EXAMPLES OF BARTER AROUND THE WORLD

EXAMPLES OF BARTER AROUND THE WORLD

Author: Neha Gupta, Writer for Ormita Australia Limited
Date Issued: January 2010

Barter is thriving as a form of commerce today. According to recent trade reports there are over 250,000 companies in the United States alone trading seven billion dollars in goods and services through barter exchanges. There are many more all across the globe.

We all know about Pepsi, one of the major beverage manufacturers. It swapped the Russian government for the rights to market Stolichnaya vodka in the USA and, in return, they gave the Russian government the rights to market Pepsi products in Russia. No cash changed hands but both parties got a new product and expanded their market share.

Examples of barter can be found all around the world. The national governments in many countries are using barter system to acquire the goods they need.

The Brazilian government recently suggested a barter deal to South Korea’s major shipbuilders and the state-run oil developer KNOC (Korea National Oil Corp) in which Korea, the world’s largest shipbuilders, will provide Brazil with drill ships or platforms in return for stakes in its oil fields in the Santos area, which KNOC would manage. Hence, both parties get what they want without cash coming into the picture.

There are also many other such deals being made between nations. Like a trade between The Democratic Republic of Congo and the China Railway Engineering Corporation (CREC). According to this barter the Chinese company will provide The Democratic Republic of Congo the desperately needed infrastructure like miles of roads and railways. Health centres, hospitals etc. in exchange for a slice of Congo’s precious natural resources to feed its booming industries. A win-win situation all around.

Barter is a life saver for developing countries who do not have the cash reserves to fulfill their needs for technological equipment or defence machinery. Nations like India have used barter successfully to trade and meet their requirements. A good example here would be of a recent trade agreement with Russia wherein Indian products can be bartered for Russian defense imports.

Even the entertainment industry has seen some major barter deals over the last decade or so. Watching a recent movie you might notice the hero drinking a particular brand of cold drink or the heroine buying your favorite cereal. Movies are used as advertising vehicles for many products these days. Recently CEO of a marketing firm said "Today, every frame has an opportunity for branding. It is how intelligibly one crafts the art of in-film product placement”. These movies are in turn promoted along with the products by the product manufactures. Hence, both the producers and the manufactures get more air time for promotion at half the cost.

The most obvious reason for bartering is to conserve cash, and since cash is the lifeblood of every business, conserving it is usually a good idea. Companies across the world have realized this and have adopted barter.