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Risks to be aware of with International Trade

There are plenty of great reasons to trade internationally as a business. First and foremost, working with more countries around the world will naturally open you up to a wider and bigger client base – which if managed effectively could see you taking on more business.

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As well as this, you can also find more opportunities to develop and improve your operations, be it finding more affordable trading partners, or indeed resources to use with your company. Whatever preferences you would have though, it’s fair to say that there are risks involved with international trade of which you should be aware. Below you can find a few examples of what these risks are:

A Fluctuating Exchange Rate

As the majority of business owners will appreciate, the exchange rate is often difficult to predict. The amounts are continually changing and the obvious risk here is that you end up paying more overtime as your prices – and supplier’s prices – change with the rates. Equally, if this isn’t monitored you also risk failing to invoice the correct amounts.

Communication Barriers

The different language barriers can also prove problematic around the world. If you don’t have an interpreter or have a common spoken language with your customers and clients, then dealing with problems can certainly be a challenge. What’s more, discussions can get lost in translation and you may end up over or under delivering on what was verbally agreed.

Political and Social Unrest

A number of nations unfortunately also face political and social unrest that can lead to problems with trade. You only need to look at the current situation in the UKwith the recent Referendum. Should they leave there will be significant ramifications on trade, as preferential agreements will no longer be in place between the UK and the other EU nations.

Differing Attitudes to Business

Lastly, beliefs and attitudes can also be different on the continents. This can make meeting new clients or discussing ideas more difficult. Without a little cultural understanding as well you risk upsetting or offending people if you don’t adhere to their way of doing business.

While all this might seem like quite a headache, the reality is that with the right research and appreciation you can help avoid or eliminate some of the above risks. There’s also alternatives like using expert assistance from international logistics companies like TNT Direct, or again hiring those with local knowledge to assist you in your overseas endeavours.

Image courtesy of iStock

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