1. A firm based in California wants to export a shipload of finished lumber to the Philippines.

The would-be importer cannot get sufficient credit from domestic sources to pay for the
shipment but insists that the finished lumber can quickly be resold in the Philippines for a
profit. Outline the steps the exporter should take to export to the Philippines effectively.
 The Filipino importer places an order with the Californian exporter and asks if he would be
willing to ship under a letter of credit.
 The Californian exporter agrees to ship under a letter of credit and specifies relevant
Information such as prices and delivery terms.
 The Filipino importer applies to the Bank of Philippines for a letter of credit to be issued in
favor of the Californian exporter for the merchandise the importer wishes to buy.
 The Bank of Philippines issues a letter of credit in the Filipino importer’s favor and sends it to
the Californian exporter’s bank, the Bank of California.
 The Bank of California advises the exporter of the opening of a letter of credit in his favor.
 The Californian exporter ships the goods to the Filipino importer on a common carrier. An
official of the carrier gives the exporter a bill of lading.
 The Californian exporter presents a 90-day time draft drawn on the Bank of Philippines in
Accordance with its letter of credit and the bill of lading to the Bank of California. The
exporter endorses the bill of lading so title to the goods is transferred to the Bank of
California.

2. How do you explain the use of countertrade? Under what scenarios might its use increase
further by 2020? Under what scenarios might its use decline?
 Countertrade is a set of barter-like deals, the principle is to trade goods and services in
respect of other goods and services where no money can be exchanged. If the global market
continuously grows, and more countries become globalized, small companies will become
big multinational enterprises so that countertrade will be more favored in 2020.
Unfortunately, many businesses have shut down due to the pandemic, hence reducing
countertrade and potential it is users.

3. How might a company make strategic use of countertrade schemes as a marketing weapon
to generate export revenues? What are the risks associated with pursuing such a strategy?
 Countertrades provides enterprises with an easy way of entering a competitive market with
high resource productivity and improved profits. The risks associated with
countertrade use is that companies who typically prefer countertrade are those major
multinationals with a clear financial background. So, it is possible small to medium-sized
companies that lack a global network or connections would use their capital inefficiently and
earn fewer income.