Barter
From Supply Chain Management Encyclopedia
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'''Brazilia - South Korea''' <ref> Barter On The Big Stage - Ships For Oil - BarterNews – http://www.barternews.com/barter_on_the_big_stage_ships_for_oil.htm</ref> | '''Brazilia - South Korea''' <ref> Barter On The Big Stage - Ships For Oil - BarterNews – http://www.barternews.com/barter_on_the_big_stage_ships_for_oil.htm</ref> | ||
- | + | The Brazilian government has suggested a barter deal to South Korean major shipbuilders and the state-run oil developer KNOC (Korea National Oil Corp). The arrangement essentially has Korea, the world largest shipbuilders, providing Brazil with drill ships or floating production, storage, and offloading platforms in return for stakes in its oil fields in the Santos area, which KNOC would manage. | |
'''Democratic Republic of Congo - China''' <ref> $9 Billion Barter Deal - BarterNews – http://www.barternews.com/9_billion_dollar_barter_deal.htm</ref> | '''Democratic Republic of Congo - China''' <ref> $9 Billion Barter Deal - BarterNews – http://www.barternews.com/9_billion_dollar_barter_deal.htm</ref> | ||
+ | The Democratic Republic of Congo is trading with a massive state-owned firm based in Beijing, the China Railway Engineering Corporation (CREC). They are planning a new road which will be the first endeavor of the biggest single deal China ever done in Africa, worth $9 billion. Due to be signed in Beijing shortly, it gives DR Congo $6 billion of desperately needed infrastructure about 2,400 miles of road, 2,000 miles of railway, 32 hospitals, 145 health centers, and two universities. In return, China gets a slice of DR Congo precious natural resources to feed its booming industries 10 million tons of copper and 400,000 tons of cobalt. It is a barter deal, what the Chinese side loves to call win-win. Not aid with strings attached, like Western powers have given DR Congo over the years, but pure business. When production begins, the Chinese companies signing the deal, CREC and Sinohydro, will disburse a final $3 billion on roads, railways and hospitals. The idea is that China will recoup its total investment within 10 years. | ||
=='''References'''== | =='''References'''== |
Revision as of 09:58, 8 July 2014
Russian: Бартер
Contents |
General Provisions
This word, the “barter” was perhaps the most popular in the first years of the post-communism Russian life. Under conditions of severe or even hyperinflation the domestic barter transactions were very popular if not the most popular transactions in Russia. Indeed, the most simple and, definitely, old of countertrade arrangements is barter which is often regarded as an old-fashioned means of exchange that was superseded because money is far more efficient [1]. After all, in a monetary system an apple grower who needs shoes simply has to find a cobbler. In a pure barter system the apple grower would have to find not just any cobbler but one who happened to want apples at that time. Thus in virtually all civilizations, except the Incas, money came to play an important role.
Barter is the direct exchange of goods and/or services between two parties without a cash transaction (Fig. 1). Although barter is the simplest arrangement, it is not common. Its problems are twofold. First, if goods are not exchanged simultaneously, one party ends up financing the other for a period. Second, firms engaged in barter run the risk of having to accept goods they do not want, cannot use, or have difficulty reselling at a reasonable price. For these reasons, barter is viewed as the most restrictive countertrade arrangement. It is primarily used for onetime only deals in transactions with trading partners who are not creditworthy or trustworthy.
There are two ways to make barter easier. The first is financial one where they have to use funds to make a final settlement (Fig. 2). The second is technological one. In the frame of information society barter becomes more feasible because the computer can certainly search more effectively the exchanging pairs for barter deals. It is worth noting however, that some of these computerized barter schemes do use units of account to facilitate comparison of the values of the goods and services offered and therefore in such cases the barter circles are using a form of money, albeit one with very restricted functions. Therefore, an Internet bartering has to have good perspectives[2].
Advantages and Disadvantages of Using Barter Arrangements [3] [4][5]
ADVANTAGES | DISADVANTAGES | ||
Subject of Advantages of Using Barter Arrangements | Comments on Advantages of Using Barter Arrangements | Subject of Disadvantages of Using Barter Arrangements | Disadvantages of Using Barter Arrangements |
Barter can help business weather economic storms |
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Lack of Double Coincidence of Wants: |
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Save Cash |
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Lack of any Common Unit of Measurement of Value |
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Makes business recession proof |
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Lack of Means of Sub-division |
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Earn extra money |
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Lack of any Common Unit in terms of which Contracts and Agreements requiring Future Payments would be written |
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Reduce bad debts |
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Lack of any Common Unit in terms of which the Generalized Purchasing Power could be stored |
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Loyalty |
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Possible Losses of Perishible Products |
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New business |
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Great difference in times of delivery for items involved in exchange. |
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Barter financing |
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Price fluctuations on the world market |
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Examples of Barter Arrangements
Bulgaria - Russia [6] Under a 1998 barter arrangement, Bulgaria receives gas from Russian Gazprom in return for allowing transit through its territory to a number of other countries including Turkey, Greece, and Macedonia. The barter agreement has been extended 10 years. Bulgaria will be provided gas at a fixed price, which after the latest hikes in fuel is among the lowest in Europe.
Brazilia - South Korea [7] The Brazilian government has suggested a barter deal to South Korean major shipbuilders and the state-run oil developer KNOC (Korea National Oil Corp). The arrangement essentially has Korea, the world largest shipbuilders, providing Brazil with drill ships or floating production, storage, and offloading platforms in return for stakes in its oil fields in the Santos area, which KNOC would manage.
Democratic Republic of Congo - China [8] The Democratic Republic of Congo is trading with a massive state-owned firm based in Beijing, the China Railway Engineering Corporation (CREC). They are planning a new road which will be the first endeavor of the biggest single deal China ever done in Africa, worth $9 billion. Due to be signed in Beijing shortly, it gives DR Congo $6 billion of desperately needed infrastructure about 2,400 miles of road, 2,000 miles of railway, 32 hospitals, 145 health centers, and two universities. In return, China gets a slice of DR Congo precious natural resources to feed its booming industries 10 million tons of copper and 400,000 tons of cobalt. It is a barter deal, what the Chinese side loves to call win-win. Not aid with strings attached, like Western powers have given DR Congo over the years, but pure business. When production begins, the Chinese companies signing the deal, CREC and Sinohydro, will disburse a final $3 billion on roads, railways and hospitals. The idea is that China will recoup its total investment within 10 years.
References
- ↑ Barter – Relevance and Relation to Money: Is barter still relevant in the modern world? // http://projects.exeter.ac.uk/RDavies/arian/barter.html
- ↑ Al-Tayar, B., Vukovic, J., Herera, F., Tchybysheva, E. Mechanics of Modern Barter forSMEs - http://ru.scribd.com/doc/98869511/Mechanics-of-Modern-Barter-for-SME1-7
- ↑ Benefits Of Barter Exchange - Land Fortune Commodity Exchange - http://www.landfortune.co.zw/index.php/trading/josh.html
- ↑ The barter system: Pros and cons - MeriNews - http://www.merinews.com/article/the-barter-system-pros-and-cons/15813654.shtml
- ↑ The Pros and Cons of Bartering for Survival - The Survevalist - September 04, 2013 - http://survival.outdoorlife.com/blogs/survivalist/2013/09/pros-and-cons-bartering-survival
- ↑ Unusual Barter Agreement Struck Between Russia & Bulgaria - - http://www.barternews.com/unusual_barter_agreement_struck_between_russia_and_bulgaria.htm
- ↑ Barter On The Big Stage - Ships For Oil - BarterNews – http://www.barternews.com/barter_on_the_big_stage_ships_for_oil.htm
- ↑ $9 Billion Barter Deal - BarterNews – http://www.barternews.com/9_billion_dollar_barter_deal.htm