Japan's Fukusuke Corporation sold 10 knitting machines and raw materials to Chinatex, a Shanghai-based clothing manufacturer in exchange for one million pairs of underwear to be produced on the knitting machines. What form of countertrade is this?

Question

Quizplus · Accepted Answer

This is an example of a buy-back arrangement, where the seller (Fukusuke Corporation) provides technology or equipment (knitting machines) to the buyer (Chinatex), and agrees to accept the output produced by this technology (underwear) as partial or full payment.

Japan's Fukusuke Corporation Sold 10 Knitting Machines and Raw Materials