kl le thuy truc 70900251

VIETNAM GENERAL CONFEDERATION OF LABOUR TON DUC THANG UNIVERSITY FACULTY OF BUSINESS ADMINISTRATION SOME SOLUTIONS LIMITING THE RISK OF INTERNATIONAL PAYMENT FOR IMPORTED GOODS AT PRINTING MATERIAL EQUIPMENT IMPORT-EXPORT COMPANY – PRINTEXIM CO.,LTD Thesis submitted as a requirement for degree Bachelor of Business Administration Supervisor: MBA MAI NGUYEN TRUONG SON Student : LE THUY TRUC Student ID : 70900251 Class : 09070101 Intake : 13th HO CHI MINH CITY, - 2013 ACKNOWLEDGEMENTS During the time studying in Ton Duc Thang University, I have given the enthusiastic teaching from lecturers of Business administration faculty Throughout major trade subjects, I have a thorough grasp of professional knowledge and I am deeply aware of the importance and the usefulness of this field to the social development Besides that, the time of practicing and studying in Printexim helps me implement the theory into practical as well as learning new more wealthy experiences All of those will be my valuable luggage that helps me get strong steps onto forward society Moreover, I hope that I can use my energy and my knowledge as well to contribute to develop the country I honestly give my profound thanks to senate of Ton Duc Thang University and Mr Mai Nguyen Truong Son for his great guidelines for internship I also would like to express my sincere gratitude to director of company and all of employees in export-import department – especially Mr Duc (export-import manager) and Mr.Hien (export-import deputy manager) who have helped me during that time Once again, I would like to send sincere thanks and wishes for health and success to the company and teachers Ho Chi Minh City, July 10th 2013 Student LE THUY TRUC THE PROJECT IS COMPLETED AT TON DUC THANG UNIVERSITY I hereby declare that this is my own research and is under the scientific guidance of MBA Mai Nguyen Truong Son The content of the research and the result of this subject are truthful and not published on any form before The data in tables for analysis, comment and evaluation is collected by author from various sources which stated clearly in the references In addition, the thesis also uses a number of comments as well as evaluation of data by other author, other agencies have cited and annotated sources If you detect any fraud, I bear full responsibility for the content of my thesis Ton Duc Thang University does not involve in the violation of copyright because I caused in the implementation process (if any) Ho Chi Minh City, July 10th, 2013 LE THUY TRUC SUPERVISOR’S REMARK Ho Chi Minh City, July , 2013 SUPERVISOR’S REMARK Ho Chi Minh City, July , 2013 CRITIC’S REMARK Ho Chi Minh City, July , 2013 ABSTRACT My study title is: "SOME SOLUTIONS LIMITING THE RISK OF INTERNATIONAL PAYMENT FOR IMPORTED GOODS AT PRINTING MATERIAL EQUIPMENT IMPORT-EXPORT COMPANY – PRINTEXIM CO.,LTD ” which comes from the status of imported payment operation of Printexim company which faced many risks although there are some limiting risk measures that the company has not applied The purpose of present study is that focusing systematic study of issues related to international payment operation for imported goods at the Printexim company Basing on that giving out solutions limiting risks in international payment and helping company improve the imported payment operation The research project is based on available theory combined with synthetic methods, comparison and analysis of secondary data provided by the company Besides that, combining analysis of market status to realize existing risks in the payment activities of the company; then suggesting solutions to minimize them Two major research methodologies are statistical synthetic methods and comparative analysis method Research subjects are issues related to the activities of international payments for imported goods at Printexim company The result of present study after analysis and synthetic show that there still existence of risks in payment operation of company Therefore, the present study has given out some solution helping company hedge those risks, they are: - Establish risk management process - Using derivative transaction to hedge exchange rate risk - Enhance the ability of negotiation in order to select the logical payment method - Diversify the imported resource - Building and strengthening relationships with banks CONTENTS Preamble Chapter 1: The literature review of risk in international payment operation for imported goods 1.1 The literature review of risk 1.1.1 Definition 1.1.2 Type of risk 1.2 International payment risk 1.2.1 Definition 1.2.2 Risk classification 1.2.2.1Commercial risk 1.2.2.2 Risk of payment 1.3 Some common risks exist in international payment method 1.3.1 Risks of remittance 1.3.2 Risks of collection 1.3.2.1Document against acceptance (D/A) 1.3.2.2Document against payment (D/P) 1.3.3 Risks of letter of credit 1.4 Some real lesson from risk payment in Vietnam 10 1.5 The meaning of limiting risks in payment operation 11 1.6 The overview of international payment operation for imported goods 12 1.6.1 Definition 12 1.6.2 The characteristics of international payment 13 1.6.3 The role of international payment in economic 14 1.6.3.1For commercial trade 14 1.6.3.2For finance-banking 15 1.6.3.3For society diplomacy 15 1.6.4 The role of imported payment operation in company 16 1.6.5 The condition of international payment of import 16 1.6.6 The means of international payment tools for imported goods 17 1.6.7 The factors influence on payment operation for imported goods in companies 18 1.7 The major payment procedures for imported goods in company 19 1.7.1 Remittance 19 1.7.2 Collection 20 1.7.2.1Clean collection 20 1.7.2.2Documentary collection 20 1.7.3 Letter of credit 21 1.8 The status of international payment in Vietnam 22 Chapter 2: Status of payment operations for imports at Printing material equipment import-export company – Printexim Co.,Ltd 25 2.1 The general introduction of the establishment and development of company 25 2.1.1 The overview and process of establishment of company 25 2.1.1.1 The period of military administration (1975 – 1997) 25 2.1.1.2 The period of transition from Printing management organization into Printing material equipment company II 25 2.1.1.3 The period from 1990 to now 27 2.1.2 Functions and tasks of Printexim company 27 2.1.2.1 Functions 27 2.1.2.2 Tasks 28 2.1.3 Organizational system 28 2.1.3.1 The organization chart 29 2.1.3.2 Functions and tasks of the board of directors 29 2.1.3.3 Functions of the financial accounting Department 30 2.1.3.4 Functions and tasks of the Administrative Organization 30 2.1.3.5 Functions and tasks of Business Department 31 2.1.4 The overview of human resource 32 2.1.5 The purpose and business scope of the company 32 2.1.5.1 The purpose 33 2.1.5.2 Business scope 33 2.1.6 Recent income statement of Printexim in 2009-2011 34 2.2 The status of imported operation at company 38 2.2.1 Business field 38 2.2.2 The imported goods structure 38 2.3 The import situation 40 75 creates more services which are implemented option but no more convenient, fast and save time transaction +The appearance of derivative transactions helps enterprises hedge risks of exchange rate and rate of loans 3.3 Some solutions limiting the risk of international payment for imported goods at Printing material equipment import-export company – Printexim Co., Ltd: 3.3.1 Establish risk management process: Establishing risk management process for company now is really necessary It will help company limit risk as well as knowing how to hedge those risks occurring during payment operation First of all, most of payment methods need to limit the risk of non-supplying goods of exporter, company needs: Step1: - Carefully discover export through getting the consultant from bank That helps company have discernment of partners, financial condition and ability to supply their goods - Clearly setting items of dispatch money and demurrage money in foreign trade contract when one of two sides breaks agreement Step 2: company has to check the prestige of shipping line Company should require exporter change another one if company suppose that shipping line has problem or un-trusted Appointing the famous shipping lines, specially shipping lines should have agent offices in the importer countries 76 Depending on each payment method, company should set up specific risk management process:  For telex transfer (advanced payment) Step 3: setting the payment order which must carefully stated exporter information: - Beneficiary’s bank, bank’s address - Beneficiary, address, account No - Detail of payment - Making a check in box “charge in VN for ourselves” and “charge outside VN for Beneficiary” Step 4: Buy insurance for goods and regularly making phone call to check the quantity of goods and urge delivery on time Step 5: appointing company staff going to exporting country in order to supervise the process of packing the goods and arrange merchandise as well as checking whether the cargo has ship on board or not  For L/C: Step 3: require exporter make a deposit at the bank to ensure performance of the contract, this will ensure absolute safety for imported company when the exporter is non-delivery Method of payment by L/C at companies tends to increase with higher value contracts therefore company should require exporter open Performance Bond before the company opened L/C If the importer does not make deliveries or deliveries under the contract, the amount of collateral will import automatically transferred to the company's account Typically the rate of deposit of the Performance Bond is 3% or 5%, sometime with up to 10%, it depends on the bank that issued the Performance Bond Step 4: Opening L/C 77 - Fully filling exact information: bank account, L/C number, Commercial invoice number, in the requirement of opening L/C - Learning clearly contract terms, correctly opening L/C in order to prevent of being refused or amended + Documentary credit number, issuing place, date of issue: the day of opening L/C must is before time of deliver with suitable space of time + The name of Advising bank, Paying bank and Confirming bank + Beneficiary’s name and address: beneficiary is exporter Staff needs to write exactly name and address of exporter + Amount: the exact money which complies with one in the contract As usual, the value of L/C has tolerance which is the same as in foreign trade contract + Form of documentary credit: base on the agreement form on the contract + Date and place of expiry: date of expiry must be later deliver day with suitable time Company should try to get the agreement of place of expiry is Vietnam It is because company can be active for time of payment, reduce fee of transferring money and extra relevant money + Date of shipment: must be in time of L/C validity and cannot be on the same date of expiry + Date of payment: must comply with contract condition + Description of shipment: must be stated clearly port of loading and discharge, transshipment or partial shipment (if any), term of Incoterms - Submitting documents to the bank: + Foreign trade contract + Credit contract Step 5: Carefully checking documents submitted by exporter: Requirements on content and format of the documents must be clear and non-generic The relevant documents must be signed by who has competence - Bill of exchange: 78 + B/E must be issued in the valid time of L/C + The number of B/E must be correct as L/C requirement + The signature on the B/E must be the same for all set of B/E + The content of B/E must be correct with L/C requirement + The date of issuing B/E must be the same as commercial invoice + The amount written on B/E must comply with one on commercial invoice - Bill of lading: + Its content must be correct with L/C requirement which exporter has been accepted + The bill of lading must issued by shipping lines and when loading cargo must be representative of the company to check the suitability of ship operation schedules and bills of lading, B/L must state "ship on board" +Request exporters sent 1/3 original B/L straightly to the importer to check against L/C and contracts - Packing list: must be detailed, specific description of the situation of arrangement and packaged goods - Certificate of origin: C/O must be issued by the authority prestige of the exported country or international and be observed by company representative as well as needing confirmation signature of this representative on C/O Step 6: appointing company staff going to exporting country in order to supervise the process of packing the goods and arrange merchandise as well as checking whether the cargo has ship on board or not  For D/P: share the same step and of Advanced payment 79 Discover exporter and set items of dispatch money & demurrage Check the prestige of shipping For each payment Advanced payment and D/P Letter of credit Set payment order Require exporter make a deposit at the bank Buy insurance and urge delivery on time Carefully open L/C Appoint a staff to go to exporter country Check the submitted document Chart 3.1: The risk management process 3.3.2 Using derivative transaction to hedge exchange rate risk: Printexim has never ever applied the measures of hedging the exchange rate In previous years, the hedging risk on the exchange rate is not considered significant; however today, the forex market is very complex movements Especially when Vietnam became a member of WTO, which setting out the need for additional tools to prevent risks on financial markets to protect Vietnamese businesses when joining 80 the competition in a relevant market to fluctuations in exchange rates, interest rates and commodity prices That is the reason why company should use the measures of hedging the exchange rate - Using option contract: here is the deal with the bank allows the purchaser has right, but without obligation to buy or sell a currency in USD at a fixed rate at a specified date in the future The company is directed to use deferred payment method so that Option contract would be a useful tool to help companies eliminate the risks posed by exchange rate changes The Company may purchase call options, whereas if USD/VND increase in company can implement option contract without bearing the difference in rates If the USD/VND reduced, company is not required to purchase at the fixed exchange rate, may cancel the contract and use spot rate, just take a fee when signing the Option contract; fees as insurance premiums - Using forward contract: when signing contract with exporter, company can sign forward contract with the bank at the same time The rate USD/VND applied will be the spot rate at time of signing forward contract but date of implementation is followed by foreign trade contract Although how rate fluctuates the company still has to pay an amount equal to VND as expected 3.3.3 Enhance the ability of negotiation in order to select the logical payment method: Risk of payment usually derived from the payment method selected There are many different payment methods, each method has its own advantages and disadvantages Therefore need to select appropriate methods and the least risk in the company To that requires negotiation capacity of the company better Currently, the payment method used by exporter selected It is because the position of the company as well as companies in Vietnam is still low This is partly due to the ability of negotiation of the company The employees of the company business are often under the old terms that are less likely to persuade partners to change On the 81 other hand, employees are weak of foreign language skills, communication is limited and lack of the ability to convince partners The information collection is weak due to lack of staff dedicated to this task Therefore, that is necessary to improve negotiating skills to achieve the most benefit payment method for company In order to enhance the ability of negotiation, the company needs to do: - Skills training for staff to negotiate business The staffs of import-export business department are responsible for negotiations with the contracting partner Therefore, companies need to facilitate import-export staff taking a course of contract negotiation skills, communication, presentation In additions, companies also need more training for staff of foreign language import so they can communicate better with partners - Organizing logical components for negotiations: components to negotiate a key factor contributing to decisions determine the outcome of negotiations In negotiating team, outside the usual arrangement, company needs staff understanding the paper material, legal, financial who are knowledgeable about this partner as well as has experience working with the partner in previous contracts, this person must have a good relationship and create sympathy for partners Besides, people also need good communication skills, good convincing partners to accept favorable conditions for company - Learning partner’s information as well as strengthening sympathetic to partner With the first negotiation partners, company needs carefully learning them Import-export business department will be in charge of this work because company does not have marketing department - The company needs to process the information collected, finding the strengths and weaknesses of the partners to have a consistent impact In addition, companies also need to learn about culture, hobbies, working habits of partner to behave accordingly For longtime partners, the company should take advantage of partner sympathy, establish relationship better by visiting 82 and giving gifts, In trading relationship: companies need timely payment, ordering routine - The tight regulation of the terms of the contract will ensure that both parties fully perform the steps, the stage during the performance of the contract, forming a tight series of sequential tasks, limiting the error prone to risk The imprudence in the selection of the conditions will affect the entire operation of company that import operation will be the first stage most directly affected Then, there are too many unintended consequences Therefore, when negotiating a contract, company needs a clearheaded, ensuring easy implementation, fast, ensuring high security and create conditions for the payment activities of the company made good and effective 3.3.4 Diversify the imported resource: Most of company partners are acquaintance and its number of exporters is not high The company has always been dependent on the importer and has to accept their payment method selection Therefore, diversification of the imported resource is really necessary In order to achieve that, company should: - Actively seeking other sources in the same country and the same source of items to take advantage of the knowledge of the law and business style as well as relationships that have been got in the that country Company can seek new suppliers through internet, acquaintances and from the introduction of partners - Enhancing the reputation of company to attract new suppliers Although company has existed for longtime, there is no online transaction even a website Most of partners and customers of company know about company through relations That is so difficult for company to be known by new exporter and to find new sources In order to attract new resources, company has to strengthen advertising company’s image by establishing website for 83 company and using marketing, advertisement to bring company’s image to foreign exporter through inquiry letter 3.3.5 Building and strengthening relationships with banks: Currently, the company has good relations with Vietcombank, but has yet to fully trust because company still has to deposit when opening L/C In addition, the company has not put its relations with other banks However, company should carefully choose banks which are proficient at banking knowledge and believable In short, company needs to expand and build a relationship with the banks: - Strengthening the relationship with Vietcombank, continue to conduct banking transactions, maintaining a relationship with them through engaging, meeting and discussing with the officers of the bank - Expanding relations with other banks operating in the field of international payments as Eximbank, ACB, Techcombank, BIDV, to ensure fast and efficient payment 3.4 Some recommendations: 3.4.1 For Vietcombank: Bank plays an important role and impacts on the payment operation of imports in Printexim company in particular and international payment operations of the business in general So please have some recommendations for the bank to help pay operation take place quickly and efficiently First, proposing the bank set up consulting work for businesses about the rules, procedures and practices in international payments The enterprises in Vietnam in general and in particular the company is still weak and lack of knowledge in this field so that it takes time in doing payment, be easy to make errors leading to unwanted risks In addition, bank should regularly advices tools help hedge exchange rate risk It is because the fluctuation in the exchange rate always is top 84 concern for the import-export business, this risk causing huge financial losses of the business Second, giving advices to company in selecting payment methods and teaching enterprises how to avoid commercial risks that may occur Third, advising for businesses when signing contracts and putting on L/C the specific terms, avoiding generic terms to avoid misleading or partner makes abuse to get benefit from that Forth, suggesting bank creates favorable conditions for company making payment through bank Therefore, bank should simplify procedures structure, facilitate financial support for business, credit, and stand out to guarantee imported payment of the company 3.4.2 For government: Government agency takes an importance role and operates all activities of the country State has enacted laws, policies and measures needed to stabilize the economy and society Therefore, the government should grasp the situation promptly to amend and supplement the law to suit the situation and create a legal environment which is stable and perfect For the import operation and import payments also need to be given support Specifically: - Improving the legal framework for international payments Create a clear mechanism for the operation of banks, expansion of international payments - Stabilize trade policy, foreign exchange policy The foreign trade policy affects import and export activities The trade policies governing the operation of the payments the bank, thereby facilitating the importation of the company 85 - Fully constructing foreign exchange on market Currently, the foreign exchange market in Vietnam is not complete Construction complete foreign exchange market help stabilize foreign exchange and operation of the bank payment CONCLUSION The result of research: Printexim company has thick experience in doing business especially in importing paper material and payment operation is considered as regular work Therefore, it can be thought that employees have strong skill of payment procedure However, that is not true It is because the statistic shows that payment methods which company is using are not the most favorable for company’s benefit It still has some limitation existing on international payment operation of company After the theoretical study and discover practically payment operation at the company Printexim, I bravely suggested some solutions to limit risks in imported payment operation at the company: - Establish risk management process - Using derivative transaction to hedge exchange rate risk - Enhance the ability of negotiation in order to select the logical payment method - Building and strengthening relationships with banks With those above solutions, I hope my thesis partly contribute to eliminate risks in imported payment operation at company I have already tried my best in writing this report; however, making mistake can be avoidable because of the shortage of time and my knowledge may be subjective I hope teachers greatly sympathize to me and I am honor to receive your comments as well as criticisms The limitation of this research project: - Study period was too short to accurately assess the status of payment activities of the company - The assessment and analysis is only true in the study period - The solutions given are only theoretical, unproven fact Recommendation for next researches: - Taking more the time to research deeper and more thoroughly - Use other research methods to assess more accurately REFERENCES Vietnamese Báo cáo định hướng phát triển công ty, Phịng tổ chức hành chính, Printexim Co., Ltd, 2013 Đỗ Minh Tuấn, Các phương thức toán quốc tế góc độ lợi ích với nhà xuất nhà nhập khẩu, 02/12/2009, Công ty Luật Châu Á - Asia Law, http://www.cfo.vn/forum/viewtopic.php?f=37&t=631 Hồ sơ lao động công đồn, Phịng tổ chức hành chính, Printexim Co., Ltd Hồ sơ thành lập cơng ty, Phịng tổ chức hành chính, Printexim Co.,Ltd Hợp đồng thương mại, Phịng kinh doanh xuất nhập khẩu, Printexim Co.,Ltd, 2009-2011 Ngọc Minh, Xuất chiêu lừa đảo tinh vi, 02/10/2012, http://www.tinmoi.vn/xuat-khau-va-nhung-chieu-lua-dao-tinh-vi011061401.html Những rủi ro thường gặp toán quốc tế nhà nhập khẩu, 14/04/2008, http://www.vnecon.vn/showthread.php?t=1162 Quyết định 09/2008/QĐ- NHNN, Thư viện pháp luật, 10/04/2008, http://thuvienphapluat.vn/archive/Quyet-dinh-09-2008-QD-NHNN-cho-vaybang-ngoai-te-cua-to-chuc-tin-dung-doi-voi-khach-hang-vay-la-nguoi-cutru-vb64872.aspx Rủi ro toán quốc tế, 19/12/2011, http://www.wattpad.com/2898592-r%E1%BB%A7i-ro-trong-thanhto%C3%A1n-qu%E1%BB%91c-t%E1%BA%BF#comments 10 Tổng hợp phương thức toán quốc tế, Cộng đồng nguổn nhân lực ngân hàng, http://ub.com.vn/threads/16740-Tong-hop-cac-phuong-thuc- thanh-toan-quoc-te.html 11 Thông tư 07/2011/TT-NHNN, Thông tin pháp luật dân sự, 24/03/2011, http://thongtinphapluatdansu.edu.vn/2011/04/03/thng-t%C6%B0- s%E1%BB%91-072011tt-nhnn-ngy-24-thng-03-nam-2011c%E1%BB%A7a-ngn-hng-nh-n%C6%B0%E1%BB%9Bcvi%E1%BB%87t-nam-quy-d%E1%BB%8Bnh-cho-vay-b/ 12 Thơng tư 03/2012/TT-NHNN, Luật Hải Phịng, 08/03/2012, http://luatkhaiphong.com/Luat-Ngan-hang/Thong-tu-03/2012/TT-NHNNngay-8/3/2012-quy-dinh-cho-vay-bang-ngoai-te-cua-to-chuc-tin-dung6232.html 13 Thông tư 37/2012/TT-NHNN, Thư viện pháp luật, 28/12/2012, http://thuvienphapluat.vn/archive/Thong-tu-37-2012-TT-NHNN-cho-vaybang-ngoai-te-cua-to-chuc-tin-dung-chi-nhanh-vb162375.aspx 14 Trần Hoàng Ngân, Hoàng Thị Minh Ngọc, Trầm Thị Xuân Hương, Nguyễn Minh Kiều, Võ Thị Tuyết Anh, Phan Chung Thủy, Thanh toán quốc tế, Nhà xuất thống kê, trường Đại học Kinh Tế, Thành phố Hồ Chí Minh Foreign language 15 Nguyen Phuoc Kinh Kha, International payment, material lection ... for health and success to the company and teachers Ho Chi Minh City, July 10th 2013 Student LE THUY TRUC THE PROJECT IS COMPLETED AT TON DUC THANG UNIVERSITY I hereby declare that this is my... copyright because I caused in the implementation process (if any) Ho Chi Minh City, July 10th, 2013 LE THUY TRUC SUPERVISOR’S REMARK