UEH UNIVERSITY COLLEGE OF BUSINESS DEPARTMENT OF INTERNATIONAL BUSINESS MARKETING INDIVIDUAL FINAL REPORT SUBJECT EXPORT IMPORT MANAGEMENT Lecturer Ph D Bui Thanh Trang Course code 23D1BUS50309703 Cla[.]
UEH UNIVERSITY COLLEGE OF BUSINESS DEPARTMENT OF INTERNATIONAL BUSINESS-MARKETING INDIVIDUAL FINAL REPORT SUBJECT: EXPORT - IMPORT MANAGEMENT Lecturer: Ph.D Bui Thanh Trang Course code: 23D1BUS50309703 Class: IBC06- K46 Student name: Nguyen Le Cam Tu Student ID: 31201022151 Ho Chi Minh City, June 4th, 2023 Contents PART 1: SALE CONTRACT BETWEEN ABC TRADING CO, LTD AND BT CO Question 1: Question 01 Base on the above basic information and add relevant information, write the sale contract with complete and accurate terms SALE CONTRACT COMMODITY: QUALITY: QUANTITY: 4 PACKAGING: PRICE: .4 PAYMENT: .4 DELIVERY: INSURANCE: INSPECTION: 10 FORCE MAJEURE .5 11 ARBITRATION: 12 GENERAL TERMS: PART 2: THE EXPORT PROCEDURES (ABC Trading Co,Ltd) Question 2: As seller, discuss in detail the procedure of the sales contract in Question 01 Export License .6 Payment terms: Prepare for the goods for export Inspect goods: Transportation contract .9 Insurance: Customs procedures: 10 Deliver the goods: 11 Present shipping document for L/C payment: .11 10 Claim and solving problem: 11 PART 3: THE IMPORT PROCEDURES IN VIETNAM ( IMPORT KOREA KING RICE COOKER) 12 Question 3: Question 03 Give an example of an imported goods and discuss in detail the procedure of importing the item 12 Import license: 13 1.1 Preparation of procedures for importing rice cooker in Vietnam: .13 1.2 Preparing import documents for rice cooker for customs: 13 Payment terms 14 Transportation contract: .15 3.1 Proceed to book a shipping vessel 15 3.2 Follow up the packing process and update information 16 3.3 Process of receiving goods: 16 Insurance: .16 Customs procedures: 17 5.1 Preparation of goods documents 17 5.2 Customs declaration: 18 Delivery: 19 6.1 Arrival Notice(A/N) and Delivery Order (D/O) 19 6.2 Transferring goods to storage warehouse 20 Inspect goods: .20 Claim and Solving 20 Make payment 21 PART 1: SALE CONTRACT BETWEEN ABC TRADING CO, LTD AND BT CO ABC Trading Co, Vietnam (seller) and BT Co., Japan (buyer) agree the conditions and terms of sale contract with the following information: Commodity: Coffee Quantity: 300 MT more or less 5% Price: USD1,600/MT CIF Yokohama Port Payment: By L/C 30 day from Bill of Lading date The contract will come into force from May 14, 2023 Question 1: Question 01 Base on the above basic information and add relevant information, write the sale contract with complete and accurate terms SALE CONTRACT No: 2345 Date : June 4th 2023 BETWEEN : ABC Trading Co, Ltd Vietnam Address: Tel: Fax: Represented by: AND : BT Co., Japan Address: Tel: Fax: Represented by: Both parties have agreed to sign the contract with the following terms and conditions: COMMODITY: W320 Cashew Nut Vietnam White Whole Cashews QUALITY: According to the sample agreed by both parties (Sample No 2345) - Color: White/ Light yellow - Grade: WS (AFI Standard) - Moisture: 3% max - Broken: 10% max - Total Defects: 8% max Without presence of residue from pesticides or insects QUANTITY: 100 MT more or less 5% at the seller option PACKAGING: The goods to be packed in the Manufacturer’s Standard Exporting Packing In x 25 lbs (11.34 kgs) Vaccum flexy pouches in cartons PRICE: - Price to be understood CIF Yokohama Port, Incoterms 2010 - Unit price: USD 5,100/MT - Total amount: 510,000 (+/- 5%) - Say: United State Dollars five hundred ten thousand only PAYMENT: Payment by irrevocable L/C 60 days from B/L date for 100% of invoice value, in favor of the seller option - Issuing bank: HSBC Bank, Japan - Notifying: Vietcombank, HCM City DELIVERY: Delivery of goods will be made CIF - Time of delivery: Within 20 days after of opening L/C - Loading port: Saigon Port, Vietnam - Unloading port: Yokohama, Japan - Partial shipment: allowed - Transhipment: not allowed The following documents are presented within 15 days after the date of shipment - Full set clean on board Bill of Lading marked “Freight collect at destination” made out to order of HSBC Bank; - Signed Commercial Invoice in three (03) originals; - Packing list in three (03) copies; - Certificate of Origin issued by Vietnam Chamber of Commerce and Industry (VICC) in one (01) original and two (02) copies; - Insurance Certificate issued by PJCO Insurance Company in two (02) originals and two (02) copies; INSURANCE: Insurance for the contracted goods will be covered by the Seller with All Risk Policy INSPECTION: The Buyer will be entitled to have the goods inspected by Vinaconntrol before shipment If any quantity and quality problems arise, the Buyer will first send the Seller via cable, then within 90 days from the date of discharge will make a formal claim accompanied supporting documents The Seller is required to resolved and is responsible for replacing the shortage or damaged goods within 30 days after of receipt of the Buyer formal claim 10 FORCE MAJEURE Force majeure cases are confirmed by the Chamber of Commerce of the relevant country and certified in writing The party subject to the force majeure event must notify the other party of the force majeure events within (05) days from the date of occurrence and must have a written confirmation within 10 days Any cases reported after the above time will not be considered 11 ARBITRATION: Any dispute arising or breaching the contract without mutual agreement between the parties involved will be resolved by International Arbitration Center in Vietnam The decision by the arbitrator must be made by both parties In the event of a party opposing the decision made, that party will be responsible for all costs of both parties to the proceedings 12 GENERAL TERMS: If any of the provisions in this contract is violated in part or whole, the aggrieved party shall formally inform the other party in writing to seek resolution The terms and practices of ICC INCOTERMS 2010, in effect at the time of concluding this agreement, will govern and apply to this contract This contract will become effective starting from the date of signing This contract is created in two (04) English copies Each party will retain two (02) copies of the contract, which hold equal significance FOR THE SELLER FOR THE BUYER PART 2: THE EXPORT PROCEDURES (ABC Trading Co,Ltd) Question 2: As seller, discuss in detail the procedure of the sales contract in Question 01 Export License An export license is a government endorsement that allows the export of a specific good in the quantity requested by the buyer and requires transportation to a specific destination Name of commodity: Cashew nuts are goods of plant origin, exporters must mention the details of commodity and the following information such as: the commercial/ trade name and scientific name, origin of the goods, major specifications, brand name and trademark, major uses, and the Harmonized System (HS) The sellers want to export raw cashews, they must have A valid certificate of food safety eligibility or certification of product quality declaration or GMP or HACCP or ISO 22000 or IFS or BRC or FSSC 22000 or equivalent; and because cashews are goods of plant origin, before shipment, they must carry out a Phytosanitary Certificate These above certificates ensure that cashew quality will meet the standards set in Vietnam Besides, the required documents that need to be prepared include L/C (letter of credit) drawn up by the bank at the request of the importer, bill of lading, commercial invoice, packing list, certificate of origin, certificate of quality and quantity from Vinacontrol and Sale contract Payment terms: Offering attractive, extended terms can help exporter win export sales Getting paid in full and on time is important Exporters want to receive payment as soon as possible, preferably as soon as an order is placed or before the goods are sent to the importer The exporter should consult with the bank before the importer applies for the Letter of Credit The exporter’s bank reviews and approve the L/C and sends it to the exporter The exporter ships the goods and submits the required documents to their bank Payment by irrevocable L/C 60 days from B/L date for 100% of invoice value, in favor of the seller Parties to the L/C contract: Sales contract: Exporter(beneficiary) and importer (account party) Credit reimbursement contract: Importer and issuing bank (HSBC bank) L/C contract: Issuing/Opening bank and exporter Confirmation agreement: Confirming bank (Vietcombank) and exporter The following are the steps for using documentary credit to pay for an export contract: Seller: ABC Trading Co,Ltd Buyer: BT Co Seller’s bank (Notifying bank): Vietcombank Buyer’s bank (Issuing bank ) : HSBC bank, Japan The amount for which the L/C is 100% of invoice value: USD 510,000 (+/- 5%) The type of L/C: L/C 60 days from opening Prepare for the goods for export In the sale contract, the seller (ABC Trading Co, Ltd) is required to prepare 100 MT more or less 5% (at the seller option ) W320 Cashew Nut Vitenam White Whole Cashews Cashews are packed in 2x 25lbs (11.34 kgs) vacumn flexy pouches in cartons Besides, to preserve cashew nuts from insects and mold, the carton must be new, clean, dry, leak- free, and lead-free W320 Cashew Nut Vitenam White Whole Cashews Net weight: 11.34 kgs The seller must ensure that quality of the cashews meets the required standards Grade WS meets AFI standard, a maximum of moisture is 3%, a maximum of 10% broken nuts, and maximum of 8% total defects Inspect goods: To ensure that cashews are not damaged or have shortages, before shipping, it is necessary to check the quality and quantity ABC Trading Co, Ltd will coordinate with the evaluation organization Vinacontrol to implement, after the inspection, if ABC Trading Co’ cashews ensure food safety and hygiene criteria , the delivery quantity is suffiecnt according to the buyer’s request, ABC Trading Co will be issued a certificate of quantity and quality including original and copies This is an important step when preparing for shipping, because if the goods not reach the buyer's hand, then ABC Trading is required to replace the damaged goods or replenish the shortage goods, this easily causes the seller to lose credibility and suffer significant losses Transportation contract The contract applies CIF Incoterm, CIF stipulates that the seller will fulfill his responsibility when the goods have been loaded on deck at the port of loading, but must pay for the loading and unloading cost of goods in/from the port, it means all transportation costs during the carriage of the goods to the port of destination It is the seller's obligation to be responsible for contacting and hiring a carrier to deliver the goods to the destination agreed upon between the seller and the buyer Not only is the seller fully responsible for transportation costs, but also the seller must process and complete export license, quotas and all documents related to the goods In this sale contract, crucial transportation information includes: Loading port: Saigon Port, Vietnam Unloading port: Yokohama port, Japan Time of delivery: within 20 days after opening L/C The seller is allowed to make partial deliveries when arranging transpotation However, transshipment is strictly prohibited Insurance: Not only is the seller responsible for all shipping costs, but the seller is also responsible for buying sea insurance on behalf of the buyer, after completion will proceed to send the buyer with relevant documents Thus, the insured party is the buyer When there is an unexpected loss on the way of shipment, the buyer will be the party to claim compensation However, risk transfer from the seller to the buyer when the goods placed on board the vessel Under the CIF term, ABC Trading Co, Ltd will enter into an insuarnce with PJICO Because insurance for the contracted goods will be covered by ABC Trading Co, Ltd with All Risk Policy so they should choose Institue Cargo Clause A (ICC(A)) The seller is expected to ensure that the insurance cover is equal to the commercial value of the product + 10% Customs procedures: To declare customs, ABC Trading Co, Ltd will access the electronic customs declaration software to make customs declarations, customs declaration requires a set of documents: Sale contract, Commercial invoice, Bill of Lading, Certificate of origin, certificate of quantity and quality, packing list According to the current regulations on export, items have a VAT of 0% According to the regulations listed by the Plant Protection Department, cashew nuts are not belong to the list of items not subject to export tax, so ABC Trading Co, Ltd does not need to pay any export fees The customs authority will return the official declaration number and the declaration result are divided into streams (gree, yellow, red) If the shipment is legal, it will be cleared and allowed to enter the green channel On the contrary, if the shipment has a problem, a second inspection must be carried out (yellow thread or red thread) ABC Trading Co, Ltd will submit the documents declared on the declaration to carry out export customs procedures at the Customs Sub-Department After the customs have approvaled the declaration, the supervision declaration will be returned to shipping lines and export cashew nuts To ensure clear processes, ABC Trading Co, Ltd should cooperate with import and export service providers to facilitate the export clearance process Actual export customs declaration: When the order has been officially delivered and accepted, the forwarder must carry out procedures for shipment with documents such as commercial invoice (1 original), customs declaration (1 copy, original), marine bill of lading After customs clearance: - ABC Trading Co, Ltd will make a document to send to the ship: SI (Shipping instruction); VGM (Verifird Gross Mass of Container on International Transport) - Receive Bill of Lading from shipping lines and contact ECOSYS (electronic certification of origin and management system) to process C/O Complete documents such as contract to make a set of payment documents to send to the Bank Keep records and settle expenses: Cost of goods; Inland transportation costs; Port surcharge; Customs Fees; International freight charges; Cost of making documents; Other costs,… Deliver the goods: After providing details to the shipping company on the bill of lading code Shipment to the vessel will end when the seller receives the bill of lading code ABC Trading Co, Ltd must abide by the time of delivery required in the sale contract Present shipping document for L/C payment: The following documents are presented within 15 days after the date of shipment: - Full set clean on board Bill of Lading marked “Freight collect at destination” made out to order of HSBC Bank; - Signed Commercial Invoice in three (03) originals; - Packing list in three (03) copies; - Certificate of Origin issued by Vietnam Chamber of Commerce and Industry (VICC) in one (01) original and two (02) copies; - Insurance Certificate issued by Insurance Company in two (02) originals and two (02) copies; 10 Claim and solving problem: Cashew nuts are easily damaged products due to mold, external temperature influence if not carefully preserved Although before exporting, the product has been inspected and certified by Vinacontrol in terms of quality and quantity However, it is very likely that during the shipping process, there will be some random factors that occur Therefore, it is very easy for buyers to complain about the quality of the product If an agreement can be reached, the seller may accept to replenish missing goods or replace damaged goods to build a long-term business relationship Similarly, if the BT Co is late in making payment after receiving the goods,the seller has the right to complain and claim compensation for the delay If the disputes cannot be reconciled, the intervention of an arbitration center in Vietnam is required After the arbitrator's decision has been made, the parties must comply, otherwise the opposing party will have to bear all the costs of the arbitration Cashew nuts are products of plant origin, so it is necessary to carry out a phytosanitary certificate (Phytosanitary Certificate) for each export shipment PART 3: THE IMPORT PROCEDURES IN VIETNAM ( IMPORT KOREA KING RICE COOKER) Question 3: Question 03 Give an example of an imported goods and discuss in detail the procedure of importing the item - Commodity name: Korea King Rice Cooker KRC-1200P - Specification: SKU: KO634HAAA1NY8CVNAMZ-2755511 Color: White, Red Wattage: 500W Capacity: 1.2 L Weight: 2.5 kg Power cord: 1.2m Product size: (DxRxC cm): 32x32x25 - Warranty: 12 months - Made in China Import license: 1.1 Preparation of procedures for importing rice cooker in Vietnam: Rice cookers are classified in the group of household electrical goods Procedures for importing rice cookers are specified in the following legal documents: - VAT Law 13/2008/QH12 dated June 3, 2008; - Official Dispatch No 1488/TC-ĐGPH dated October 21, 2009; - Decision 04/2017/QD-TTg dated 09/03/2017; - Circular 38/2015/TT-BTC dated 25/3/2015 amending and supplementing 39/2018/TT-BTC dated 20/04/2018; - Decision No 3810/QD-BKHCN dated December 18, 2019; Decree 69/2018/ND-CP dated May 15, 2018; Circular No 09/2019/TT-BKHCN dated September 30, 2019 1.2 Preparing import documents for rice cooker for customs: To be granted an import license, a set of documents for carrying out import procedures for rice cookers is specified in Circular 38/2015/TT-BTC dated March 25, 2015; amendment and supplement 39/2018/TT-BTC dated 20/04/2018 The application for the Import License should be submitted to the department along with required documents: - Customs declaration Commercial invoice, - Bill of lading, - Packing list, - Sales contract, - Registration for quality inspection, - Energy labeling, - Certificate receipt of origin (C/O) form E - Catalog (if any) For quality inspection records, registration will be carried out on the national singlewindow site The registration dossier must prepare the necessary documents in advance Quality inspection results are also uploaded on the national one-stop system Payment terms The buyer will ask Issuing bank (HSBC) to issue a letter of credit, the buyer's bank will issue the L/C to the seller's bank for review and approval, then the L/C will be sent to the buyer sell; The person is required to deliver according to the regulations, time and submit the necessary documents to their bank After the documents are sent to the buyer's bank for review and amendment (if any) The buyer's bank will issue payment to the seller's bank, which commits to the seller to pay 100% of the order value within 60 days from the date of opening the L/C Documents the buyer needs to ask the seller to provide in the L/C: - Commercial Invoice - Bill of Lading - Packing list - Certificate of Origin form E - Inspection Certificate - Insurance Certificate To guarantee, the buyer must request all necessary documents And the buyer is required to make the payment in full and on time, if the buyer does not make the payment, the buyer's bank is required to pay the buyer 3 Transportation contract: When importing and exporting goods from China to Vietnam, all parties will negotiate on the hire of transport, determine the delivery date and put it in the sale contract To make a contract of carriage, the parties need to have sufficient contact information for both parties such as: Names of parties, phone numbers, representatives, tax codes, and addresses The shipping information must also contain complete details including the commodity's name, quality (gross weight, net weight, specifications), order quantity, packing, etc Which Incoterm delivery conditions and payment methods apply to delivery orders In particular, information about loading port and unloading port; Modes of shipping are allowed partial transhipmet or transhipmet; time to receive relevant documents 3.1 Proceed to book a shipping vessel The conduct of chartering will be chosen by the seller but must be reviewed and agreed by the buyer; the buyer needs to know which unit will carry out the shipping, the estimated delivery time, the list of carriers from China to Vietnam; stipulates claims and compensation, the liability of the parties for damaged and missing goods during transportation For the contract sale of goods "Korea King rice cooker", the required information includes - Loading of port: Guangdong, China - Unloading of port: Cat Lai port, HCM city, Vietnam - Commodity name, weight: based on the information on the documents to provide Korea King rice cooker KRC-1200P (Weight: 2.5 kg) - Train departure time (ETD): the estimated departure date of the train - Packing time: according to the agreed plan between the two parties Other requirements: container type (20ft - 40ft - 45ft), storage conditions (such as temperature, humidity, ventilation, ), explosion-proof, transport safety 3.2 Follow up the packing process and update information Applying CIF Incorterm terms, the seller will be the one to bear all the costs of transporting the goods from the port and all risks incurred during transportation from loading of port to the port of destination; The risk passes to the buyer when the goods arrive at the port of destination and are unloaded To ensure benefits for both parties, the buyer must request the seller to update information including the image of the empty container as evidence of its undamaged condition, as well as photographs of the goods being packed into the container 3.3 Process of receiving goods: At least day before the ship arrives, you will receive a notice of arrival from the shipping company or agent Arrival notice is a detailed notice of the shipping line / forwarding agent To inform the estimated time of arrival of the shipment The information on the arrival notice will be similar to that on the bill, including: name of exporter, importer, container number, seal, ship name, trip number, description of goods, ) In addition, there will be additional local charges Then, proceed to get a delivery order (D/O) including the following documents: Referral letter Original Bill Power of attorney (if required) After receiving the goods, the buyer will make payment to the shipping unit to declare the goods to the customs, complete the declaration procedures and arrange the means of transportation of the goods to the warehouse The importer also ensures the proper maintenance of records and documentation of the import orde Insurance: The Ministry of Finance in Vietnam has established regulations for insurance coverage of imported and exported goods, specifically focusing on goods transported by sea These regulations, known as the "General rules on insurance of sea transported import and export goods of 1990" (ACC Co., 2022), (According to QTC Rules 2004 of Bao Viet Insurance and ICC "A", "B", "C" 1.1.1982 of the Association of London Insurers) Institude cardo clauses A: all risks included Institude cardo clauses B: Institude caeedo clauses C: Under CIF terms, the seller will be obligated to purchase insurance for the buyer's benefit However, the amount to buy insurance is paid by the buyer himself, the seller is only responsible for buying the insurance If in some cases some risk of loss is excluded in the Policy and the insurance company refuses to pay Therefore, to avoid this, the buyer should ask the seller for a copy of the contract to find out if there is an exclusion of additional insurance If the policy has additional exclusion conditions that it considers to affect your insurance benefits The buyer may therefore require the seller to purchase additionally to those excluded risks Or designate an insurance company other than the coverage company Provided that there are no excluded risks (except for substantially eliminated risks) ICC(C) is considered the minimum and ICC(A) is considered the maximum because it covers all risks If the CIF is keein, but there is no other agreement in the contract, then just buy class C insurance But ICC(A) is still considered the best coverage for the buyer Get insurance up to 110% of the CIF value of the shipment Customs procedures: The next step in the process of importing goods by sea is to open and clear the declaration 5.1 Preparation of goods documents Depending on the type of import and export, the customs declarant must prepare different sets of customs documents according to regulations Customs dossiers are specified in Clause 5, Article of Circular 39/2018/TT-BTC amending and supplementing a number of articles of Circular No 38/2015/TT-BTC + Customs declaration + Commercial invoice + Commercial contract + Goods packing slip + Bill of lading + Certificate of origin of goods + Certificate of conformity + Dossier of registration for quality inspection 5.2 Customs declaration: - The importer shall declare information on the import declaration and submit the customs declaration Currently, importers can declare customs information on the VNACC/VCIS customs declaration software The system will give feedback on the result of threading + Green channel declaration: pay tax, tax money can be printed, then proceed to liquidate and receive goods + Golden stream declaration: pay tax before or after carrying out the procedures for opening declarations, opening declarations, liquidating and receiving goods + Red channel declaration: similar to the yellow channel, but in the step of opening the actual declaration, there is an additional step of carrying out procedures for physical inspection of goods - Pay taxes: Commodity name: Korea King Rice Cooker KRC-1200P HS code: 85166010 has the usual preferential import tax of 20% Imported from China with FORM E: import tax is 0% (Special preferential import tax Asean - China (ACFTA)) In order to get customs clearance of goods (freeing goods, bringing goods to the warehouse for storage), the importer shall provide a list of containers and a list of goods to the Customs Sub-Department that manages the port area, warehouse, yard, and location After completing the tax payment and the declaration is cleared, importer can proceed to print the barcode Importer submits the barcode and customs clearance declaration to the supervising customs at least sets Customs will stamp on the barcode and return set to the enterprise, and set of customs will keep Delivery: 6.1 Arrival Notice(A/N) and Delivery Order (D/O) Arrival Notice The arrival notice will be notified by the shipping company, the transport company to the buyer, including: - Vessel/ voyage – Name of shipping line or number of ships - MBL/ HBL • Quantity – Quantity of imported goods - Cont/ Seal no – Number of containers containing goods or number of lead, - Port of loading – Name of actual port currently loading - Port of discharge – Name of the port to discharge the goods - ETD – Intended time of vessel departure - ETA – Intended time of vessel arrival - Port/ warehouse – Name of port or warehouse where the goods are to be delivered - Local charge – Charges are paid at the port of loading and unloading - Pick up D/O At – Where to take delivery orders - Remark – Additional notes of shipping lines Delivery Order When the goods arrive at the port of destination, the shipping line or transport unit will notify the goods of arrival and issue a delivery order, the importer will take the