What are Trading Services and what are their types?

30 November 2020
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update in2020/12/05
The questions that will be answered in current article are as follows: What are trading services? What are the types of trading services? What do trading services include? What are domestic, foreign and international trading services?

In this article of Sinbad we are going to explain that what the trading services are and why they are important. According to that nowadays the import and export of goods is one of the most important issues in international business, so there are lots of companies that source some of their resources through international markets with the help of import-export trading companies or trading services companies.

What are the Trading Services?

As we know presence in international markets, especially exports and imports, will bring many benefits but ti doesn’t mean that there are no complexity there. Although presence in international markets can be very profitable, but if the trader has not enough information in this field, he suffers lots of losses. One of the ways to enhance your information and limit your personal responsibility in this area is using the services of commercial companies.

Generally, any activity that takes place during the exchange of various goods, services, and etc. (from the production stage to reaching the consumers) is called trade. On the other hand, according to previous definition, trading activities act as a link between the producers of goods and consumers and are based on the following two principles:

  • Procurement and production of various products or services
  • Directing produced goods or services to consumers

Types of Trading Services

Types of trading activities or services in terms of location can be divided into three categories: domestic, foreign and regional.

Domestic Trading

When a trade is within the borders of a country, it is called domestic trade. It means that the focus of domestic business activities is to meet the needs of domestic resources and transactions are based on the financial system of that country.

Foreign Trading

All business activities that take place outside the borders of a country are called foreign trading. The purpose of this type of business is to provide the required equipment with better quality and also to make a profit from the business.

Regional Trading

Regional trading services are actually those business transactions that will take place between two or more countries in a geographical area. However, the goals of providing regional trading services may be different, but they can be summarized in the following cases:

  • Establishment of facilities in trading operations
  • Increasing the production level of factories
  • Raising the living standard of the people of the region
  • Provide employment for the people of the region
  • Participating in the use of each other's resources
  • Participating in potential risks to the economies of countries in the region
  • Creating a defense-economic barrier in the region to deal with countries that are commercially competing with regional trade member states

Types of Trading Services in terms of their target

Considering that if the target of trading services are producer companies, consumers or none of them but the country’s economy, trading services can be categorized in three groups.

Trading Services to the targets

Producers of goods and services need materials and equipment in order to produce goods or supply services so that they can manufacture and supply their product. These include the purchase of machinery, raw materials, tools, parts which are offered to the producer in the field of resource identification, supply, equipment, and supply of materials and equipment to cover trading services.

On the other hand, it should be reminded that delivering goods and services to consumers is one of the activities that trading service companies perform for the producers and removes their worries about delivering the product to the consumer.

Trading Services to the consumers

Identify costumers’ needs and tastes, trading services tries to provide the goods and services produced, in accordance with the needs and in order to obtain customer satisfaction.

Trading Services to the country's economy

Business activities serve the implementation of policies and strategies that the economy of each country creates for itself. For example, if for some reason in a country, it is necessary to prohibit the import of certain goods into the country, by implementing this policy, trade will strengthen the country's economic decisions.

If the export of some goods is a priority of the country's policies, implementing this policy, trade will serve to strengthen the country's economic foundations. On the other hand, trading services can regulate the circulation of goods in the country's economy and make it desirable to manage the economic affairs of the people of a country by adjusting the time and place interval between producer and consumer.

At the same time, there is a division of labor through commercial activities at the level of the country's economy and every producer of goods and services is engaged in the production of special goods. This will increase individual abilities in acquiring skills and as a result increase production efficiency and ultimately increase the country's national production.

What is a Trading Services Company?

In fact trading services companies are the companies that operate in the field of buying and selling goods or services for profit and income. Trading companies can start their activities in the form of one of the types of companies in the commercial law.

Commercial or trading companies are actually the companies that are formed and registered between two or more people in order to make a profit and in compliance with a set of relevant rules and regulations. According to different factors, these companies can be categorized in some groups. At first, these companies are divided according to the degree of liability of the partners, and then according to Article 20 of the Commercial Code, they are divided into 7 ways.

What are the duties of Trading Service Companies?

The most important duties that trading service companies have towards other companies can be summarized in the following cases:

  • Buying or acquiring any movable property for sale or rent
  • Shipping by land, sea or air
  • Brokerage or real estate operations such as facilitating real estate transactions and things like that
  • Carrying out all activities related to the establishment of any factory
  • Auction operations
  • Execution of various types of banking exchange operations
  • Holding public exhibitions
  • Transactions between traders or non-traders
  • Marine and non-marine insurance operations
  • Carrying out all activities related to shipbuilding, ship trading and domestic or foreign shipping

What does it mean by Trading Unit?

Trading services and activities that have been discussed earlier are performed by specific person, group or organization. These institutions have private, public, or a combination of the two.

The Last Word

In this article we discussed about the meaning of trading services and its different types. Trading services are important in many ways for many companies that are operating domestically and internationally. In fact, many other companies turn to these companies to meet their needs. We will be glad if you share your comments and questions with our experts in this regard.

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