Which of the following is true of indirect exports?

• A. Indirect exports mean the producer directly ships goods to foreign consumers.
• B. Indirect exports involve selling goods to a domestic intermediary who then exports them to foreign markets.
• C. Indirect exports require the producer to establish a foreign sales office.
• D. Indirect exports are only possible for services, not physical goods.

Answer: (B)

Verified step by step guidance

1. Understand the concept of indirect exports: Indirect exports occur when a producer sells goods to a domestic intermediary, such as an export trading company or export management company, which then handles the process of exporting the goods to foreign markets.
2. Contrast indirect exports with direct exports: Direct exports involve the producer shipping goods directly to foreign consumers or establishing a foreign sales office, whereas indirect exports do not require the producer to engage directly with foreign buyers.
3. Analyze the given options by matching them with the definition of indirect exports: The correct statement should reflect that the producer sells to a domestic intermediary who manages the export process.
4. Eliminate incorrect options: For example, the statement that indirect exports require the producer to establish a foreign sales office is false because that is characteristic of direct exporting.
5. Conclude that the true statement is the one describing indirect exports as selling goods to a domestic intermediary who then exports them to foreign markets.