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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