Why Consider Countertrade?

By Christian Losche, Research Associate for GLOBAL ID, LLC

Countertrade refers to the trading of goods for goods between countries, rather than currency. This is an excellent way to trade if a company is looking to break into the international market, but lacks the currency at the time. It will also help in building customer relationships in different markets as long as the goods provided in the trade are of promised quality. The question may arise, how does one make money during the process of a countertrade? Take PepsiCo, who entered into a countertrade with Russia. In exchange for syrup provided by PepsiCo, Stolichnaya trades vodka. PepsiCo makes money off of this trade by obtaining the rights to sell the vodka in the U.S. With the partnership, PepsiCo adds additional sales and an addition of a new market to its list of endeavors. There are numerous other examples of countertrades, but once again the point must be stressed, when entering into a countertrade, the products exchanged must meet the standard of quality promised.