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MIDTERM REPORT REPORT OF EXPORT BUSINESS PROCESS ANALYSIS CASE OF VIETNAM’S SEAFOOD EXPORTATION

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FOREIGN TRADE UNIVERSITY FACULTY OF INTERNATIONAL ECONOMICS AND BUSINESS MIDTERM REPORT REPORT OF EXPORT BUSINESS PROCESS ANALYSIS: CASE OF VIETNAM’S SEAFOOD EXPORTATION Lecturer: Phan Thi Thu Hien (Dr.) Course: International Trade Transactions Group: Class: TMAE302.2 Hanoi, 17 December 2021 download by : skknchat@gmail.com TEAM MEMBER No Student ID Name Date of Class Birth 1911150013 Phạm Gia Tùng Chi 11/04/2001 K58-ANH 05-CLCKT 1911150015 Nguyễn Tuấn Cường 19/12/2001 K58-ANH 06-CLCKT 1911150018 Nguyễn Ngọc Diệp 30/01/2001 K58-ANH 04-CLCKT 1911150022 Nguyễn Ngọc Quang 21/04/2001 K58-ANH 05-CLCKT Dũng 1911150715 Nguyễn Bá Thái Duy 26/10/2001 K58-ANH 02-CLCKT 1911150571 Nguyễn Thị Thùy Dương 05/11/2001 K58-ANH 01-CLCKT 1911150023 Nguyễn Tùng Dương 15/02/2001 K58-ANH 06-CLCKT 1911150519 Ngô Tiến Đạt 26/07/2001 K58-ANH 03-CLCKT 1911150016 Nguyễn Văn Đạt 21/11/2001 K58-ANH 05-CLCKT download by : skknchat@gmail.com INTRODUCTION A OVERVIEW OF VIETNAM SEAFOOD EXPORT Overview Key exported products and mainstream markets 2.1 Key exported products 2.2 Mainstream markets Opportunities and Threats Impact of the Covid-19 pandemic Vietnamese regulations on exporting fishery products 10 5.1 Regulations on food safety for exported fishery products 10 5.2 Regulations on Siluriformes fish products exportation into the United States market 10 5.3 Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CTPPP) 11 B SALES CONTRACT 12 Commodity 12 Specifications 12 Quantity 13 Price - Delivery - Transfer of Ownership 13 4.1 Price 13 4.2 Delivery 13 Transfer of ownership 13 Payment 13 Legal clauses 14 C EXPORT PROCESS OF VIETNAMESE TRADERS 15 Asking for an L/C opened 15 Acquiring for export license 15 Preparing the export goods 15 download by : skknchat@gmail.com Packing, labeling and marking 16 Pre-Shipment Inspection 16 Booking for a shipping space 17 Custom clearance for export 17 Shipment of export 17 Acquiring for cargo premium 17 10 After shipment Payment 18 11 Settle the claim (if any) 18 D ANALYSIS OF EXPORT PROCESS OF VIETNAMESE TRADERS 18 Process information 18 Systemization chart 19 Time procedure chart 19 Bottlenecks in the export process 19 Corresponding recommendations to improve bottlenecks 19 CONCLUSION 20 REFERENCES 21 APPENDIX 22 download by : skknchat@gmail.com INTRODUCTION Asia is a leading provider of seafood products to the developed markets and many other regions in the world The area is reported to provide million tons of seafood to the global trade market annually with two staples: fish and shrimp This figure is more than half of the world’s total seafood exports In particular, Vietnam contributes significantly to the overall value of seafood supplied globally These seafood exports play a major role in worldwide consumption and enhance domestic economic development To carry hundreds of tons of seafood out of the Vietnam border, contracts are a prerequisite and paramount international transaction For the purpose of better understanding the procedures and requirements involved in the formation of a trading contract, our team conducted research “Export business process analysis: Case of Vietnam’s seafood exportation” Our report is under the instructions and supervision of Dr Phan Thi Thu Hien We are so grateful for her support and the precious knowledge she helped us to finish the course International Trade Transaction However, because of time limitations, the group's report unavoidably contained flaws We eagerly await readers' feedback to help us improve the content download by : skknchat@gmail.com A OVERVIEW OF VIETNAM SEAFOOD EXPORT Overview Fishery is identified as a key economic sector of the country Seafood export value in 2020: 8.5 billion USD- accounted for 4-5% of GDP or 9-10% of total national exports Seafood export ranks 5th place in terms of value exports (after: electronics, apparel, crude oil, footwear) From 1997-2020: Exports increased 11 times, growing at an average annual rate of 10%, from 758 million USD to 8.5 billion USD (see appendix A) It is estimated that in the first eight months of 2021, Vietnam's seafood exports are 1,283 million tons, worth $5.578 billion, up 4.19% in volume and 7.14% in value over the same period in 2020 (appendix B) Key exported products and mainstream markets 2.1 Key exported products Aquaculture for export is mainly shrimp and pangasius Shrimp exports accounted for the highest proportion, the highest growth and the greatest stability From 1998-2020: Export increased more than times from 457 million USD to 3.73 billion USD per year; average annual growth rate of 10% The proportion of total assets is increasing: from 36% to 50% Pangasius exports increased 162 times from 9.3 million USD to 1.5 billion USD; average annual growth of 26% Seafood exports account for 30-35% of total seafood exports From 1998 to 2020: Turnover increased 10 times from 315 million USD to 3.2 billion USD; average annual growth of 11% 2.2 Mainstream markets Vietnam exports seafood to over 160 countries and territories across the world The top ten markets are the United States, the European Union, Japan, China, Korea, ASEAN, Australia, the United Kingdom, Canada, and Russia, which account for 92-93 percent of Vietnam's total seafood exports (see appendix C) download by : skknchat@gmail.com In the top six major markets (the United States, the European Union, Japan, China, Korea, and ASEAN), exports to the EU have slowed in recent years, while exports to ASEAN and Korea have remained constant, and exports to China have surged Exports to the United States and Japan had the most rapid rise The recent COVID-19 pandemic, however, interrupted supply, hampered logistics, caused high freight costs, and impacted important markets, according to Ms Le Hang, Deputy Director of VASEP Center PRO, Vietnam Association of Exporters and Producers (VASEP) The country's seafood exports reached about 6.2 billion USD by the end of the third quarter of 2021, up 3% from the same time the previous year Exports of seafood to the United States rose in September, up 3% over the previous month to US$159 million Meanwhile, exports to other markets continued to fall, with China seeing the largest loss (almost 50%), followed by Japan, Canada, the United Kingdom, and Australia, all of which had 35-45 percent drops While exports to the EU and Russia fell by more than 15%, exports to Korea fell by 5% Opportunities and Threats The Government of Vietnam, the Seafoods industry and the Seafoods enterprises are increasingly interested in food safety, environmental and social responsibility All processing plants apply HACCP More and more farming areas and processing plants have obtained sustainability certifications such as ASC, GLOBAL GAP, MSC, VietGAP… The Government, the Ministry of Agriculture, the Association of Seafoods exporters and producers and other agencies and sectors are increasingly interested in developing the Seafoods industry with large development goals and plans (Decision No 1445/QD-TTg dated August 16, 2013, approving the master plan for development of the Seafoods industry to 2020, vision to 2030) download by : skknchat@gmail.com Being able to supply a large amount of safe and stable quality seafood thanks to the abundant supply with a potential of 28 coastal provinces, aquaculture land/water resources and a developed processing industry with more than 600 export enterprises All processing and exporting enterprises are private and can actively invest in the seafood industry Developed processing technology can create many diversified products with high added value Satisfy all needs of customers in other countries thanks to stable supply, and application of closed models, good chain links in industries Have a stable and skilled workforce There are many FTAs with countries and territories that bring advantages in import and export taxes and opportunities to improve product quality Up to now, Vietnam has joined 16 FTAs, with participating countries accounting for 73% of Vietnam's seafood exports, of which 13 FTAs have been signed (accounting for 71% of exports) The EVFTA Agreement takes effect from August 2020 and the UKVFTA agreement will promote exports to the EU and UK (Vietnam Association of Seafoods Exporters and Producers, 2020) Impact of the Covid-19 pandemic In 2021, Vietnam's economy will continue to be affected by the Covid-19 epidemic, especially the epidemic wave that broke out at the end of April with a new strain that has a rapid and dangerous spread complicated in many localities, seriously affecting the socio-economic situation of the whole country, which creates the risk of breaking the seafood production - processing - export chain due to the impact of the Covid-19 epidemic download by : skknchat@gmail.com Firstly, the operating capacity of seafood processing businesses plummeted Only 30% of seafood processing firms in the South operate with an average capacity cut to 30-35 percent, according to the Ministry of Agriculture and Rural Development Case F0 forced the closure of the seafood processing plant According to the General Statistics Office's IIP survey results, the production index of frozen shrimp increased by 16 percent in the first six months of the year, but only 95.7 percent in July compared to the same period, 78.8 percent in August, and an estimated 77.8 percent in September; the production index of frozen fillets only increased by 81.8 percent in the first nine months of the year Second, purchasing raw materials is difficult for businesses and traders Businesses find it difficult to obtain raw materials due to the strict and rigid control over people and modes of transportation Procurement is behind schedule owing to complicated control systems and procedures; workers at the purchasing, harvesting, and transportation phases not want to join the labor due to fear of illness or because they have not been vaccinated Third, the consumption of fish processing businesses has dropped dramatically According to the results of the IIP survey conducted by the General Statistics Office, the consumption index of "frozen shrimp" increased by 17.7% in the first six months of the year, but then decreased by 10% in July, 34% in August, and 34% in August In September, it's expected to drop by 35% Consumption fell substantially as manufacturers shut down or cut output, and export activities were hampered by a variety of factors Fourth, pressure in ensuring wages for employees to retain employees Workers in the seafood processing industry often have to undergo training The seafood processing industry is inherently difficult to attract workers due to the specifics of the profession, but now it is even more difficult to maintain workers and ensure wages for workers to retain employees when businesses are unable to so Enterprises must stop operating or reduce capacity or move or reduce profits to incur more costs related to epidemic prevention and control, logistics, etc download by : skknchat@gmail.com Vietnamese regulations on exporting fishery products 5.1 Regulations on food safety for exported fishery products On October 29, 2018, the Ministry of Agriculture and Rural Development promulgates the Circular No 16/2018/TT-BNNPTNT on amending and supplementing a number of Articles of the Circular No 48/2013/TT-BNNPTNT on inspection and validation of food safety for exported fishery products This Circular regulate on progress on granting certificate for export consignment of establishments which is not in the list of priority as follow: ● Within working days after a consignment is exported, the consignment owner must provide in written forms all necessary information as specified in the certificate at the request of competent agencies of the importing state or territory to the Evaluation authority for the issuance of certificates ● Within 01 working day after receiving all valid information, the Evaluation authority shall conduct the evaluation to issue certificates for the exported consignment in accordance with the form of the respective importing country or territory if the evaluation result of such consignment is satisfactory This Circular takes effect from December 13, 2018 5.2 Regulations on Siluriformes fish products exportation into the United States market In accordance with the new provisions of the Fisheries Law 2017, Decree 26/2019 / ND-CP dated March 8, 2019 of the Government, the MARD has issued Decision No 1802/QD- BNN-QLCL dated 22/5/2020 about the "Food Safety Control Program for Siluriformes fish and its products which are exported to the United States market” Sub-departments of Fisheries, Agro-Forestry-Fishery Quality under the Provincial Departments of Agriculture and Rural Development directly under the Central Government are responsible for controlling the food safety conditions for the whole 10 download by : skknchat@gmail.com under the pretext that it would harm US workers If the US rejoins, the CPTPP would deliver substantial tailwinds to Vietnamese exports to the US from lower tariffs in major export categories.” B SALES CONTRACT SELLER: ABM FOODS., Ltd 61/2 Binh Gia, Tan Binh District Ho Chi Minh City VIETNAM Tel: (+84) 856-652-345 BUYER: American Seafoods Co., LLC 2025 First Avenue, Suite 900 Washington DC State USA Tel: (+1) 206-448-0300 It has been mutually agreed to the sale and purchase of rice on the terms and conditions as follows: Commodity ● Vietnam frozen Basa fish fillet ● HS code: 03043200 Specifications ● Style: Frozen – Freezing Process: IQF ● Part: Fillet ● Certification: BRC, EEC, FDA, HACCP ● Size (gram/pcs): 170 – 220 12 download by : skknchat@gmail.com ● Packing in PE/PA bag 2kg/vacuum bag, 10kg/carton ● Shelf Life: 24 months ● Place of Origin: Vietnam Quantity ● 50 MT (more or less 5% at buyer's option) Price - Delivery - Transfer of Ownership 4.1 Price ● Currency: USD ● Total price: 230,450 +/- 5% ● Unit price: 4609/MT/FCA Cat Lai port, Vietnam Incoterms 2020 ● Amount in letters: Two hundred and thirty thousand, four hundred and fifty more or less five percent 4.2 Delivery ● Time of shipment: Within at least 45 days after L/C opening date ● Term of delivery: FCA Cat Lai port, Vietnam Incoterms 2020 ● Port of loading: Cat Lai port, Vietnam ● Port of unloading: San Diego port, U.S ● Notice of shipment Within 24 hours after finishing the shipment, the Seller must inform the Buyer the details of shipment, including date of shipment, GW, NW, Vessel's name, ETA and ETD, which is sent by fax first and confirmed in written documents ● Other delivery terms 13 download by : skknchat@gmail.com Transshipment: Not allowed Partial shipment: Not allowed Transfer of ownership Happens on board the first shipping vessel leaving Cat Lai Port Payment Payment shall be made by an irrevocable, at sight L/C in US dollars for 100% total value of the Contract in favor of the Seller L/C shall be issued through Bank of America, Los Angeles branch L/C shall be issued at least 45 days before the shipment and 60 days in validity Payment shall be made against presentation of the required documents as following by the beneficiary: ● Bill of exchange drawn on the issuing bank in favor of the beneficiary ● Full set (3/3) of original clean shipped on board ocean bill of lading showing L/C number, consigned to the order of Bank of America, Los Angeles branch and notify the applicant with full address ● Signed Commercial invoice in triplicate ● Quality and quantity certificate issued by manufacturer in triplicate ● Detailed packing list in triplicate ● Certificate of origin issued by Vietnamese Chamber of Commerce in triplicate ● Beneficiary’s certificate certifying that one set of non negotiable documents has been sent by fax to the applicant within 05 days after shipment date ● One extra copy of N/N invoice and transport document required for issuing bank’s file Legal clauses GOVERNING LAW 14 download by : skknchat@gmail.com This Contract shall be governed by the Unidroit Principles 2004/ CISG 1980 FORCE MAJEURE The ICC Force majeure Clause 2003 is incorporated by reference into this contract ARBITRATION All dispute arising out of or relating to this contract, including any question regarding its existence, validity or termination, shall be referred to finally resolved and determined by arbitration in accordance with the International rules of the American Arbitration Association for the time being in force which rules are deemed to be incorporated by reference of this clause OTHER TERMS Any amendment or supplement of the contract must be made in written form and mutually agreed by both parties with authorized signatures This contract, which shall come to effect on the date of signing, is written in English in 06 Originals and 06 Copies, three of which are retained by each party C EXPORT PROCESS OF VIETNAMESE TRADERS Asking for an L/C opened In terms of payment, the buyer based on the payment terms in the international sale of goods contract will require the issuing Bank to open L/C At the end of the L/C opening period, if the Seller has not received an L/C then remind the buyer in official writing If the Seller receives a new L/C then check the L/C Acquiring for export license According to Decree 187/2013/ND-CP: ● Commodities banned and suspended from Import, export: Applied for permission of Prime Minister 15 download by : skknchat@gmail.com ● Commodities under special control by ministries: must satisfy the requirement According to 31/2018/ND-CP that export requirements include these certificates: ● Certificate of Origin (C/O), Certificate of Analysis (CA) ,Certificate of Quality (CQ) issued by a competent authority under the Ministry of Industry and Trade Preparing the export goods The export company must perform procurement in this step to obtain a source of export commodities; the major objective is to locate the source of goods, pick the ordering area, gathering location, buying and selling methods Economic contracts made between the export company and the manufacturing facilities serve as the foundation for the collection of commodities Ordering is the most popular form of purchase Proceed to place the order based on the model and model as specified in the contract signed with the domestic production facility to ensure that the correct item, quantity, and quality are received Packing, labeling and marking Functions of Packaging: ● Divide the goods into saleable unit ● Protects the product ● Provide information about handling, transportation, storage display and use of the product Requirement for Packaging Proper protection: ● Environment friendly ● Safe to handle ● Economical to produce, handle and store ● Display attractively 16 download by : skknchat@gmail.com ● Convenient and safe to use in compliance with relevant standards Packaging material: paper, plastics, wooden, cardboard, etc Labeling and marking: According to legal requirements, which contain some information: instruction for uses and storage of the product, dimensions of the product (size, weight, thickness) – Ingredients or material for manufacturing,country of origin – Manufacturer / Factory, Lot number/ date of manufacture and expiry Shipping marks must include this information to deliver the boxes to the correct destination and information marks contain additional information about the buyer Handling marks instructions for proper handling of boxes during warehousing and transportation Pre-Shipment Inspection Type of inspection : by exporter Inspection place: at the supplier’s warehouse Inspection includes: ● Package and Label ● Description and Code of goods ● Quality and Quantity ● Origin ● Intellectual Property ● 5% Random inspection ● 10% information analysis 100% strictly violate customs legislation 17 download by : skknchat@gmail.com Booking for a shipping space Made by the importer with collaboration of exporter Custom clearance for export The exporter is responsible for completing the customs clearance procedures and ensuring that the goods are loaded onto the ship to comply with the export regulations of the host country The steps for customs clearance are as follows: Customs declaration: The exporter is responsible for declaring fully and in detail about the goods in the most honest way on the customs declaration for the customs office to check based on that Presenting the goods: the exporter needs to arrange the goods in an order that is most convenient in controlling and presenting the goods Implement further decisions of customs authorities Shipment of export Full Container Load FCL The seller rents empty reefer containers and loads the goods into the containers After that, the seller delivers the containers to the carrier that buyer rents at the container yard at Cat Lai port Acquiring for cargo premium Importer takes the responsibility for the goods insurance 10 After shipment Payment In terms of payment, the seller will make a set of documents at the request of the L/C to present to the bank opening the L/C, through the advising bank to claim money The bank opening the L/C checks the seller’s documents, if it is consistent with the L/C, then the issuing bank is responsible for paying the full amount of the order to the advising bank before the maturity of the L/C 18 download by : skknchat@gmail.com 11 Settle the claim (if any) During the process of export, companies might not avoid some mistakes such as: slow delivery, insufficient quantity… When such a problem occurs, the buyer has petitioned or complained, the seller has to resolve and adjust by negotiation between two parties In case that they can not negotiate, the problem would be solved by legal proceedings at court or arbitration D ANALYSIS OF EXPORT PROCESS OF VIETNAMESE TRADERS Process information ● Customer: American Seafoods Co., LLC (an American seafood company) ● Exporter: ABM FOODS., Ltd ● Main product: Vietnam frozen Basa fish fillet – HS code: 03043200 ● Carrier: Sea port ● Customs Duties on exporting seafood (Vietnam frozen Basa fish fillet) in Vietnam: ○ VAT on exporting Vietnam frozen Basa fish fillet (seafood): 0% or 5% ○ Export duty: Vietnam frozen Basa fish fillet is not in Vietnam’s nomenclature of taxable exports, therefore, the exporters not have to pay export tax 19 download by : skknchat@gmail.com Systemization chart Time procedure chart Bottlenecks in the export process Starting the moment the order is received, the production team takes days to prepare export goods, creating a lag in delivery Shortage of shipping containers leads to rising shipping costs Physical submission of export dossiers is time-consuming and therefore raises costs Port or border handling in Vietnam takes up to 55 hours costing USD 205 compared to average 12.7 hours in developed countries 20 download by : skknchat@gmail.com ... formation of a trading contract, our team conducted research ? ?Export business process analysis: Case of Vietnam’s seafood exportation? ?? Our report is under the instructions and supervision of Dr... OVERVIEW OF VIETNAM SEAFOOD EXPORT Overview Fishery is identified as a key economic sector of the country Seafood export value in 2020: 8.5 billion USD- accounted for 4-5% of GDP or 9-10% of total... capacity of seafood processing businesses plummeted Only 30% of seafood processing firms in the South operate with an average capacity cut to 30-35 percent, according to the Ministry of Agriculture

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