes in international market are hazardous and difficult to anticipate. Suitability and acceptability of the product in international market is rather difficult to gauge. Variations in demand and supply conditions are more unpredictable. A good business man untie such knots and succeed.

Here we have noticed that most of the commercial risks are to be borne by the exporters. Exporters cannot shift these risks to the professional risks bearers, paying insurance premium. The exporter is not aware of the conditions in the foreign market as the way he is aware of domestic market. Long distances to travel along with cost and time implication distinguish international trade form domestic trade. Exporter cannot visit Paris with the same ease he does Mumbai from Bhopal. If goods are not sold or price realization is lower than anticipated, due to changes in demand or supply, exporter has to bring back the goods, incurring additional freight cost or opt to sell the goods at a loss. In international market, as in domestic market, presence of competitors influences the demand and supply conditions and entry of new competitors depresses the market more. Further, local production may bring down the prices. Introduction of substitutes to capture the market may take away the exporter’s share in the market.

How to overcome commercial risks in international business?

Commercial risks can be minimized by using forecasting techniques and keeping a careful watch on the changing business conditions in the concerned country, in particular, and also keeping a track of the changes in the world economy. Exporters have to be prepared to face any eventuality and wisdom lies in forecasting and anticipating, of course, finally, quick responding, at the earliest hour.

Also read:

Political risks in International Trade
Risks arising out of foreign laws in Import Export Business
Cargo risks under Imports and Exports
Types of Policies to cover credit risks in Import Export Trade
Causes influencing price of export goods in Export Trade
Credit risks and solutions under International Business
Foreign exchange fluctuations risks and solutions in import export Business
How to overcome the credit risk in an export business?
Does exchange rate of currency effect export business?
Marine Insurance policies
Risks and solutions in Export Business

GST amount of rate on Natural rubber

GST taxable rate on Synthetic rubber business

Rate of GST on Waste, parings and scrap of rubber business

GST imposed rate on Compounded rubber

GST amount of rate on Vulcanised rubber thread and cord business

GST on Handmade safety matches

GST percentage on Latex Rubber Thread business

GST scheduled rate on sale or purchase of Plates, sheets, strip, rods and profile shapes, of vulcanised rubber other than hard rubber

GST payable rate on Tubes, pipes and hoses, of vulcanised rubber other than hard rubber, with or without their fittings (for example, joints, elbows, flanges).

GST amount of rate on Conveyor or transmission belts or belting, of vulcanised rubber

Reduced GST scheduled rate on purchase or sale of Rear Tractor tyres and tubes

GST on Rear Tractor tyres and rear tractor tyre tubes

GST slab rate on sale or purchase of New pneumatic tyres, of rubber used in motor cars, buses or lorries, aircraft, motor cycles etc

GST amount of rate on Re-treaded or used tyres and flaps

GST amout of rate on Inner tubes of rubber

GST slab rate on Nipples of feeding bottles made of rubber

Plastic bangles is sales on No need to pay GST

Nil tariff of GST on sale of Condoms and contraceptives

GST percentage on Surgical rubber gloves business

GST scheduled rate on Rubber articles of apparel and clothing accessories

Payable GST on Toy balloons made of natural rubber latex business

In this article, we have learned a - what is Commercial risk in international Business, how do commercial risks arise in export import trade of international business, what are the factors caused for Commercial risk under import export business. You have also learned solutions to overcome commercial risks in export import trade of international business.

Would you like to add more information about commercial risks in import export business? Share your experience in resolving commercial risks under international business of import and export.

Comment below your thoughts about this article – How to solve commercial risks under international business?

The above information is a part of Import Export online Training

How to prepare an Export Invoice. Contents of Export commercial Invoice:

Difference between Pro forma Invoice and Commercial Invoice in Export Import Trade. Do pro-forma invoice accepts for import customs clearance?

What is Commercial enforcement hold for import cargo in US

Merge your Commercial Invoice and Packing List

Product tariff code of sulfides of nonmetals, commercial phosp trisulfide

HS code for silicates, commercial alkali metal silicates

Posts about export import online training

How to start Export Business?
How to get Export Orders?
What are the risks and solutions in Export Business?
How to overcome negative thinking in Exports Business?
How to send samples?
How to prepare Export Invoice?
How to get certificate of origin?
How does letter of credit work?
What are the terms of Payment in Export Import Trade?
Terms of Delivery in International Business
How to settle dispute in Exports and Imports?
Central Excise Procedures under Exports in India
How to get RCMC?,What are the legal documents in Exports?
Why does Documentation require in Exports and Imports?
Difference between Demurrage and Detention in import
Difference between Proforma Invoice and Commercial Invoice
How to protect Buyer and Seller in Triangular Exports and Imports?
How does High Sea Sales work in Exports and Imports?
Difference between Mother vessel and Feeder vessel
Types of export containers

GST scheduled rate on sale or purchase of Residual lyesfrom wood pulp

GST scheduled rate on Rosin and resin acids business

GST rate on sale or purchase of Wood tar, wood tar oils, wood creosote, wood naphtha

GST on Insecticides, rodenticides, fungicides, herbicides, plant growth regulators, disinfectants

GST scheduled rate on purchase or sale of Finishing agents, dye carriers

GST amount of rate on purchase or sale of Prepared rubber accelerators

Payable GST on Reaction initiators

GST payable rate on purchase or sale of Refractory cements, mortars, concretes

GST imposed rate on Mixed alkyl benzenes and mixed alkyl naphthalene

Trimmed GST levied rate on sale or purchase of All diagnostic kits and reagents

The information provided here is part of Export Import Training online

Comments

PRAKASH DESSHPANDE: On 13 April 2014 sir, I am overwhelmed about the detailed information you had provided,it will prove tremendous help to the beginners,kindly help me in searching the commodities in high demand in developed nations especially in economic zone countries,favored countries,to start. prakash deshpande

jaiprakash: On 15 April 2014 dear sir, thank you for your valuable information about the commercial risks which is helpful for the beginners.

MAHENDRA SINGH KORANGA: On 29 August 2014 HOW CAN RESOLVED THE COMMERCIAL RISK. BEFORE EXPORT THE GOODS AT FIRST COVER THE SHIPMENT UNDER ECGC SEND THE CONTRACT COPY NEAR YOUR ECGC DEPARTMENT (OFFICE) IN THAT CASE WHEN YOU HAVE COVERED THE EXPORTS CONSIGNMENT UNDER ECGC. YOU PAYMENT COME 100%

VASANT KULKARNI: On 01 September 2014 I have not started import-export business. I am planning to start business. This article is very useful for beginners. Thanks a lot. FROM:VASANT KULKARNI

Gautham Anand: On 22 November 2014 I would like to start an exporting business of agricultural products and i am a beginner in this business feild,i need some proper guidence,kindly replay me soon.Waiting for your replay,Thankyou.

Shubs Gandhi : On 06 July 2015 Sir I have a lot of interest in import export business & I'm about to take admission for diploma in imp/exp management. But sir I have some doubts & I'll be very thank-full to you if you help me out of these. Sir i don't have any background in this field or a bulk of capital. So does this actually matters? I've also heard about risk factors & frauds, so as a new comer will it be possible for me to settle in this field?

Saravanan: On 20 July 2015 I would like do export business,but I have no idea about this business,so I want know what I do first , how can I get full details about export business. Because I'm eagerly waiting for to do export business but the only problem is how can i approach . please share me about that. I want known the starting point after that I will all of that. Please help me.

Rajendra Deshmane: On 05 December 2015 received comprehensive information on this topic...thanks a lot:)

D.Roy: On 14 December 2015 We exported one consignment of machinery to Algeria.Now the customs of Algeria saying that machines are second hand as because some rust has come due to sea weather. Now what to do.

Tanti Kishan : On 10 August 2016 i want to do import export business this is my dream so you help me? and spend your time for me? i am tanti kishan and i am old 21 i hope you help me 'how to do import export'.

nikhil jain : On 10 August 2016 Kya ma app sa import export business ka Bara m baat ker sktahu

Lalit: On 11 August 2016 My name is Lalit and I got your email from business site. I live in Canada and looking to forward to get some help from you as I don't have experience in import and export business. Sir would you be able to help me to get some leads, contacts or company that are in this business. I am looking forward to Hera from you.

Sunil: On 11 August 2016 Myself Sunil G, and I am a working professional and interested in learning about the import-export business. This is with a view of starting a small business of my own down the line and then move from my existing It career to IMport Export. Could you please suggest me a course or institute or a book which I can start from?

kumari raj : On 11 August 2016 I am a keralite, but settled in Chennai. I read your article about Import and Export. I am currently working in a publishing field but wants to quit the job to look after my children. I am very much interested in import and export business. Can you please help me to get into this business.

sharma suri : On 13 August 2016 my name surendra sharma. i want enter to export and import business ple tell me sir.ple help me sir

raghu vrr : On 16 August 2016 Am Raghavendra Reddy from Hyderabad.Sir I want to start an export business and even I don't know basics about exports and imports business. Kindly guide me. sir please give me.

Gnani: On 17 August 2016 My name is Gnani, I am from Hyderabad. I am interested in learning import and export business sir. I have seen your website; I need your help for learning subject. Hats off, to your wonderful though of sharing for future generations. Hoping a positive reply from your sir.

Rajora L.C.: On 19 November 2016 Dear Sir, In china what are the necessary documents required for import of Humanhair from India to China. Can Airlines deliver the cargo to the notify without getting release order from the bank to whom the goods consigned and is it possible that customs can deliver the cargo to the notify without delivery order from the Airline.Please advise I shall be highly obliged

Stalin Jose : On 20 November 2016 I am Stalin. I am doing Tour marketing for Thailand. I like to do Export business. I saw your blog in Website. its really very useful for all Indians. Thank you. Sir i need to get some information in your busy schedule. I belongs to Village Panchayat. Whom should i approach for basement to apply Import Licence. May i know the procedure for applying it. Kindly help me to start the Export business.

Dulli McGinnes: On 23 June 2017 DU bist ein Dulli Dulli Du Dulli LG Dein Kev

benival: On 30 June 2022 With the Covid-19 pandemic impacting the world, many suppliers got their orders (partially manufactured or completed) canceled. A large number of our associated vendors sent us offers of their stocks for support on sales. Just compiling these stock information has given us an insight about the massive amount of goods that got piled up at various Indian factories. While figuring out a way to sell the stocks that reached us, we realized that an equally significant volume of e-commerce sellers missed the opportunity to source goods from India. Because of this, they couldn't do any product research or process orders for AW 2020 from India. So, we have reached out to them with a compiled list of available inventories to help them access ready products, thus saving the time lost in product development and production lead time. This inventory is also available to them at a short lead time and can be dispatched in 7-21 days maximum though it will require a change of labels, in some cases. These customers are online retailers and sellers on different e-commerce platforms like Amazon. We had recently organized a Stock Sale event for these customers, and their responses were very overwhelming. They were also pleased to find a solution. After seeing the response on the first part of the stock collection and sales, we are compiling more collections of these readily available stocks. Hence, we are reaching out to you to participate. Moreover, production and lead times are now taking longer than before, as the world slowly begins to work its way back to some normality. This stock collection Part - 2 (as we call it here) might be of interest to e-commerce sellers all over the world. The same would be a solution to cut down on losses on both ends, we believe. Many of you receiving these emails may have already received orders from us for your stock or are in discussion with us for having the orders closed in the next few days. We request such manufacturers to avoid uploading the stocks that are already ordered or are in discussion with our office. You can upload the stock offers that haven't got selected till now, though. We know these stocks are mostly fresh and inspired by the Autumn Winter 2020-21 trends and colors too. Whatever is happening in the world is something that no one has ever experienced before. Like everyone, we also wish that this never happens again. But to cope with the situation in hand, things will become easier for many businesses if we come together. We would like you to participate in the Part-2 of our Stock Sales. Where you can list up goods in the link given below, under the available categories. The updated collection will be presented to buyers across the world. We can expect these customers to put replenishment orders for these goods if the sales go well for them.

ashok: On 02 July 2022 Shall highly appreciate if you can throw some light on the issue of NOC requirement from Original Importer for amending the IGM. Specifically, we have a case whete the Original importer in India paid 10pct prepayment to the overseas Exporter with an understanding to pay remaining 90pct on D/P at sight. After cargo arrived at Indian Port and manifest is already filed, Indian Importer refuses to accept the documents since market prices have dropped by 30pct. Even though contract provides for the overseas exporter to forfeit the 10pct deposit and resell the cargo, wud the requirement of the NOC from the Original Importer a mandatory condition ? As obtaining this NOC would mean the Overseas Exporter would have to compromise even though it is the Indian Importer who is clearly the one which is violating the contractual terms. Would an Undertaking from the Overseas Supplier be sufficient replacement of the NOC from the Indian Importer ?

tushar: On 05 July 2022 I have transferred full payment money against Pro forma invoice to my shipper in indonesia... Now my shipper is not ready to send the goods to me..what can be done in this situation?please suggest me..How can i get my whole money back?? whats the legal procedure??

Ramesh: On 16 July 2022 Right now I am struggling to recover payment from a U.S. Importer, someone who has been buying from my client for last 15-years without any default but has now defaulted on payment and all persuasion does not seem to be working. Can you throw some light on the issue? Is there a way we can sue him? RBI requires payment to be realized within 9-months and even after extension within 15-months.

Commercial Risks and its solution in Export Import business

Comments

Discussion Forum