Question

Sharon works for a cereal manufacturing company. Her company recently built a manufacturing facility in canada and agreed to take 15 percent of the cereal produced as partial payment over a ten-year period. What form of countertrade is her company pursuing?.

Answer 1

Buy-Back is the form of countertrade her company is pursuing.

What is Countertrade?

Countertrade is a type of reciprocal international trade in which commodities or services are traded for other goods or services rather than hard cash. This sort of international commerce is more widespread in underdeveloped nations that have restricted access to foreign cash or financing. Countertrade is divided into four types: barter, buy-back, counter purchase, and offset.

Countertrade, in whatever form, allows countries with limited access to liquid capital to exchange commodities and services with other countries. Countertrade is a component of a larger import and export strategy that assures a country with limited local resources has access to necessary commodities and raw materials. Furthermore, it allows the exporting country to provide goods and services in a bigger worldwide market, fostering growth in its sectors.

What is Buy-Back Countertrade?

Occurs when a company constructs a facility in a nation or provides the country with technology, equipment, training, or other services in exchange for a percentage of the plant's production as partial payment for the contract.

Therefore, Buy-Back Countertrade is the form of countertrade Sharon's company pursuing.

For more information on Buy-Back Countertrade, refer to the given links:

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