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What Is a Foreign Export?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 05 September 2016
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A foreign export is any type of good that is originally imported into one country, then is subsequently exported to a different nation. This process of merchandise re-export may take place for a number of reasons, including the desire of buyers to work with exporters in countries with more desirable tariffs and duties, or taking advantage of current rates of exchange on the currencies involved. A common practice in many situations, the foreign export process usually calls for the goods to be re-exported in essentially the same condition and form that they were in when received from the country of origin.

One of the easiest ways to understand how a foreign export occurs is to consider that a client in France places an order for a certain type of goods with a supplier in the United States. The US supplier actually uses a supplier in China to fill orders for those particular products. Since the client prefers to export goods from the US, that supplier will place an order with his or her contact in China, arrange to receive the goods imported from the country of origin, then use those goods to fill the order from the client based in France. As is true in just about any financial transaction, the pricing and shipping costs charged to the French client will be sufficient to allow the US supplier to cover all costs plus make some sort of profit.

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In some cases, foreign export occurs simply because customers prefer to do business with companies based in specific nations. The reasons may have to do with personal preferences, but more often are impacted by the trade laws that may exist between the customer’s country of residence and the nation in which the supplier or vendor is located. Even allowing for the fact that the goods ordered are produced in a third country, factors such as duties, shipping costs, volume purchase agreement in place with the vendor, and other factors may even make it more cost-effective to use the foreign export strategy.

The process of foreign export impacts the economy of a number of nations. Businesses based in nations like the United Kingdom and the USA take in a great deal of trade using this particular approach. The customer receives goods at what is considered an equitable cost from a supplier that is trusted, while that supplier is able to purchase the goods from the manufacturer at a rate that is agreeable to both parties and have them imported at reasonable rates. When the structure of the business deal is carefully planned and takes into account the expenses associated with arranging this type of transaction, everyone involved can benefit.

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