Risks Faced by Companies When Exporting and the Roles of Intermediaries

 

Risks Faced by Companies When Exporting and the Roles of Intermediaries
 
Introduction
	Exporting of products and services has become a common phenomenon among businesses because of increasing level of globalisation related activities supported by modern business environment. The advancement as achieved in the field of technology has further enables businesses to consider marketing of their products and services in the international markets and as a result, there has been a higher level of exports being performed by them. In addition to this, the increasing level of competition in the domestic markets have forced business to consider the international markets for selling their goods and services in order to achieve higher overall growth and ultimately to sustain their business. The rise in the export of goods and services is mainly attributed to developing countries, as these countries have access to prime factors of production at cheaper rates. R
For instance, the availability of raw material, labour and land has enabled them to produce finished products at cheaper rates and also in higher quantity in excess of their basic requirements. Thus, the excess of products as produces is exported to other countries that require them. This has also forced the export related activities to grow at a rapid pace. However, the rise in the export of goods and services has also resulted into various kinds of additional risks to be faced by businesses in the exporting country. They are being exposed to numerous kinds of newer risks from exporting their products in the international markets. Apart from the higher level of risk included in the exporting of finished products to international markets, the task of exporting has become possible because of various kinds of intermediaries that have an active role to play in effectively facilitating such trade across nations. 
	In this essay, the focus has been on the identification of various kinds of risks to which businesses are exposed to, from exporting their products and services to international markets. A critical assessment of exiting literature will be performed to assess the different types of risks associated with exports of products and services to businesses. In performing the assessment, the specific examples will be considered with respect to risks faced by companies while exporting their products and services. Apart from this, the role of intermediaries in effectively facilitating the export of products and services will also be critically assessed in this essay. Finally, the findings about the risk involved in exporting and the role of intermediaries in the process will be included in the conclusion section of this essay. 
Risks faced by Companies When Exporting
	All kinds of commercial transactions include certain kinds of risks and the risk gets multiplied in case of transactions that involve the exporting of finished products and services. For instance, the literature suggests that an exporter has to face large number of risks in the process of exporting the products and services in international markets. As a result, it becomes essential for the exporter to understand all kinds of risks that are associated with export of goods and services in international markets so that better decisions can become possible to facilitate the export of goods and services in a most effective manner. The major types of risks to which businesses are exposed to in exporting their products to international markets are discussed as follows:
	Credit Risk: This is an important kind of risk which is highly prevalent in case of export of goods and services to businesses in international markets. Credit risk implies the risk from non payment for goods and services purchased by the importer. For instance, before granting credit to businesses in international markets, it becomes essential for the exporter that the credit worthiness of the importer should be properly assessed. However, because of large distances and alien environment involved, the task of assessment of credit risk has highly become difficult and ultimately, the creditworthiness and reputation of importer is extremely difficult to assess. This led to the increased level of risk of non payment or late payment by the importer for the good imported. This makes it essential for the exporter to perform a critical assessment of the creditworthiness of importer in order to remain protected from the credit risk involved in such transaction (Zou, Kim and Cavusgil, 2009). 
There are various such instances of credit risk faced by companies from the export of their products and services. For instance, a textile factory in Jiangsu province China is faced with heavy credit risk from United States and Europe because of global financial crisis that have adversely affected the performance of these economies. As a result, the businesses in the exporting countries are highly worried about the credit provided to businesses in these