What Is an Export Trading Company?
An export trading company (ETC) is a company that works with other companies involved in the exporting business. The ETC works independently from the company for which they are providing services, even though it might have been formed by the export company; it effectively acts as another branch of the business. These companies provide services that support the exporting process, such as warehousing, billing and shipping.
In addition to taking care of many of the processes of the actual exporting, export trading companies can also take care of other aspects as well. They may act as an intermediary of sorts, drumming up business for the exporters or gathering relevant marketing information. Many ETCs will handle the legal requirements involved, too, such as insuring the exported goods and dealing with the legal requirements involved.
Most exporters deal internationally and having an export trading company that can handle interpreting and is able to negotiate the varied laws and regulations can save time and effort. Some companies will deal with different export companies, depending on geographic location. They might even have a different export company for each country where they export goods. This is primarily done in larger exporting companies.
Export trading companies are generally operated in one of two ways. Most ETCs are separate entities from the companies that actually do the exporting, though there is sometimes slight crossover. They operate as another client of the company and charge a fee for their services, either hrough a flat rate or through a commission.
Another form of an export trading company is one created by the producers of the exported goods. These types of groups can be formed to focus on one particular industry, or many, depending on the creating company's type of business. Sometimes these types of export companies are formed by different groups that have the same product. Although they are possibly competing for a market share, they can save money by sharing costs among the other producers, a cost which could be much more if handled by an independent export company.
The term export trading company is often interchanged with the term export management company. This is somewhat of a grey area, though, as many interpret them differently. The main differences in definition can be boiled down to function. Export management companies are generally associated with the marketing side of the business, while export trading companies, while they can handle marketing duties, are generally associated with the process of moving and storing the product. For all practical purposes, the terms are considered interchangeable.
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