Export Broker Definition
An export broker or agent is a person who acts as an intermediary between buyer and seller in the international market. An export broker enables both parties to execute internal transactions. An export broker brings the two interested parties together and facilitates the transaction. She charges a commission for brokering the transaction.
There are many types of export brokers or agents who facilitate exports and imports. They are listed below:
- Traditional Agents – Traditional agents acts on behalf of their principals. In international trade, they negotiate terms for the purchase and sale of products on behalf of principal.
- Brokers – Brokers are persons who facilitate business transactions, but they do no represent any principal or company. This relives the broker from many of the fiduciary duties inherent in an agency relationship. Brokers find export opportunities for their clients in international markets and charge a commission for the services they provide to clients.
Brokers are broadly divided into two types:
- Merchandise Broker – A merchandise broker is a broker who facilitates their clients to set terms and conditions such as price, quantity, delivery time, and purchase return etc. They mainly negotiate the contract but do not send or receive products on behalf of clients.
- Customs Broker – A Customs broker provides clearance services for the goods that are exported to international markets. Custom broker is also known as customs clearance agents. A customs broker must have a customs-broker license.
Export/Import commission: The export or import broker can make money by using different areas to facilitate exports and imports. The commission varies from product to product and volume of trade.
- Sales Commission – Export brokers often earn money through sales commissions. Brokers charge a commission on each transaction. The commission amount largely depends on the way transaction is negotiated. Those brokers who are in the market for a long time and have a lot of experience will probably charge higher rates than those who are new or less experienced. 10 to 15 percent is normal commission rate.
- Broker Commissions – Broker commission is different from sales commission in that it depends upon the deal rather than sale. Broker commissions are charged on the deal negotiated between buyer and seller. It is predetermined amount or rate. For instance, if a manufacturer has excess inventory and he wants to export products at a discounted price, he may hire a broker who will find potential buyers, negotiate a deal, and charge commission for his services.
References for Export Broker
Academic Resarch on Export Broker
- ● The importance of networks in export promotion: policy issues, Welch, D. E., Welch, L. S., Young, L. C., & Wilkinson, I. F. (1998). Journal of International Marketing, 66-82. This paper explores policy issues connected with internationalization of companies in the field of networks. This article, through the evaluation of a new export promotion scheme, specifically addresses the policy issues arising when networks are part of the foundation for ongoing international market penetration. It further proposes that network outcomes should be included as part of the criteria for evaluating the success of export promotion schemes.
- ● Competing from the periphery: export development through hard business network programmes, McNaughton, R. B., & Bell, J. (2001). Irish Marketing Review, 14(1), 43. The objective of this study was to explore the linkages between the overall business strategies of small firms and their patterns, processes and pace of internationalization. A qualitative approach was adopted, involving 30 indepth interviews with key decision makers of internationalizing small firms based in 3 UK regions (15 ‘knowledge-intensive’ and 15 ‘traditional’ firms). Different results were formed, and this article aims to discuss the impact of these results, public policy, and theory development.
- ● Improving small farmer participation in export marketing channels: perceptions of US fresh produce importers, Stanton, J. V., & Burkink, T. J. (2008). Supply Chain Management: An International Journal, 13(3), 199-210. The study employs survey data collected from a national sample of US fresh produce importers. Their concerns and suggestions regarding potential for transactions with small Mexican farmers were assessed, with factor analysis providing a thematic summary of their perspectives.
- ● The Choice of Foreign Market Entry Modes: The Role of Resources and Industrial Driving Forces, Gubik, A. S., & Karajz, S. (2014). Entrepreneurial Business and Economics Review, 2(1), 49-63. The objective of the paper is to analyse the effects of corporate resources, attitudes of owner/entrepreneur/manager to internationalisation and the characteristics of the business industry on the entry mode choice.
- ● Social factors influencing export initiation in small and medium-sized enterprises, Ellis, P., & Pecotich, A. (2001). Journal of Marketing Research, 38(1), 119-130. The authors examine the influence of antecedent social ties on export behavior in an exploratory cross-case investigation of a sample of small and medium-sized exporters drawn from different industries. Data pertaining to 31 export market entries support the view that decision makers’ cosmopolitanism has a significant influence on the initiation of exports.
- ● The management of export marketing in engineering industries, Hunt, H. G., Froggatt, J. D., & Hovell, P. J. (1967). European Journal of Marketing, 1(1), 10-24. This paper explores the concept of management in export marketing in textile and agricultural machineries, and the mechanical handling equipment companies. It proposes that in the last resort it is the firms that must do the exporting, and it is “directors” and managers” quality that determines their response to improvements in services and incentives.
- ● Intermediation and the role of intermediaries in innovation\, Howells, J. (2006). Research policy, 35(5), 715-728. This paper investigates the issue of intermediation and the role of intermediaries in the innovation process. The aim of this paper is threefold. Firstly, to review and synthesis the literature in this field; from this to develop a typology and framework of the different roles and functions of the intermediation process within innovation; lastly to try and operationalise the typology within the context of UK using case study material.
- ● Application of information technology to a virtual enterprise broker: The case of Bill Epstein, Kanet, J. J., Faisst, W., & Mertens, P. (1999). International journal of production economics, 62(1-2), 23-32. In this paper, the authors examine the potential role of information technology (IT) in the so-called virtual enterprises (VE). This is done by making available a case study of the entrepreneur Bill Epstein. This paper properly describe Epstein’s activities and his role as enterprise “broker”. It further proposes possible reasons why Epstein himself does not make heavy use of IT and present a tool box of possible IT which would support VE broker activities.
- ● Corporate banking behaviour: a survey in Hong Kong, Chan, A. K., & Ma, V. S. (1990). International Journal of Bank Marketing, 8(2), 25-31. This article contains findings of a survey in Hong Kong amongst a representative sample of companies directed to understanding their buying behaviour and attitude to banking services. The areas explored include split‐banking behaviour, bank usage, bank switching, perceived importance of attributes of a bank in a banking relationship, and usage of other financial services. This research aims to contribute a pioneering study, which is expected to provide invaluable insights to banks operating in Hong Kong both locally and foreign‐based so as to formulate their bank marketing strategies.
- ● Improving small farmer participation in export marketing channels: perceptions of US fresh produce importers, Stanton, J. V., & Burkink, T. J. (2008). Supply Chain Management: An International Journal, 13(3), 199-210. The purpose of this paper is to identify important elements of a strategy to facilitate small farmer participation in international supply chains for fresh produce.
- ● A multi-agent system for coordinating international shipping, Goldsmith, S. Y., Phillips, L. R., & Spires, S. V. (1998, May). In International Workshop on Agent-Mediated Electronic Trading(pp. 91-104). Springer, Berlin, Heidelberg. This paper analyses the possible benefit of software agents in international shipping, with emphasis placed on moving products in the US-Mexico borders. It also goes on to show the impact of these agents (part of agencies) in proper information handling.
- ● Global supply chains: factors influencing outsourcing of logistics functions, Rao, K., & Young, R. R. (1994). International Journal of Physical Distribution & Logistics Management, 24(6), 11-19. This study explores the attitude of shippers and service providers towards outsourcing of logistics functions performed within large multinational, manufacturing companies engaged in global trade and presents a model describing the factors which influence the outsourcing decisions.
- ● An analysis of import–export procedures and processes in China, Ramasamy, B. (2010). (No. 88). ARTNeT Working Paper Series. This paper concludes that the trade facilitation processes that exist in China seems comparatively efficient.