What is the difference between import and export?
International trade tend to involve imports and exports. These activities tend to be carried out by many countries.
Many students tend to get confused about these terms. However, the lesson provide detailed insight between import and export in a tabular form of easier understanding.
What Is Import?
An import are goods and services bought from another country into the home country. These are products produced by foreign land and brought into the domestic country for consumption.
Most countries tend to import products that are not readily available within their boundaries and this helps to bring about the balance of trade.
Here are procedures on how to import products:
- Trade Enquiry
The importing company gathers information about the exporting companies then communicates to agree on their rates, terms, and conditions.
- Obtaining Import License
The importer is expected to have import license but this is applicable only on certain goods and not all of them.
- Procurement of Foreign Exchange
Both the exporter and importer belong to different countries hence the importer needs to obtain foreign exchange.
- Placement of Order
One all the above status have been completed then the importer place the order for the supply of the products.
- Acquire Letter of Credit
The importer will be required to obtain the letter of credit from the bank to show the credibility related to the realization of the obligation.
- Receipt of Shipment Advice
The exporter deliver shipment advice to the importer once the products are loaded. It contain details of information such as invoice number, vessel name, bill of lading, description of goods etc.
- Customs Clearance and Release
The goods received at the dock are subject to customs clearance which involves a number of legal formalities.
What Is Export?
Export refers to the form of trade where domestic manufactured products are sent to foreign countries upon the arise of demand.
The form of trade is quite common among developing countries that export their products and services.
Here are the key procedures to consider when exporting things:
- Inquiry and Sending Quotations Receipt
The potential importer send inquiries to exporting countries for a quotation. The exporting companies later send the quotation of the potential buyer.
- Order Receipt
The buyer identifies the exporting company and sends the order receipt for the products to be dispatched.
- Obtaining License
The exporter needs to have an export license before goods are dispatched. It is a vital document of international trade.
- Customs Clearance
Products need to undergo custom clearance before they are dispatched to the importer according to the country of residence.
- Preparation of Invoice
The invoice for the goods dispatched is prepared and it contains all the necessary details before being sent to the importer.
- Securing Payment
There are certain vital documents of international trade that the importer needs to have such as a bill of lading, invoice, letter of credit, insurance policy, etc which will help to claim the title of the goods.
Comparison Chart: Import Vs Export
|Refers to the process of buying goods from another country with the aim of reselling
|Refers to the process of selling goods or services to another country
|Meet the demand for goods in the domestic market
|Increase market share and global presence
|What Does It Mean
|High level imply robust domestic demand
|High level implies a surplus
|Earns foreign exchange
|Effect on the Domestic Economy
|The trade deficit in case of high imports than export
|The trade surplus in case of high export than import
Core Differences between Import and Export
- Imports occur when domestic companies buy goods from abroad for reselling while export occurs when domestic companies sell goods or services abroad.
- Import is a country’s expenditure while export is a country’s source of income
- A trade deficit occurs when imports are more than exports and trade surplus occur when exports are greater than imports
- High level of imports indicate robust domestic demand and a high level of exports indicates a trade surplus
- The core of the object of imports is to meet the current domestic market demand whereas exports to increase market share and global presence
The core difference between import and export is that import refer to goods sourced from another country with the aim of resell while exports refer to selling goods or services to another country.