SOLUTIONS TO IMPROVE EXPORT PROCESSING FORWARDING OPERATION AT MAT THANH JOINT STOCK COMPANY |

VIETNAM GENERAL CONFIDERATION OF LABOUR TON DUC THANG UNIVERSITY DEPARTMENT OF BUSINESS ADMINISTRATION THESIS SOLUTIONS TO IMPROVE EXPORT PROCESSING FORWARDING OPERATION AT MAI THANH JOINT STOCK COMPANY Supervisor: MBA PHAM THI NGOC BICH Student: VU THI THU HOAI Student ID: 70900321 Intake: 13 HO CHI MINH CITY, 2013 VIETNAM GENERAL CONFIDERATION OF LABOUR TON DUC THANG UNIVERSITY DEPARTMENT OF BUSINESS ADMINISTRATION THESIS SOLUTIONS TO IMPROVE EXPORT PROCESSING FORWARDING OPERATION AT MAI THANH JOINT STOCK COMPANY Supervisor: MBA PHAM THI NGOC BICH Student: VU THI THU HOAI Student ID: 70900321 Intake: 13 HO CHI MINH CITY, 2013 ACKNOWLEDGEMENT I would like to thank Business Administration Faculty of Ton Duc Thang University has created the best conditions to help me finish this thesis I sincerely thank to MBA Pham Thi Ngoc Bich who has conducted me to complete this thesis with the dedicated care I thank to the managers and staffs who instructed me during time I interned at Mai Thanh Joint Stock Company I want to say “thanks” to all teachers and friends who helped and supported me through the study period Even though I tried my best to finish my thesis, some mistakes still happed I hope you could conpathyze and make suggestion to help me perfect it Thanks! CƠNG TRÌNH ĐƯỢC HỒN THÀNH TẠI TRƯỜNG ĐẠI HỌC TƠN ĐỨC THẮNG Tơi xin cam đoan cơng trình nghiên cứu riêng tơi hướng dẫn khoa học Thạc sĩ Phạm Thị Ngọc Bích Các nội dung nghiên cứu, kết đề tài trung thực chưa công bố hình thức trước Những số liệu bảng biểu phục vụ cho việc phân tích, nhận xét, đánh giá tác giả thu thập từ nguồn khác có ghi rõ phần tài liệu tham khảo Ngồi ra, luận văn cịn sử dụng số nhận xét, đánh số liệu tác giả khác, quan tổ chức khác có trích dẫn thích nguồn gốc Nếu phát có gian lận tơi xin hồn tồn chịu trách nhiệm nội dung luận văn Trường đại học Tơn Đức Thắng không liên quan đến vi phạm tác quyền, quyền tơi gây q trình thực (nếu có) TP Hồ Chí Minh, ngày tháng năm Tác giả Vũ Thị Thu Hoài TABLE OF CONTENTS CHAPTER INTRODUCTION 1.1 Introduction 1.2 Rationale .2 1.3 Research objectives 1.4 Research methodology 1.5 Data source 1.6 Research organization 1.7 Research structure .5 CHAPTER LITERATURE REVIEW 2.1 Concepts related to processing, export processing, forwarding .7 2.1.1 Processing 2.1.2 Export processing 2.1.3 Forwarding .8 2.1.4 Forwarder 2.1.5 Processing norms .11 2.1.6 Processing liquidity 11 2.1.7 Processing fee 12 2.2 Scope of forwarding 12 2.3 The benefits of using forwarding services .13 2.3.1 For the exporter .13 2.3.2 For the importer 14 2.4 Role of forwarder in global trade 14 2.4.1 The Customs broker 14 2.4.2 The agent 15 2.4.3 The consolidator 15 2.4.4 The carrier .15 2.4.5 Multimodal transport operator (MTO) 15 2.5 Export processing modes 16 2.5.1 By the ownership of raw materials during production 16 2.5.2 By processing fee .16 2.5.3 By the level of supply of raw materials, ancillary materials .17 2.5.4 By production modes .17 2.6 Forwarding process of export processing goods .17 2.7 Factors affecting the company’s forwarding operation 18 2.7.1 External factors .18 2.7.1.1 Legal/political factor 18 2.7.1.2 Infrastructure 19 2.7.1.3 Social/cultural factor 19 2.7.1.4 Macroeconomic management policies 20 2.7.1.5 Competitors 20 2.7.2 Internal factors 21 2.7.2.1 Corporate culture 21 2.7.2.2 Human resources 21 2.7.2.3 Technology 22 2.7.2.4 The company’s trademark and reputation .22 2.7.2.5 Development experience of the company .23 2.7.2.6 Marketing activities .23 CHAPTER 24 THE COMPANY BUSINESS OVERVIEW 24 3.1 The development history 24 3.1.1 The company’s brief 24 3.1.2 The development history .24 3.2 Organizational structure 26 3.2.1 Organizational chart .26 3.2.2 Key roles and responsibilities of each department .26 3.2.2.1 Board of directors 26 3.2.2.2 Sale department .26 3.2.2.3 Accounting department 27 3.2.2.4 Line department .27 3.2.3 Business areas and missions of the company 28 3.2.3.1 Business areas 28 3.2.3.2 Missions 29 3.3 The operations of the company 30 3.3.1 Forwarding .30 3.3.2 Global transportation 31 3.3.3 Business results of the company (2009 - 2011) 33 3.4 Forwarding process of export processing goods .34 3.4.1 Registering the processing contract with the Customs 34 3.4.2 Importing materials, machinery and equipment for processing 36 3.4.2.1 Receiving Delivery Order from Shipping Line (D/O) 36 3.4.2.2 Implementing the Customs declaration 37 3.4.2.3 Inspecting goods 43 3.4.2.4 Receiving goods 44 3.4.3 Exporting finished-products 45 3.4.3.1 Receiving Booking Note from Shipping Line .45 3.4.3.2 Implementing the Customs declaration 45 3.4.3.3 Delivering products .47 3.4.3.4 Applying for C/O 48 3.4.3.5 Receiving Bill of Lading from Shipping Lines .49 3.4.4 Liquidating the processing contract 49 3.4.4.1 Contract liquidation process 50 3.4.4.2 Solutions for extra materials 50 3.5 Evaluation on Mai Thanh Joint Stock Company 52 3.5.1 Advantages .53 3.5.2 Disadvantages 53 CHAPTER 55 SOLUTIONS TO IMPROVE EXPORT PROCESSING FORWARDING OPERATION AT MAI THANH JOINT STOCK COMPANY 55 4.1 SWOT analysis 55 4.2 Solutions to improve export processing forwarding operation at Mai Thanh Joint Stock Company 57 4.2.1 Solutions for Mai Thanh Joint Stock Company 57 4.2.1.1 Developing marketing activities to attract the customers 57 4.2.1.2 Planning the long-term strategies to maintain relationships with customers .59 4.2.1.3 Solutions to enhance staffs’ professional qualification 61 4.2.1.4 Building reasonable price policies 62 4.2.1.5 Improving and updating technology 63 4.2.2 Recommendations for the Government related to improve technology and infrastructure 63 4.2.3 Recommendations for the Customs authority 63 4.2.3.1 Speeding up the process of upgrading the Customs procedures 63 4.2.3.2 Enhancing the qualification of the Customs managers and staff, and promoting training activities 64 4.2.3.3 Building infrastructure, investing equipment, applying to technology and modernizing the Customs 65 4.2.3.4 Reforming administrative procedures 65 CONCLUSION 66 LIST OF ABBREVIATIONS                  WTO: World Trade Organization ASEAN: Association of Southeast Asian Nations FIATA : International Federation of Freight Forwarders Association B/L: Bill of Lading C/O: Certificate of Origin D/O: Delivery Order C/I: Commercial Invoice FOB: Free on board CIF: Cost, Insurance and Freight MTO: Multimodal transport operator CFS: Container Freight Station VNL: Vietnam Logistics THC: Terminal Handling Charge L/C: Letter of Credit FCL: Full Container Load LCL: Less than a container load VCCI: Vietnam Chamber of Commerce and Industry 54 Marketing policies The company has no its own marketing department, so it is hard to attract the customers as well as introduce the company’s image to people So, the amount of customers for export processing are limited Up to now, the company just implements export processing forwarding for very few companies Customers service care The company has no this department When receiving the questions or complaint of the customers, the company is not consistent for general answers to satisfy the customers This causes information confusion for the customers So, the company should set up the customers service department 55 CHAPTER SOLUTIONS TO IMPROVE EXPORT PROCESSING FORWARDING OPERATION AT MAI THANH JOINT STOCK COMPANY 4.1 SWOT analysis OPPORTUNITY – O EXTERNAL FACTORS S THREAT – T O1: Thanks to long coast, T1: Vietnam has potential of The great between many forwarding marine companies, economy O traffic systems to serve complex import-export activities T3: Forwarding price of O3: Good human resource Vietnam is higher than supply other countries Preferential tariff T4: The infrastructure of policies of the State attract our country such as ports, many foreign companies roads… are obsolete to join in processing market of Vietnam INTERNAL FACTORS Administrative focusing on building ports, procedures are prolix and O4: T especially foreign ones O2: The Government is T2: W competition O5: The politic Vietnam is stable T5: Bureaucracy corruption still exist of and 56 STRENGTH – S S-O STRATEGIES S1: Much experienced in  Planning S2: Good relationships with customers and Staff are highly skilled, experienced and trained good relationships with customers reasonable price policy  Establishing competitive strategies  Training skills for staff prestige in the market S3: long-term  Building strategies to maintain forwarding activities S-T STRATEGIES to improve qualification professionally, young and enthusiastic S4: The management is professional, qualified and well trained S5: The technology is modern and update S6: Be the leading company of export processing S7: The company is located near the airport, it is convenient for activities by air route WEAKNESS – W W-O STRATEGIES W-T strategies W1: Number of staff of  Developing marketing  Improving and update line department are activities to attract 57 limited, so there are not customers technologies usually enough staff to solve very many tasks when overloading W2: Number of customer for export processing is limited W3: The staffs’ language level is still low W4: Much information and task congest internet systems W5: The company has no professional marketing department W6: The company is far from seaport, it wastes time for travelling and doing the procedures at ports Figure 4.1 SWOT matrix 4.2 Solutions to improve export processing forwarding operation at Mai Thanh Joint Stock Company 4.2.1 Solutions for Mai Thanh Joint Stock Company 4.2.1.1 Developing marketing activities to attract the customers 58 Marketing activities play an important role in the development of the company Marketing is known as a tool helping the company approach with the customers as well as introduce the company’s image to people On the other hand, now marketing activities of forwarding industry have not been focused, this makes not attract many customers So, promoting marketing activities for forwarding is necessary and more interesting Now, marketing activities of Mai Thanh Joint Stock Company is still weak The Company has no its own marketing department, so marketing activities have not been focused Because Vietnam’s economy has been growing and people’s lives are improving, companies and enterprises must have marketing strategies to contribute for building the company’s image as well as introducing services of its Therefore, Mai Thanh Company should consider some following solutions: - Establishing website for the company: website is the image of the company through internet and e-commerce facilities With the trend of using internet frequently, people are just at home without travelling more and search information that they need So that, creating a website is easily accessible and full of information Moreover, the website has outstanding format to attract customers’ attention The website is interaction between the company and customers Instead of direct feedback about the company, customers can post their complaints on the company’s website, this helps the company improve website as well as services - Participating in forwarding associations and organizations such as VIFFAS, FIATA, VCCI, IATA, VLA… to make relationships between companies, study experiences Being member of domestic and foreign forwarding associations helps the company affirm its prestige and trademark to customers and competitors - Joining in online forwarding forums: now, many forums are created with purposes for both sellers and buyers Here, companies register an account and log into the forum, select suitable sector to promote their products and answer 59 customers’ questions through forums Also, customers can visit the forum to find out products and services as their request - Advertising service products in newspapers, magazines, public media…, after conducting, the company has to analyze and evaluate these tasks to get experiences for strategies of the company The advertisement is quite costly but it impacts on the awareness of the customers quickly because newspapers, magazines and public media are also used frequently as internet Furthermore, the company can design frames running on TV laid at the elevators of buildings or towers When waiting for elevators, people can see frames with the information and services of the company - Introducing the newest services to the close customers: those customers trust the company’s products and services because they have used many times and they feel suitable for them When the company introduces new services because of prestige and trademark, the customers have peace of mind and of course, the company saves the costs of advertisement for new services - Analyzing and reviewing the marketing activities that rival companies have been using in order to make appropriate strategies for the company - Finding out information about the new and potential markets to easily access The company should make surveys for new and close customers to understand their requirements In addition, for each market, providing the different marketing strategies to suit each market 4.2.1.2 Planning the long-term strategies to maintain relationships with customers Currently, the company have been no customers service department, this one can provide exact consultancy for them if they need The first impression is always the most important for a relationship And first business reputation is not the exception Business reputation is extremely vital factor to maintain relationships with customers Finding the customers is hard, keeping them is more difficult So, the company needs to have long-term strategies 60 to maintain those relationships to make intimacy with them and get profit for the company Some solutions that the company can consider: - Delivering goods on time and ensuring the company’s services: punctuality is always considered to be golden rule for forwarding companies in general and Mai Thanh Company in particular Punctuality shows the company’s professionalism, respects the time of the company and customers It is important for maintaining punctuality to building trust and reputation with customers - Holding meetings with the customers face to face to listen their feedbacks on pricing, payment The company should listen and take feedbacks quickly for the customers’ questions and complaints This is the task of the customers care department of the company The department is responsible for updating information of the customers through “Contact” on the company’s website, phoning to them to receive feedbacks when they use services of the company The staff of this department must be flexible with each situation in order to give customers the best satisfaction - Classifying the customers into long-term, short-buy to have right customer service policies For long-term customers, the company should establish the long-term contracts to fix right prices for customers in a certain time The company can keep in touch with the customers so the customers can use the company’s services whenever they have the service demand and the company can maintain the profit For short-buy customers, the company should send out survey questionnaire on each transaction on pricing, service quality, forwarding time to meet their requirement better - Limiting to contact to customers by email, except for some special cases: the exchange via email should be served for internal company Using email for customers makes annoyed for them and shows no respect to them The company should speak directly to meet the needs and answer questions of customers in order that they know the company’s enthusiasm 61 - Creating favor programs or commission for those who introduce new customers to the company 4.2.1.3 Solutions to enhance staffs’ professional qualification Human resource is considered to be one of the most important resources of an enterprise Human resource contributes to make the efficiency and profit of the company The skillful managers of the company must know how to exploit this important source, create working enthusiasm for the employees The training is very essential because their specialties are advanced, the working efficiency is better Currently, the staff of Mai Thanh Company are professional, mostly graduated However, when it is about Tet holidays, the company can not meet the needs of customers Therefore, the company needs to have solutions as well as policies for the staff of the company: - The training courses: forwarding jobs require employees to understand the business processes, the legal documents, general knowledge of forwarding The new regulations, circulars issued by the Customs and the State if the enterprises does not get information in time, they will face many difficulties in implementing import documents, many costs arise So, the company should organize seminars to exchange experiences, help employees quickly grasp in case of complex problems Besides, the company should require employees to join in professional classes organized by the Customs to get information clearly With current integration, the company has to equip comprehensive knowledge for the staff such as high-level language, wide geographical knowledge, understanding the rules relating to import-export, national and international laws, insurance, banking,… - Setting up criteria to evaluate employees’ performances to encourage job creativity and contribution and limit mistakes For the regulations concerning rewards and punishments: the company should have a reasonable reward regulation to help staff maximize working ability, to encourage them to contribute best ideas for the company The rewards should be associated with 62 business results and each employee’s performance with his customers In addition to the fixed salary, employees also receive bonuses for innovations, bonuses at holidays, rewards for prominent individuals in order to encourage employees - Short-term recruitment: this trend is being used more in companies When overloading documents, the staff can not handle quickly which creates pressure for them, stagnation goods at ports The short-term recruitment as 3-month or 6month employees solves above problems of the company 4.2.1.4 Building reasonable price policies Now, many forwarding companies established, not only domestic companies but also foreign ones with much development experiences and advanced infrastructure All has created the strong competition for the field of forwarding in Vietnam In addition to reputation and trademark of the company, price of services is an important factor to attract customers to the company The price makes the essential competition for the companies forcing them to have a reasonable pricing policy associated with the quality of services With the establishment of the company since 2001, the company has had much experience in determining price as well as quality to survive However, the company should consider some solutions for building better pricing policies to attract more customers: - Setting up different pricing policies for various types of customers such as close customers and new customers For the customers using the company’s services many times, the company should have favor price for them, make them feel to receive the care from the company as well as create close relationships with them Furthermore, the customers will introduce many partners to the company and its prestige and reputation will be advanced - Implementing surveys to know the competitive price with other companies Through surveys by letting customers answer the questionnaires, the interviews, the company will synthetize and analyze by software such SPSS or E-views to 63 get results for the company Besides, the actual surveys not only help the company determine the appropriate price but also help it know disadvantages in management and customer care in order to have better solutions - Having seasonal policies to adjust the prices 4.2.1.5 Improving and updating technology Technology has been developed increasingly, especially forwarding companies such as Mai Thanh Company Updating and enhancing technology are inevitable This helps the company store large amount of information systematically and scientifically and remove unused and unnecessary information for the company Computer network system is a tool supporting staff to process information quickly The company needs to update this system to limit information congestion when overloading Online Customs declaration software is important to forwarding companies, the new version of this software should be updated regularly 4.2.2 Recommendations for the Government related to improve technology and infrastructure Currently, the infrastructure and technology of Vietnam can not meet the demand of forwarding field as well as logistics industry conveniently Roads with weak quality can not serve for the trucks and large container best Some seaports are not eligible for international ships Therefore, the State should have the solutions to solve the above problems: - There is a long-term strategy, the coordination between the departments and the national budget - Investing and equipping modern machinery for key seaports to improve palletizing capacity - Organizing a suitable network of inland traffic, handling traffic congestion to ensure logistics operations 4.2.3 Recommendations for the Customs authority 4.2.3.1 Speeding up the process of upgrading the Customs procedures 64 Foreign economic activities in general and export processing activities in particular has developed, so the Customs must continued to reform Customs procedures with the reforming implementation of general administrative procedures To accelerate this reforming process, the Customs needs to focus on carrying out “The plan reforms the Customs procedures both of width and depth”, especially paying attention to devise practical solutions in accordance with international regulations and integration requirements: - Taking the initiative, affirming the responsibility under the law of the enterprises - Enhancing the inspection and supervision of the Customs authorities - The Customs process united, simple and easily implemented - Assigning tasks, powers and responsibilities of each Customs officer clearly 4.2.3.2 Enhancing the qualification of the Customs managers and staff, and promoting training activities Export processing goods as well as other import-export ones must be complied with Customs procedure processes Although mode of processing includes many complex stages, requires strict management, the authorities should create favorable environment for the enterprises Therefore, enhancing the qualification of the Customs managers and staff is necessary to build a force of Customs officers expert at business, law, economy… and dedicated To improve the qualification of Customs officers and managers, firstly, the authorities need to focus on administrating and allocating funds for training, retraining regular courses for officers Besides, the authorities need to plan for opening training classes and courses for the enterprises to make Customs procedures and other required contents in order that they understand and comply with the law, Customs’ policies as well as the State’s ones This training carried out frequently helps the enterprises conduct procedures quickly, conventionally 65 4.2.3.3 Building infrastructure, investing equipment, applying to technology and modernizing the Customs The establishment Customs’ own wide network is capable of transferring data signals, audio, fax, connected images between the Customs units and the Automation center; studying to connect this network with Banks, State’s Treasury, carriers, airlines, ports to implement the transactions confirming the payment and monitoring warehouses One of the most important and effective information technology applications is online Customs declaration The State should mention clearly about this application to promote the implementation of Customs procedures via online for export processing goods in particular as well as import-export ones in general 4.2.3.4 Reforming administrative procedures Currently, the administrative procedures of the State are very prolix and complicated This makes inconvenient for business of the companies The biggest obstacle of the export processing forwarding companies is the Customs clearance Although the Customs is responsible for inspection and management import-export goods, the Customs procedures prolix makes the enterprises lose their opportunities So, the State should have some ways: reforming forms of working, specific working regulations for officers, preventing the negative phenomena When issuing new regulations, it is necessary to announce for the enterprises in order not to make mistakes 66 CONCLUSION Nowadays, export processing has been becoming a strategic production industry in our country With our country’s current economy, the technology is obsolete, the status of unemployment is high, the qualification of employees is also low, so development of export processing is extremely essential Export processing solves employment for labor force, helps us acquire modern technologies and advanced management level of countries in the world as well as increases foreign currency for our country The process of economic integration has been going fast, Vietnam has participated in WTO, its economy requires to maintain the growth at – 8.5% per year, exporting turnover is 20 – 25% per year To gain this target, our country must exploit our exporting advantages With the fierce competition of today, Mai Thanh Joint Stock Company wants to build it own trademark close to the customers and orient new directions in the future The company tries its best to build the image of an enterprise in accordance with quality to satisfy the customers The Board of Directors always find out solutions to enhance and perfect import-export processes The company wants to optimize the time and minimize unnecessary costs to save for the company and customers I would like to acknowledge all Mai Thanh Company’s staffs and Miss Pham Thi Ngoc Bich, my supervisor Thank to their instruction, I have finished my thesis completely However, because of the limitation in individual knowledge and the limited time, some mistakes could happen in my thesis I hope to get your opinions to make my thesis better Thank you! REFERENCES “Chapter 7: International processing contract” , Curriculum Foreign Trade Techniques, (Doan Thi Hong Van), Labor and Social Publishing House, University of Economics Ho Chi Minh City 217 – 225 Online resources: http://yume.vn/white_star/article/phap-luat-va-doanh-nghiep.35CFCF3D.html http://www.voer.edu.vn/module/kinh-te/cac-nhan-to-anh-huong-den-hieu-qua-sanxuat-kinh-doanh-cua-doanh-nghiep.html http://www.container-transportation.com/giao-nhan-van-tai.html http://export.gov/logistics/eg_main_018144.asp http://en.wikipedia.org/wiki/Freight_forwarder http://www.wisegeek.org/what-is-freight-forwarding.htm http://www.dna.com.vn/vi/do-luong-thuong-hieu/s/gia-tri-vo-hinh-cua-thuong-hieu/ http://kallabmt.wordpress.com/2012/12/03/phan-tich-moi-truong-ben-trong-cua-tochuc/ LIST OF APPENDIXES APPENDIX 1: The Processing contract APPENDIX 2: The Customs declaration and annex for imported goods APPENDIX 3: Bill of lading APPENDIX 4: The processing norms APPENDIX 5: Commercial Invoice APPENDIX 6: Packing List APPENDIX 7: The Customs declaration and annex for exported goods APPENDIX 8: Delivery Order ... That the reason I choose topic: ? ?Solutions to improve export processing forwarding operation at Mai Thanh Joint Stock Company? ?? for my graduation thesis 2 1.2 Rationale Mai Thanh Joint Stock Company. .. SOLUTIONS TO IMPROVE EXPORT PROCESSING FORWARDING OPERATION AT MAI THANH JOINT STOCK COMPANY 55 4.1 SWOT analysis 55 4.2 Solutions to improve export processing forwarding operation. .. Thanh Joint Stock Company, the company? ??s activities, objectives and orientation the company? ??s development Chapter 4: Solutions to improve export processing forwarding operation at Mai Thanh Joint