Page 26 - Countertrade

THE ETHICS OF COUNTERTRADE

“It is a commonplace to say that all business is built on trust, but this is
even more so with countertrade. A countertrade transaction can scarcely

proceed if the two parties involved mistrust each other or do anything to
arouse suspicion of mistrust. A countertrade deal is difficult enough
when each party collaborates fully with the other, and approaches the
deal is a positive manner, intent on making it work and in overcoming all
the obstacles.

Frequently each party comes to the deal with a different background of
experience. One may have negotiated many countertrade or offset
deals, and will know beforehand all the pitfalls likely to be encountered.
The other party could be undertaking a countertrade deal for the first
time. There could a strong temptation for the wiser party to take
advantage of his superior knowledge to negotiate a deal that is much to
his advantage and, on the other hand, to the other party's disadvantage.

This will soon rebound on the one who thought he was so smart. Not
only will the aggrieved party be very reluctant to do business with him
again, but he will let it be known to his business compatriots, banks and
government officials that the other firm is not to be trusted. Further
business could be impossible, not only with the inexperienced party, but
with other companies in the same country.

Any exporter entering into a countertrade deal would be foolish to
behave in this unethical way, even though there might be a short-term
advantage to him. Countertrade goes beyond an everyday sales
transaction; it is an excellent opportunity to create a partnership with the
purchasing company, to create a platform for continuing business,
perhaps not necessarily on a countertrade basis. This is particularly true

if countertrade is taken up as a pro-active marketing strategy. Any
competitive advantage gained would be thrown away if the importer who
has negotiated the countertrade is dissatisfied with the transaction.” (5)

Source: the Australian Countertrade Association