Such transactions cannot usually be carried on by firms with small capital. This is especially so where the products imported from the foreign market are raw or food products because trade in these staples is usually on a cash basis and involves larger amounts than trade in manufactured products.
4. Buying direct.—The importing firm may buy direct from the producers thru its branches established abroad, thru local representatives, or thru travelling buyers who make periodical visits to the territories covered.
In case of manufactured goods, much of the buying is direct. Many large department stores send their buyers abroad periodically in search of late specialties and styles. Some stores maintain permanent offices, not only in London, Paris and Berlin, but also in Yokohama and Shanghai. A difficulty in making such offices efficient lies in the fact that they cannot keep in close touch with the American market. For this reason, many houses combine the two methods and establish a contact between the permanent buying offices and the home office by means of buyers who make periodic visits.
In the staples, fashions play no part: price and quality are the sole determining factors. Local buy ers or traveling buyers or both are used. The wool auctions in Australia, the Siberian fur markets, the indigo auctions in Calcutta and the tea market in China are visited by traveling buyers. Travelling buyers may also be employed where the purchases are made in large quantities at auction, or as "spot cash" transactions.
5. Local many lines the unit of pro duction is so small that native travelling buyers col lect the goods and resell them at a.central place to representatives of foreign houses. Such collectors, moreover, perform a useful service in grading and sorting the goods.
In the wool trade in Buenos Aires the baraqueo (warehouse owner) receives wool on consignment for sale to exporters, while in Australia the wool is often collected by storekeepers and travelling merchants who in turn sell it to a local broker.
In some cases such collectors will pack, the goods after cleaning and grading and mark them with their own trade-marks. This is done by the "baler" of jute in British India, and by the Chinese tea merchants. Similar methods are followed in most of the agri cultural products.
In some parts of the world, such as the Balkan States, Southern Russia, Southern Germany and the Levant where house industry still exists on a large scale, native buyers travel from town to town collect ing the goods produced and offer them for sale at some central market. Often the collector furnishes the producer with raw material and makes advances on the price of the goods to be produced.
Often the importer buys in a foreign country goods not produced there, but imported for reexportation. The trade in colonial products is a typical indirect trade; much of America's imports of spices, rubber, and other products of the tropics come by way of England, Holland and Belgium.
Before the war the fur markets of Russia, Germany and England were large auction centers where Asiatic, Canadian and American furs were sold to visiting buyers. American fur dealers in this roundabout way bought back American furs from European collectors. Fur auctions are now held in New York and St. Louis. Zanzibar, Bombay, Shanghai, and Singapore are also important centers of this reexporting trade.
6. Indirect buying.—Foreign commission houses are of assistance to those importers who do not main tain branch houses or send representatives abroad. In some cases these houses are employed to supple ment the work of branch houses. The commission house checks the shipment before it leaves the for eign port, pays the manufacturer or local middleman and attends to all the details of importation, render ing a bill including all the charges and adding from three to eight per cent commission.
Domestic retailers who do not care to carry the risks of foreign trade find it possible to supply their needs for foreign goods by purchasing from the num erous importing wholesalers or jobbers (these arc im port merchants corresponding to the export mer chants mentioned in an earlier chapter) and thru branch houses or representatives of foreign manu facturing concerns. A large proportion of the more specialized articles such as laces, silks, velvets, and a good share of patented or trade-mark food products such as cocoa, cheese, and canned fish are bought in this country by domestic wholesalers or retailers from the American representatives of foreign firms.