O-LevelCommerceGlobal trade7100/22 · May/June 2013 · Q720 Marks

An exporter is based in London and sells mostly to South East Asia.

(a)Why would the exporter send many of his goods by air?[4]
(b)(i)Explain why payments from importers might be made by electronic transfer.[2]
(b)(ii)Why would the use of a credit card be important for this exporter when travelling to South East Asia?[3]
(c)State two ways in which customs authorities in South East Asia might affect the exporter's business.[2]
(d)In what circumstances might the exporter contact his agent in Singapore by telephone rather than by email?[3]
(e)To what extent is distance a problem when trading between London and South East Asia? Give reasons for your opinion.[6]

Mark scheme

Marking points from the official mark scheme (May/June 2013). The mark or mark type is shown in brackets.

[4] (a) Any four points × 1 mark each or two well explained points × 2 marks each –
speed is required + example, fast = 1 mark
goods are urgently required or have a short shelf life
goods are valuable enough to bear the cost of air freight
goods are perishable + example
goods are small and fragile and need careful handling
goods are required in an emergency such as a natural disaster
great distance
any other relevant point
[2] (b) (i) Any two points × 1 mark each –
secure method
fast means of payment/immediate payment
making use of computer technology
exchange rates are easily calculated
easy to use as undertaken by the bank
reliable
suitable for transferring money between countries
any other relevant point
[3] (b) (ii) Any three points × 1 mark each –
acceptable in most places/most countries
saves carrying cash
can postpone payment
more secure than carrying cash
may obtain a more favourable rate of exchange than for other means of payment
can use it to obtain foreign currency
make payment or example
any other relevant point
[2] (c) Any two ways × 1 mark each –
charge him import duty on goods sent to South-East Asia
enforce quotas limiting the amount of goods allowed into a country
inspect the goods for illegal goods such as drugs
inspect any containerised goods he is sending
delay the importation of goods into countries
supervise bonded warehouses
embargoes
any other relevant point
[3] (d) Any three circumstances × 1 mark each and up to 2 marks for a well explained point.
when there is a problem about the goods
when he wants to hold a discussion
when he wants to make emergency changes to an order
when he wants to make a quick decision
when he wants to make personal contact
when the email is not functioning/no email
when he wants the agent to take urgent action
any other relevant circumstance
[6] (e) Level 2 (4-6 marks) Has shown to what extent distance is a problem when trading between London and South-East Asia and has given a reasoned opinion. There is considerable distance between London and South-East Asia. This may present several problems. Goods will need to be transported either by air or by ship. Goods may be containerised to protect them against theft or damage. Goods will need to be well packaged and insurance costs are likely to be greater because of the distance involved. Although communication has greatly improved, it is possible that there may be communication problems because of different time zones or because of communication breakdown. A particular type of transport may not be available immediately. Goods will need to be stored and this adds to costs. If they are containerised, the container acts as the storage. Distance is, therefore, likely to be a problem when trading between London and South-East Asia and is likely to add to the costs of trading. Level 1 (1-3 marks) Has commented on distance in relation to trading between London and South-East Asia. The distance between London and South-East Asia is great. More transport will be needed. The goods will need to be insured. Storage will be required. Distance will add to costs.