Definition TRADE “Buying by linxiaoqin


“Buying and selling of goods”
“Exchange of goods and services among buyers and sellers when both
are satisfied

The word trade has always been used in a generic fashion and the attempts of
deciphering the meaning of this word has only been done by economists and
business people. We have been hearing this word since the time we started to
understand the world. So what exactly is trade? Going by the standard definition of
the term, it is nothing but a simple activity that involves exchange of goods and
services. That’s how simple it is. Such exchanges of goods or services can be
between two parties or several parties. Bilateral trade refers to the trade that takes
place between two parties whereas multilateral trade occurs when more than two
parties are involved in

If we look at history books, trade was actually in the form of barter system where
commodities were exchanged and not currency. The commodities to be exchanged
had equal values and were equally desirable to both parties. In modern world,
money is used as medium of exchange and barter system is no longer in existence.
The term trade has acquired significant importance in today’s world.

Imagine a life without the concept of trade! Sure, it would not be as fascinating as it
is now. The need and importance of trade can only be understood from the fact that
trading is in existence since centuries. During initial times, people first started to
trade among themselves, and then they started to venture into other villages, towns
and even countries. Even many famous discoverers from far away countries found
India when they were hunting for new places to trade. This word is also responsible
for discovery of many unknown countries and conception of travel. Names like Marco
Polo, Columbus, Vasco De Gama etc surely rings a bell in the world of trade and its
origin. Trade as a whole is not only complex but exciting as well. One thing is pretty
sure; trade is going to be in existence as long as humans are there on the planet.
The concept of Trade is centered around the simple activity of the exchange of good
and/or services. These exchanges may be the ones that simply take place between
two parties.
The simple trade which takes place between two parties is known as bilateral trade.
These exchanges may also take place amongst more than two parties. the transac
These exchanges that take place amongst more than two parties is known as
Multilateral trade. In its authentic and original form trade perforce used barter and
the exchange of goods and services of a recognized equal value that is equally
desirable to both parties.

Modern traders generally negotiate through the use of a medium of exchange, The barter system of course has become extinct now.

The invention of money and the subsequent creation of the concepts of credit, paper
money and non-physical money have played pivotal roles in simplifying and
promoting the development of trade.
Most economists agree and accept the very obvious theory that trade benefits both
parties involved in the transaction. Trade is a concept that exists largely due to the
differences in the cost of production of some tradable commodity in the various

Trade policy is a collection of rules and regulations which pertain to
trade. Every nation has some form of trade policy in place, with public
officials formulating the policy which they think would be most
appropriate for their country. The purpose of trade policy is to help a
nation's international trade run more smoothly, by setting clear
standards and goals which can be understood by potential trading
partners. In many regions, groups of nations work together to create
mutually beneficial trade policies.

 International trade is the exchange of goods and services across
national borders. In most countries, it represents a significant part of
GDP. While international trade has been present throughout much of
history (see Silk Road, Amber Road), its economic, social, and political
importance have increased in recent centuries, mainly because of
Industrialization, advanced transportation, globalization, multinational
corporations, and outsourcing. In fact, it is probably the increasing
prevalence of international trade that is usually meant by the term

Empirical evidence for the success of trade can be seen in the contrast
between countries such as South Korea, which adopted a policy of
export-oriented industrialization, and India, which historically had a
more closed policy (although it has begun to open its economy, as of
2005). South Korea has done much better by economic criteria than
India over the past fifty years, though its success also has to do with
effective state institutions.
Export / Import
Exporting and importing goods is a great way to expand your business
and take part in the global economy. In fact, companies that do
business internationally grow faster and fail less often than companies
that don't.

If you are ready to get started in international trade, there are a
number of government programs to help you get started. Also, there
are strict regulations on importing and exporting goods, so it is critical
that you understand which of these regulations apply to you.

Import export businesses, also known as international trading, are one
of the hottest commercial trends of this decade. American companies
trade in over 2.5 trillion dollars a year in merchandise, of which small
businesses control over 95 percent. As the owner of an import export
enterprise, you can work as a distributor by focusing on exporting and
importing goods and services that cannot be obtained on national soil
(e.g., Russian caviar and French perfumes) or those that are cheaper
when imported from other countries (e.g., Chinese electronics). In
addition, you can also open an export management company (EMC),
where you can help an existing corporation market its products in a
foreign country by arranging the shipping and storing of the
merchandise for them without doing the actual selling. EMCs can
specialize in one industry or work with different types of import export
manufacturers. It is also possible to act as a broker for a company,
working on commission over the actual sales. This is a great choice for
products that are guaranteed to sell because of high demand or an

International trade is one of the hot industries of the new millennium.
But it's not new. Think Marco Polo. Think the great caravans of the
biblical age with their cargoes of silks and spices. Think even further
back to prehistoric man trading shells and salt with distant tribes.
Trade exists because one group or country has a supply of some
commodity or merchandise that is in demand by another. And as the
world becomes more and more technologically advanced, as we shift in
subtle and not so subtle ways toward one-world modes of thought,
international trade becomes more and more rewarding, both in terms
of profit and personal satisfaction.

Importing is not just for those lone footloose adventurer types who
survive by their wits and the skin of their teeth. It's big business these
days--to the tune of an annual $1.2 trillion in goods, according to the
U.S. Department of Commerce. Exporting is just as big. In one year
alone, American companies exported $772 billion in merchandise to
more than 150 foreign countries. Everything from beverages to
commodes--and a staggering list of other products you might never
imagine as global merchandise--are fair game for the savvy trader.
And these products are bought, sold, represented and distributed
somewhere in the world on a daily basis.

But the import/export field is not the sole purview of the conglomerate
corporate trader, according to the U.S. Department of Commerce, the
big guys make up only about 4 percent of all exporters. Which means
that the other 96 percent of exporters--the lion's share are small
outfits like yours wil be--when you're new, at least.

How to Start an Import/Export
From importing exotic fashions to exporting light fixtures, the
international trade business will take you all over the world and into all
product niches.
June 28, 2001

Editor's note: This article was excerpted from our Import/Export
Business start-up guide, are bought, and sold, represented and
distributed somewhere in the world on a daily basis.

But the import/export field is not the sole purview of the conglomerate
corporate trader, according to the U.S. Department of Commerce, the
big guys make up only about 4 percent of all exporters. Which means
that the other 96 percent of exporters--the lion's share are small
outfits like yours wil be--when you're new, at least.

Champagne and Caviar
Why are imports such big business in the United States and around the
world? There are lots of reasons, but the three main ones boil down

      Availability: There are some things you just can't grow or
       make in your home country. Bananas in Alaska, for example,
       mahogany lumber in Maine or Ball Park franks in France.
      Cachet: A lot of things, like caviar and champagne, pack
       more cachet, more of an "image," if they're imported rather than
       home-grown. Think Scandinavian furniture, German beer, French
       perfume, Egyptian cotton. Even when you can make it at home,
       it all seems classier when it comes from distant shores.
      Price: Some products are cheaper when brought in from out
       of the country. Korean toys, Taiwanese electronics and Mexican
       clothing, to rattle off a few, can often be manufactured or
       assembled in foreign factories for far less money than if they
       were made on the domestic front.

Aside from cachet items, countries typically export goods and services
that they can produce inexpensively and import those that are
produced more efficiently somewhere else. What makes one product
less expensive for a nation to manufacture than another? Two factors:
resources and technology. A country with extensive oil resources and
the technology of a refinery, for example, will export oil but may need
to import clothing.

Types of Import/Export Businesses

First off, let's take a look at the players. While you've got your
importers and your exporters, there are many variations on the main

      Export management company (EMC):                         An EMC
       handles export operations for a domestic company that wants to
       sell its product overseas but doesn't know how (and perhaps
       doesn't want to know how). The EMC does it all--hiring dealers,
       distributors and representatives; handling advertising, marketing
       and promotions; overseeing marking and packaging; arranging
       shipping; and sometimes arranging financing. In some cases,
       the EMC even takes title to the goods, in essence becoming its
       own distributor. EMCs usually specialize by product, foreign
       market or both, and--unless they've taken title--are paid by
       commission, salary or retainer plus commission.
      Export trading company (ETC): While an EMC has
       merchandise to sell and is using its energies to seek out buyers,
       an ETC attacks the other side of the trading coin. It identifies
       what foreign buyers want to spend their money on and then
       hunts down domestic sources willing to export. An ETC
       sometimes takes title to the goods and sometimes works on a
       commission basis.
      Import/export merchant: This international
       entrepreneur is a sort of free agent. He has no specific client
       base, and he doesn't specialize in any one industry or line of
       products. Instead, he purchases goods directly from a domestic
       or foreign manufacturer and then packs, ships and resells the
       goods on his own. This means, of course, that unlike the EMC,
       he assumes all the risks (as well as all the profits).

42 Wholesale Trade
The Wholesale Trade sector comprises establishments engaged in
wholesaling merchandise, generally without transformation, and
rendering services incidental to the sale of merchandise.

The wholesaling process is an intermediate step in the distribution of
merchandise. Wholesalers are organized to sell or arrange the
purchase or sale of –

   1. goods for resale (i.e., goods sold to other wholesalers or
   2. capital or durable non-consumer goods, or
   3. raw and intermediate materials and supplies used in production.

Wholesalers sell merchandise to other businesses and normally
operate from a warehouse or office. These warehouses and offices are
characterized by having little or no display of merchandise. In addition,
neither the design nor the location of the premises is intended to
solicit walk-in traffic. Wholesalers do not normally use advertising
directed to the general public. Customers are generally reached
initially via telephone, in-person marketing, or by specialized
advertising that may include Internet and other electronic means.
Follow-up orders are either vendor-initiated or client-initiated,
generally based on previous sales, and typically exhibit strong ties
between sellers and buyers. In fact, transactions are often conducted
between wholesalers and clients that have long-standing business

This sector comprises two main types of wholesalers: those that sell
goods on their own account and those that arrange sales and
purchases for others generally for a commission or fee.

  1. Establishments that sell goods on their own account are known
     as wholesale merchants, distributors, jobbers, drop shippers,
     and import/export merchants. Also included as wholesale
     merchants are sales offices and sales branches (but not retail
     stores) maintained by manufacturing, refining, or mining
     enterprises apart from their plants or mines for the purpose of
     marketing their products. Merchant wholesale establishments
     typically maintain their own warehouse, where they receive and
     handle goods for their customers. Goods are generally sold
     without transformation, but may include integral functions, such
     as sorting, packaging, labeling, and other marketing services.
  2. Establishments arranging for the purchase or sale of goods
     owned by others or purchasing goods, generally on a
     commission basis, are known as business to business electronic
     markets, agents and brokers, commission merchants,
     import/export agents and brokers, auction companies, and
     manufacturers' representatives. These establishments operate
     from offices and generally do not own or handle the goods they

Some wholesale establishments may be connected with a single
manufacturer and promote and sell the particular manufacturers'
products to a wide range of other wholesalers or retailers. Other
wholesalers may be connected to a retail chain or a limited number of
retail chains and only provide a variety of products needed by the
retail operation(s). These wholesalers may obtain the products from a
wide range of manufacturers. Still other wholesalers may not take title
to the goods, but act as agents and brokers for a commission.

Although wholesaling normally denotes sales in large volumes, durable
no consumer goods may be sold in single units. Sales of capital or
durable no consumer goods used in the production of goods and
services, such as farm machinery, medium and heavy duty trucks, and
industrial machinery, are always included in wholesale trade.

Retail trade
The Retail Trade sector comprises establishments engaged in retailing
merchandise, generally without transformation, and rendering services
incidental to the sale of merchandise.

The retailing process is the final step in the distribution of
merchandise; retailers are, therefore, organized to sell merchandise in
small quantities to the general public

Industry Overview
The retail trade industry sells merchandise to the general public for
personal or household consumption. The industry is characterized by
the purchase of goods for resale to consumers. The industry includes
the sale of both durable and non-durable goods. Retail products range
from expensive items such as cars, jewelry, and home furnishings and
appliances to inexpensive and consumable items such as groceries and
fast food. Manufacturers that sell their own products directly to the
public are generally classified as manufacturers. The retail trade
industry includes stores that sell to both consumers and businesses
such as office supply stores and gasoline service stations.

Despite signs that consumer spending may be limited, many retail
operations have announced expansion plans. Aerospatiale plans to
expand in the Southern and Midwestern regions of the US where it is
currently underrepresented. Michaels Stores is testing 25 new stores in
five separate markets. The new Michaels' stores will test new store
formats, which, if successful, may be adopted at the company's
existing stores. Dick's Sporting Goods added 71 stores in 2004 through
its purchase of Galyan's and will probably seek to expand its presence
in eastern half of the United States.
The automotive retail sector is being challenged by shrinking profit
margins on new vehicle sales, rising interest rates, and high gas
prices. Promotions and incentive programs from auto manufacturers
are helping maintain the current healthy levels of sales, but as these
deals cut into manufacturers' profits they are likely to be limited or
discontinued. Many dealerships are investing in ancillary product lines
such as parts and services or financing and insurance. The auto parts
segment in particular remains strong, benefiting from purchases that
consumers perceive as necessary rather than discretionar
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Table of content

  1)   Trade
  2)   Trade Policy
  3)   Import and Export
  4)   Wholesale trade
  5)   Retail trade

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