The dreaded Somali Pirates. Image credit slate.com

The dreaded Somali Pirates. Image credit slate.com

ZIMSEC O Level Commerce Notes: Difficulties faced by importers and exporters

  • Different languages
  • Language is a barrier in international trade because it leads to communication problems.
  • There is a need to translate information or instructions from one language to another e.g. Chinese to English.
  • Different currencies
  • Different countries make use of different currencies which need to be converted to and fro using prevailing exchange rates.
  • Different weights and measures:
  • A lot of countries are yet to adopt the metric system for example the U.S which makes use of feet instead of metres.
  • Different cultures and religions:
  • Different people in the world believe in different religions and have different cultures.
  • For example due to religion and cultural reasons Zimbabwe cannot export beef to India.
  • Different laws and regulations:
  • Each country has its own laws and regulations which govern the activities of their citizens as well as rade.
  • For example Zimbabwe’s roads require motorists to travel on the left while Americans travel on the right. This means that some types of vehicles might not be allowed into Zimbabwe.
  • Differences in technology resulting in entities in developing nations facing stiffer competition from developed nations which can produce goods more cheaply using advanced technology.
  • Conducting market research, to establish the demand for goods in another country is expensive and difficult for the exporter to obtain such information on foreign markets.
  • Exporters often experience delays in receiving their payment and there can also be risk of default by the importer due to wars or state interference.
  • A lot of documents, which are sometimes difficult to understand need to be completed.
  • Long distances are involved resulting in:
  • higher transport costs.
  • More transit risks.
  • Higher insurance charges.
  • Difficulty in providing after-sale services.
  • The government may impose trade restrictions enforcing quotas in an effort to control foreign currency reserves as well as in pursuit of other macroeconomic goals.
  • Political instability e.g. civil wars and disorder in a a country and political interference may restrict trade.
  • There is stiff competitions.
  • Packaging is expensive.

To access more topics go to the Commerce Notes page.

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