SOLUTIONS TO IMPROVE THE ENTRUSTED EXPORT OPERATION AT SADACO

VIETNAM GENERAL CONFIDERATION OF LABOUR TON DUC THANG UNIVERSITY DEPARTMENT OF BUSINESS ADMINISTRATION Thesis submitted as a requirement for the degree Bachelor of Business Administration SOLUTIONS TO IMPROVE THE ENTRUSTED EXPORT OPERATION AT SADACO Supervisor: Dr CAO MINH TRI Student: NGUYEN THI THANH NGA Student ID: 70900352 Intake: 13 HO CHI MINH CITY, July 2013 VIETNAM GENERAL CONFIDERATION OF LABOUR TON DUC THANG UNIVERSITY DEPARTMENT OF BUSINESS ADMINISTRATION Thesis submitted as a requirement for the degree Bachelor of Business Administration SOLUTIONS TO IMPROVE THE ENTRUSTED EXPORT OPERATION AT SADACO Supervisor: Dr CAO MINH TRI Student: NGUYEN THI THANH NGA Student ID: 70900352 Intake: 13 HO CHI MINH CITY, July 2013 ACKNOWLEDGEMENTS I would like to express my deep gratitude to all people who contribute valuable assistance and supports during the completion of this internship report It would be my honor to express my sincere gratitude to my advisor Dr Cao Minh Tri for his continuous support of my report, for his patience, motivation, enthusiasm, and immense knowledge I could not have imagined finishing this work without his guidance and advice My sincere thanks also go to all staffs in the Export/Import Department at Saigon Trade Production Development Corporation (SADACO) Especially, my warm thanks are sent to Mr Tran Quoc Manh – General Manager, Mr Nguyen Van Sa – Manager and Mr Nguyen Tien Diep – head of Export/Import Deparment who facilitated the completion of this report It is worth to point out that my work today cannot be perfect without his guidance and willing help Many thanks to other employees at SADACO, especially Ms Pham Thi Hong Phuoc, Ms Nguyen Thi Thanh Thao for their valuable helps with professional knowledge and specialist skill in the entrustment export process Thank you for having forgiven all my mistakes during my internship and helped me out I will never forget the lessons that I learnt from you Last but not least, I would like to express a deep gratitude to my parents who are the most meaningful people in my life THE PROJECT IMPLEMENTED AT TON DUC THANG UNIVERSITY I hereby declare that this is my own research under scientific guidance of Dr Cao Minh Tri The contents of the thesis and the results of this project are truthful and not published in any form of documents before The data in the tables used for analysis and evaluations is collected by the author from various sources that are clearly stated in the references If detected any fraud, I promise to take full responsibility for the contents of their thesis Ton DucThang University does not involve the violations that caused in the implementation process (if any) Ho Chi Minh City, July 2013 Author Nguyen Thi Thanh Nga COMMENT OF CRITICISM Student: Nguyen Thi Thanh Nga Student ID: 70900352 Class: 09070101 Intake: 13 ……………………………………………………………………………………… ……………………………………………………………………………………… ……………………………………………………………………………………… ……………………………………………………………………………………… ……………………………………………………………………………………… ……………………………………………………………………………………… ……………………………………………………………………………………… ……………………………………………………………………………………… ……………………………………………………………………………………… ……………………………………………………………………………………… ……………………………………………………………………………………… ……………………………………………………………………………………… ……………………………………………………………………………………… ……………………………………………………………………………………… ……………………………………………………………………………………… ……………………………………………………………………………………… ABSTRACT Entrusted export is a new field of export business Currently, there are just a few firms operating in this type of export However, with the trend of globalization, this type of export shows profitable potential in the near future This research concentrates on the issues and solutions to improve the entrusted export operation at Saigon Trade Production and Development Corporation (SADACO) To begin with, this research provides overall of entrusted export operation which developed based on reliable literature review Furthermore, it also shows the analysis in current entrusted export operation at SADACO during the period 2020 – 2012 After conducting the analysis, it is found that there are some environments influencing to the operation of SADACO Finally, based on the provided theories and analyzed data, this research suggests some solutions to improve the problems which is existing in entrusted export operation at SADACO Key words: entrusted export, trustor, trustee, SADACO ABBREVIATIONS CFR Cost and Freight CIF Cost, Insurance and Freight CAD Cash against document CFS Container freight station C/O Certificate of origin C/P Voyage Charter Party D/A Documents against Acceptance D/P Documents against Payment ETD Estimated time of departure FOB Free On Board FCL Full container load ICC International Chamber of Commerce L/C Letter of Credit LCL Less than a container load LSP Logistics Service Provider POL Port of loading POD Port of discharge THC Terminal handling charge LIST OF TABLES Table 2.1 Human resources structure by education level at SADACO in 2012… 34 Table 2.2 Revenue at SADACO during the period 2010 – 2012………………… 35 Table 2.3 Import and export turnover during the period 2010 – 2012…………… 36 LIST OF FIGURES Figure 1.1The relationship between trustor, trustee and importer………………….8 Figure 1.2The external environment……………………………………………….18 Figure 1.3Michael E Porter’s five forces of competition model………………….21 Figure 2.1Logo of SADACO…………………….……… …………………… 28 Figure 2.2Organization Structure at SADACO…………………… …………….31 Figure 2.3Human resources structure at SADACO 2012 ……………………… 33 Figure 2.4Proportion of entrusted export during the period 2010-2012 ………… 37 Figure 2.5The process of entrusted export at SADACO………………………… 38 Figure 2.6The relationship between SADACO and trustor, importer, carrier, customs……………………………………………………………………… ….39 Figures 2.7Process of doing customs procedure………………………………… 43 Figure 3.1SWOT matrix……………………………………………………….… 60 TABLE OF CONTENTS Acknowledgement Abstract ABBREVIATIONS LIST OF TABLES LIST OF FIGURES INTRODUCTION CHAPTER 1: LITERATURE REVIEW 1.1 General literature review of entrusted export 1.1.1 Definitions 1.1.2 Features of entrusted export 1.1.3The roles of entrusted export…………………………………….……… 1.1.4 Legal documents related to entrusted export…………………………… 1.1.5 Advantage and disadvantage of entrusted export … ……………………5 1.2 The process of entrusted export .6 1.2.1Negotiate and sign the entrusted export contract 1.2.2 Sign the export contract .8 1.2.3Ask for export license (if needed) 1.2.4Prepare for payment process (if needed) 1.2.5 Prepare commodities 1.2.6 Checking export commodities 10 1.2.7 Do customs procedure .10 1.2.8Hire means of transportation 11 1.2.9 Deliver commodities to carrier 12 1.2.10 Buy insurance 15 1.2.11 Make full set of document for payment 16 1.2.12 Adjust claims 17 1.3 The environments influencing the efficiency of entrusted export .17 1.3.1 External environment 17 1.3.2 Internal environment 25 CHAPTER 2: ENTRUSTED EXPORT OPERATION AT SADACO 28 2.1 Overview about SADACO 28 2.1.1 General information 28 2.1.2 History and development of SADACO .28 2.1.3 Mission and function 29 2.1.4 Organization system 31 2.1.5 Human resources at SADACO 32 2.2 Entrusted export operation at SADACO 34 2.2.1 Introduction about import/export department 34 2.2.2 The importance of entrusted export operation at SADACO 35 2.3 The process of entrusted export operation at SADACO .37 2.3.1 Negotiate and sign entrusted export contract 40 2.3.2 Sign export contract 41 2.3.3 Prepare commodities for export 41 2.3.4 Book ship space with shipping line 42 2.3.5 Do customs procedure 43 2.3.6 Receive commodities from trustor 45 2.3.7 Deliver commodities to carrier at port .46 2.3.8 Make full set of documents for payment 47 2.3.9 Adjust claims and liquidate contracts .50 2.4 Some features of the process of entrusted export at SADACO .50 CHAPTER 3: SOLUTIONS TO IMPROVE THE EFFICIENCY OF ENTRUSTED EXPORT OPERATION AT SADACO 53 3.1 Development orientation of SADACO 53 3.1.1 General orientations 53 3.1.2 Orientations for entrusted export operation 54 3.2 SWOT analysis 54 APPENDIX NO APPENDIX NO APPENDIX NO APPENDIX NO APPENDIX NO APPENDIX NO APPENDIX NO APPENDIX NO 10 THE NATIONAL ASSEMBLY - SOCIALIST REPUBLIC OF VIET NAM Independence - Freedom - Happiness Law No.36/2005/QH11 Hanoi, June 14, 2005 COMMERCIAL LAW Pursuant to Article 103 and Article 106 of the 1992 Constitution of the Socialist Republic of Vietnam, which was amended and supplemented under Resolution No 51/2001/QH10 of 25 December, 2001, of the tenth National Assembly, the tenth session; This Law provides for commercial activities Section SALE AND PURCHASE OF GOODS BY MANDATED DEALERS Article 155.- Purchase and sale of goods by mandated dealers Purchase and sale of goods by mandated dealers mean commercial activities whereby the trustee conducts the purchase and sale of goods in his/her/its own name under terms agreed upon with the trustor and is entitled to receive mandate commission Article 156.- Trustees A trustee for purchase and sale of goods is a trader dealing in goods which are consistent with the entrusted goods and conducting the purchase and sale of goods under terms agreed upon with the trustors Article 157.- Trustors A trustor of purchase and sale of goods may, or may not, be a trader that authorizes a trustee to conduct the purchase and sale of goods at his/her/its request and pays a commission Article 158.- Entrusted goods All goods which are lawfully circulated may become the subject matter of a mandated sale and purchase Article 159.- Entrustment contracts Mandate contracts for purchase and sale of goods must be made in writing or in other forms of equivalent legal validity Article 160.- Sub-entrust to a third party A trustee shall not be allowed to sub-mandate a third party to perform the signed entrustment contract for purchase and sale of goods, except where it is so approved in writing by the trustor Article 161.- Multilateral mandate A trustee may accept the entrustment for purchase and sale of goods from different trustors Article 162.- Rights of trustors Unless otherwise agreed, trustors shall have the following rights: To request trustees to supply adequate information on the performance of mandate contracts; Not to bear responsibility in cases where trustees commit law violations, except for cases specified in Clause 4, Article 163 of this Law Article 163.- Obligations of trustors Unless otherwise agreed, trustors shall have the following obligations: To provide information, documents and means necessary for the performance of mandate contracts; To pay mandate commissions and other reasonable expenses to trustors; To hand over money and goods as agreed upon; To bear joint responsibility in cases where trustors commit law violations which are attributable to acts of trustor or intentional law-breaking acts of the parties Article 164.- Rights of trustees Unless otherwise agreed, trustees shall have the following rights: To request trustor to provide information and documents necessary for the performance of mandate contracts; To receive mandate commissions; Not to bear responsibility for goods handed over to trustor strictly under agreement Article 165.- Obligations of trustees Unless otherwise agreed, trustees shall have the following obligations: To conduct the purchase and sale of goods as agreed upon; To notify trustor of matters related to the performance of mandate contracts; To follow instructions of trustor as agreed upon; To preserve assets and documents assigned to them for the performance of mandate contracts; To keep secret information related to the performance of mandate contracts; To hand over money and goods as agreed upon; To bear joint responsibility for law violation acts of trustor, in cases where such law violation acts are partially attributable to their own faults APPENDIX NO 11 THE GOVERNMENT SOCIALIST REPUBLIC OF VIET NAM - Independence - Freedom - Happiness No.12/2006/ND-CP Hanoi, January 23, 2006 DECREE Detailing the implementation of the commercial law regarding international goods sale and purchase and goods sale, purchase, processing and transit agency activities with foreign countries THE GOVERNMENT Pursuant to the December 25, 2001 Law on Organization of the Government; Pursuant to the June 14, 2005 Commercial Law; At the proposal of the Minister of Trade, Chapter IV ENTRUSTMENT OF IMPORT AND EXPORT OF GOODS AND UNDERTAKING OF ENTRUSTED IMPORT AND EXPORT OF GOODS Article 17.- Entrustment of import and export of goods and undertaking of entrusted import and export of goods Traders may entrust other traders to import and export all kinds of goods, or undertake import and export of all kinds of goods entrusted by other traders, except those on the list of goods banned or suspended from export and goods on the list of goods banned or suspended from import Article 18.- Entrustment of import and export and undertaking of entrusted import and export of goods under permits For goods imported or exported under permits as provided for in this Decree, the trustor or the trustee must obtain import or export permits before signing entrustment or entrustment undertaking contracts Article 19.- Entrustment of import and export of goods of organizations and individuals other than traders Vietnamese organizations and individuals other than traders may, on the basis of contracts signed in accordance with the provisions of law, entrust import of export of goods to meet their needs, except those on the list of goods banned or suspended from export and goods on the list of goods banned or suspended from import Article 20.- Interests and obligations of the trustor and trustee of import or export shall be agreed upon by the involved parties in entrustment or entrustment undertaking contracts ... implementation process (if any) Ho Chi Minh City, July 2013 Author Nguyen Thi Thanh Nga COMMENT OF CRITICISM Student: Nguyen Thi Thanh Nga Student ID: 70900352 Class: 09070101 Intake: 13 ………………………………………………………………………………………... are just a few firms operating in this type of export However, with the trend of globalization, this type of export shows profitable potential in the near future This research concentrates on the... and playing a vital role in this period of industrialization – modernization of the country In this process, import and export has contributed an important part to this revolution As a main tool