Question

Which of the following is an example of indirect exporting?

a. an australian company allowing a local firm in china to use its technical know-how in producing a product a korean chemical company allowing a japanese company to reproduce the chemical product in the local japanese market
b. a south korean electronics firm selling its televisions through a local electronics retailer in the host country a british company selling its machinery to a canadian manufacturer that is licensed to produce and market goods in that country an american fast-food chain allowing a local chain of restaurants to operate its business in india

Answer 1

Indirect exporting occurs when a company uses an intermediary to sell its products in a foreign market, such as a South Korean electronics firm selling TVs through a local retailer in the host country.

Step-by-step explanation:

Within the scope of international trade, indirect exporting refers to a situation in which a company sells its products in a foreign market through an intermediary, rather than directly. An example of indirect exporting is option b: a South Korean electronics firm selling its televisions through a local electronics retailer in the host country. This involves using a third party, which differentiates it from direct forms of exporting such as establishing a subsidiary or selling directly to consumers in the foreign market.

Option a (technical know-how licensing) and the instances involving licensing to a local firm to produce and market goods (such as an American fast-food chain or a British machinery company) are examples of direct investment in foreign operations rather than indirect exporting.