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INTRODUCTION Background In the XXI century, the international economic integration trend has been taking place at a rapid rate in the ASEAN region as well as worldwide Countries all over the world have a strong connection with each other in various aspects, especially in economics and trade After than more 30 years of international economic integration, Viet Nam recognized the importance of the import-export industry and the mechanical industry for the country’s development On the path of industrialization and modernization of the country, the Government identified the mechanical industry as the backbone for Vietnam’s economic development Therefore, the Government has supported and created favorable conditions for domestic mechanical enterprises to concentrate on producing mechanical products that serve the processing industry; agriculture, forestry and fishery Although steel is one of the main raw materials for the mechanical industry’s production, domestic steel produced, cannot meet the demand of Vietnamese mechanical enterprises Besides, the domestic steel industry has not been able to produce specific types of steel for the mechanical industry with reasonable prices and good quality such as alloy steel, hot rolled steel plates, cold-rolled steel plates, … that are important materials used for mechanical manufacturing Therefore, steel imports play an important role in the development of the domestic mechanical industry The Chinese steel market is one of best choices for Vietnamese mechanical enterprises because of abundant steel supply, diverse types of steel as well as reasonable prices However, there are a lots of steel markets such as Taiwan, Russia, Singapore, … that also provide the types of steel with high quality and good prices Therefore, Vietnamese mechanical companies have to research carefully to find out the suitable market for their company, which helps the Luan van companies cut down raw material costs and also focus investment on the high technology machineries to produce high-quality mechanical products In the context of Vietnam’s global integration, Hong Nam Mechanical Joint Stock Company recognized both opportunities and challenges of importing steel from different markets Hong Nam Mechanical Joint Stock Company is known as the first company capable of designing and manufacturing mechanical products for different types of industries across the country Therefore, the company always need to import large quantities of steel for production After an internship in General Sales Department, Hong Nam Mechanical Joint Stock Company, along with the school’s knowledge to learn more about the company’s steel import situation, I chose the topic: “The current situation of steel import activities of Hong Nam Mechanical Join Stock Company.” for internship report The purpose of the internship report is to analyze the company’s steel imports activities to find out achieved aspects and also limited problems in the company’s imports Thereby, there are some proposed solutions to enhance the efficiency of the company’s steel imports activities Research objectives - Research question: How is the current situation of steel import activities of Hong Nam Mechanical Join Stock Company? - General objective: Analyzing the current situation to find solutions - Specific objectives: · Analyzing key information of the company · Researching the steel import activities from different markets of the company in order to find out limited problems Luan van · From results, propose suitable solutions to enhance the steel import activities of the company Research object The object of research is the steel import activities of Hong Nam Joint Stock Company Research Scope - Time limited: 2017 – 2019 - Venue limited: Vietnam Research method - Data collection: the data gathered by discussing informally with Hong Nam Mechanical Joint Stock Company personnel (Primary data) and the data collected from internal documents of the company (Secondary data) - Data Analysis: Base on two data sources (Primary data and Secondary data) to research and find out problems Research Structure The internship report structure except for introduction, conclusion, contents and references, has been divided to chapters: CHAPTER INTRODUCTION TO HONG NAM MECHANICAL JOINT STOCK COMPANY CHAPTER THE CURRENT SITUATION OF THE STEEL IMPORT ACTIVITIES OF THE COMPANY CHAPTER RECOMMENDATIONS AND SOLUTIONS Luan van (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company CHAPTER INTRODUCTION TO HONG NAM MECHANICAL JOINT STOCK COMPANY 1.1 Establishment and development process Hong Nam Mechanical Joint Stock Company is a state-owned enterprise established on November 4, 1971 under the Decision No 2445/ CLCV of the Ministry of Mechanics and Metallurgy (now the Ministry of Industry) In December 2003, the company was equitized according to Decision No 238/ 2003/ QD-BCN of the Ministry of Industry Figure 1.1 Logo of Hong Nam Mechanical Joint Stock Company · Company’s name: HONGNAM MECHANICAL JOINT STOCK COMPANY · Abbreviated company’s name: HOMECO · Tax ID: 0101495214 · Address: No.45, Lane 294 Linh Lam St., Hoang Mai Dis., Ha Noi, Viet Nam · Telephone: (+84) 243 644 6606 · Fax: (+84) 243 644 6605 · Email: homecocrane@gmail.com · Website: www.cokhihongnam.com.vn Luan van (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company Hong Nam Mechanical Joint Stock Company (HOMECO) is known as one of the first Vietnam enterprises that can design, manufacture and supply transport lifting equipment such as crane, gate crane, conveyor belt, screw, elevators, hoists, … At the same time, the company also manufacture unique mechanical products for different types of industries in Vietnam like installing steel structures for warehouse frame, scaffolding, and other mechanical products The company has the infrastructure including factories, auxiliary areas with high standards to manufacture lifting equipment, mechanical process and steel structure Besides, the company is equipped with state of the art equipment such as lathes, horizontal boring machines, internal – external high precision circular grinding machines, planers of all kinds, high frequency furnaces, automatic steel plates cutting, US automatic welding machine, DC welding machine, mechanical testing machine for fabrication materials, steel structure oscilloscope, detector check the quality of welds, pneumatic sandblasting machine, modern paint praying system, theodolite, … with Vietnamese standards TCVN4244-2005 After equitization, the company has brought the ISO 9001-2008 quality management system into the manufacturing process, which helps the company improve management ability Also, the company has a team of specialized technical staffs with high qualifications Over the past 40 years, the company has been constantly growing, always successfully fulfilling its assigned tasks and also have been awarded many Labor Medals, the certificates of merit from Ministry of Industry 1.2 Branch Offices of Hong Nam Mechanical Joint Stock Company HOMECO currently has branches nationwide · HOMECO Ho Chi Minh Branch (Tax ID: 0101495214-005) Luan van (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company · HOMECO Bac Ninh (Tax ID: 0101495214-001) · General Service Center – HOMECO Branch (Tax ID: 0101495214-004) · Ha Noi Crane Mechanical Factory – HOMECO Branch (Tax ID: 0101495214-003) · Lifting Equipment Factory – HOMECO Branch (Tax ID: 0101494214002) 1.3 Business activities of HOMECO 1.3.1 Business activities - Manufacture of lifting and handling equipment - Installation of industrial equipment systems in the construction industry and civil construction - Design, manufacture, repair and installation of lifting equipment, nonstandard equipment and equipment for construction industry and civil construction 1.3.2 Products and Services - Lifting equipment: suspension bridge crane, single girder bridge crane, double girder bridge crane, container gantry crane, car winch, grabbing crane - Conveyor - Hydro-mechanical equipment: valve gate of hydraulic engineering constructions - Smart parking: smart car garage, smart multi-story garage - Solar power panels - Mechanical process service: burning tower crane - Repair and maintenance services Luan van (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company 1.4 Management organization of HOMECO Director Deputy Business Development Director Sales & Marketing Department Deputy Technical Director Branch Offices Production & Purchasing & Technical Import-Export Department Department HOMECO Ho Chi Minh Branch Accounting Department Ha Noi Factory Administration Department Bac Ninh Factory General Service Center Figure 1.2 The scheme of HOMECO's management organization (Source: HOMECO’s Internal Documents) Luan van (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company 1.4.1 Board of Directors Board of Directors include three members: General Director, Deputy Business Development Director and Deputy Technical Director a, General Director Mr Le Van Quynh Main responsibilities - Making policies and strategic objectives of the company - Be responsible for the foreign affairs of the company - Signing directly economic contracts - Deciding financial indicators, signing payment orders, issuing payment orders and checks - Deciding on salaries and allowances (if any) for employees in the company - Appointing, dismissing and removing manager positions in the company - Monitoring all activities of company’s departments b, Deputy Business Development Director Mrs Phan Thi Tuoi Main responsibilities - Monitoring all activities of departments (Sales & Marketing Department, Accounting Department, Administration Department and Purchasing & Import-Export Department) - Planning, budgeting for marketing activities for each quarter of each year to advise General Director - Advising for General Director on the management of capital in the company Luan van (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company - Checking the financial statement made by the Accounting Department - Signing economic contracts as authorized by General Director and approving a number of documents related to production activities in the company as authorized by Director - Developing policies such as wages, social policies and other policies for employees c, Deputy Technical Director Mr Nguyen Dinh Quang Main responsibilities - Monitoring all activities of departments (Production & Technical Department, Purchasing & Import-Export Department) - Be responsibilities for manufacturing activities - Annually, building recruitment plans, training and managing human resources to meet requirements of production - Managing the quality of mechanical products - Supervising and approving the purchase materials for production activities 1.4.2 Sales & Marketing Department Manager: Mrs Nguyen Thi Lien Numbers of employees: 10 Main responsibilities - Researching and developing the domestic and foreign markets to expand the manufacture and business of the company - Doing marketing activities and also making marketing campaign for company Luan van (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company - Cooperating with Production & Technical Department to providing the specific information of company’s mechanical products - Taking care of customers and solving customers’ requirements (if any) - Researching the company’s products and comparing with other companies 1.4.3 Accounting Department Manager: Mrs Nguyen Thi Lan Phuong Numbers of employees: Main responsibilities - Taking responsibility for important tasks: management of company’s cash flow, budgets and forecasting, management of taxes, management of company investment, financial reporting and analysis - Supporting Purchasing & Import-Export Department to pay sales contracts using L/C or T/T 1.4.4 Administration Department Manager: Mrs Nguyen Thi Thuy Number of employees: Main responsibilities - Arranging appointments and scheduling important events of company - Storing and maintaining employees’ personal records - Making monthly expenses reports submit to financial – accounting department - Storing and printing documents of company when there are important events or meetings 10 Luan van (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company Using electronic customs declaration software (ECUS5 – VNACCS) to make customs declaration Figure 2.4 ECUS5 – VNACCS software (Source: Synthesis of the author) The opening electronic customs declaration process includes the following steps: · Declaration of import information (IDA): When fully filling the indicators on IDA screen (133 indicators), the customs declaration staff sends to VNACCS system which will automatically issue the number, export the criteria related to tax rates, names and also automatically calculating the criteria related to value and tax After that, VNACCS system responds to the customs declaration staff at the declaration registration screen (IDC) · Registration of import declaration (IDC) After receiving the declaration registration screen (IDC), the customs declaration staff checks declared 23 Luan van (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company information and the information automatically is exported and calculated by system If the information is confirmed correctly, it sends to the system to register the declaration · Checking conditions for declaration registration: Before allowing the registration declaration, the system will automatically check enterprise listings which enterprise are not eligible for registration If the set of documents is valid, enterprise will register a customs declaration · Checking through channels: When customs declaration has been registered, the system automatically checks cargoes through channels: green channel, yellow channel and red channel - Green channel (level 1): Exempt from checking detailed documents and actual cargoes - Yellow channel (level 2): Checking detailed documents and exempt from checking actual cargoes - Red channel (level 3): Checking detailed documents and actual cargoes Tax Procedures After the declaration is divided, the tax amount will be displayed on the declaration whether it is green, red, or yellow This tax amount is displayed on the first page of the declaration and is broken down into specific sections: - Import Tax - VAT - Total tax payable This is the basis for paying the exact amount of tax v Receiving goods at the port - Having receipt of goods, documents of receipt and original bill of lading D/O 24 Luan van (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company - Paying warehouse rental, handling fees and get a receipt - Sending delivery orders to the ship management office at the port to sign for confirmation and locate the goods at the port - Sending a delivery order to the logistics department for delivery 2.2.1.4 Liquidation Implementation department: Deputy Technical Director or Manager of Purchasing & Import-Export Department - Liquidate contracts on time: After receiving the goods, if the shipment status is completely normal, the contract will end when full payment for the shipment - Liquidate contracts ahead of time: Case 1: Both parties fulfill their obligations ahead of the time limit specified in the contract Case 2: Due to one of two parties cancel the contract In some other cases: lack of goods, unqualified goods, after the two parties agree and complete the compensation procedure, the contract ends 2.1.3 Market structure Import markets play an important and decisive role to import efficiency of enterprises Thus, the choice of import market has always been put on top The partners of the company from: Russia, China, Taiwan 25 Luan van (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company 20% 40% China Taiwan Russia 40% Figure 2.5 The import market structure of the company (Source: Purchasing & Import-Export Department) As can see from the pie chart, the company focusing on importing steel in three main markets: China (40%), Taiwan (40%) and Russia (20%) The reason why China and Taiwan are the best choices of the company is that steel industry in these two countries is very developed, good steel quality and reasonable price Table 2.1 The steel import partners of HOMECO Partners Market Fosun International China Baoshan Iron & Steel Co., Ltd China Beijing Shougang Co., Ltd China China Steel Taiwan Chun Yuan Steel Taiwan 26 Luan van (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company Magnitogorsk Iron &Steel Russia (Source: Purchasing & Import-Export Department) It is clearly seen from the table, almost partners of the company are from China and Taiwan 2.1.4 The result of steel import activities 2.1.4.1 The steel import turnover and import market of the company Table 2.2 The steel import turnover of HOMECO from 2017-2019 (Unit: billion VND) Year 2017 Indicators Value 2018 Percentage Value Percentage (%) 2019 Value (%) Percentage (%) China 15,6 39.4 14,4 28.6 19,2 30.8 Taiwan 14,4 36.4 19,2 38.1 24 38.5 Russia 9,6 24.2 16,8 33.3 19,2 30.7 Total 39,6 100 50,4 100 62,4 100 value (Source: Purchasing & Import-Export Department) As can be seen from the table, HOMECO witnessed an increase in the steel import turnover over the periods of years In 2017, the import turnover was 39,6 billion VND and still increased to 50,4 billion VND in 2018 Until 2019, this trend also remained and the import turnover stood 62,4 billion VND Most of the company’s import markets were volatile because in the steel import process, the company has to select the supply sources that meet the requirements of the company The company’s partners are mainly from China, Taiwan and Russia From 2017 and earlier, China was the company’s main partner with 15,6 billion VND (accounted for above 39% of the company’s 27 Luan van (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company total steel import turnover) However, Taiwan exceeded any other kinds in importing steel with 19,2 billion VND in 2018 and 24 billion VND in 2019 China market: This is the steel import market of the company accounting for a high proportion In 2017, the steel import turnover accounted 39.4% and tended to decrease in 2018 (with 14.4%), then slightly increased to 30.8% in 2019 Although the percentage of the steel import turnover from China was not stable, Chinese market is still preferred choice of the company with high quality and reasonable prices Taiwan market: This is the steel import market having dramatic growth In 2017, the percentage of import turnover was 36.4% and increased until 2019 with 38.5% which was the highest ranking in importing steel Taiwan market is a potential steel import market of company because the quality of steel is always stable and transportation costs are lower than other markets Russia market: There was an increase in the steel import turnover over the period of years In 2017, the figure for the steel import turnover was 24.2% and had tendency to increase until 2019 (with 30.7%) Although this market increased gradually over the years, transportation costs were higher than others market 2.1.4.2 The types of imported steel HOMECO imports the main types of imported steel that used for manufacturing specific mechanical products of the company including: hot rolled steel, cold rolled steel, alloy steel, plate steel Table 2.3 The types of HOMECO's imported steel from 2017 – 2019 (Unit: billion VND) Year Indicators 2017 2018 2019 Value Percentage Value Percentage Value Percentage 28 Luan van (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company (%) (%) (%) Total value 39,6 100 50,4 100 62,4 100 Cold rolled 3,96 10 8,064 16 6,24 10 11,88 30 10,08 20 12,48 20 Alloy steel 9,9 25 14,112 28 18,72 30 Plate steel 13,36 35 18,144 36 24,96 40 steel Hot rolled steel (Source: Purchasing & Import-Export Department) This table demonstrates the value and the percentage of the kinds of imported steel in the periods of years It is clearly seen from the table that there was a rise in the steel import turnover of types of imported steel because the company has expended its manufacturing scale In almost types of imported steel, the value of plate steel import turnover took the highest position and the percentage of plate steel import also was the leading ranking Specifically, in 2017, the value of plate import turnover stood at 13,36 billion VND (accounted for 35% of total import turnover percentage) The value of plate steel import turnover in 2018 and 2019 were 18,144 billion VND and 24,96 billion VND respectively The second ranking belongs to alloy steel In 2017, company imported alloy steel with the value of import turnover was 9,9 billion VND (accounted for 25% of total steel import turnover percentage) After that, there was an dramatic increase in the value of alloy steel import turnover in 2018 (with 14,112 billion VND) and in 2019 (with 18,72 billion VND) The reason is that the company changed products strategies and concentrated on mechanical products which used more alloy steel such as: solar power panels, conveyors Hot rolled steel was not changes over the years In 2017, the value of hot rolled steel import turnover was 11,88 billion VND (accounted for 30% total steel import turnover) However, from 29 Luan van (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company 2018 to 2019, the percentage of hot rolled steel import turnover remained at 20% that means the value of hot rolled steel import turnover was 10,08 billion VND in 2018 and 12,42 billion VND in 2019 Finally, cold rolled steel has the lowest value and percentage of steel import turnover over the years 2.2 Assessing the steel import activities of the company 2.2.1 The achievements of steel import activities In recent years, steel import activities of the company have provided a large source of materials for the mechanical production of the company Although the world steel market is always volatile and steel prices fluctuate erratically, the company always imports good quality steel at reasonable prices Therefore, the company's steel import activities in recent years have achieved the following expected results Firstly, the steel import process is handled quickly One of the most outstanding reason is that departments of the company have close links with each other to handle the contents of the contract In addition, staffs of the company have solid professional qualifications to handle any unexpected situations Secondly, direct import helps the company take the initiative in steel import activities and supply raw materials for the company's production Thirdly, diversifying payment method of the company Thanks to the flexible use of different payment methods such as L/C, T/T in different cases, the company has reduced the risk of international payments Last but not least, using electronic customs declaration software instead of traditional customs declaration Therefore, the company has saved time to complete import procedures and also reduced the staff travel costs 30 Luan van (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company 2.2.2 The limitations of steel import activities Firstly, in recent years, the company has focused on traditional markets such as China, Taiwan, Russia that have long been associated with the company The main reason is that the Purchasing & Import-Export Department has not invested much in researching other potential markets, which leads to the omission of many potential partners Secondly, in contract negotiation, the company always chooses CIF price as import price, which makes the company sometimes have to import steel at high price Thirdly, almost contracts are signed by mail and fax, so in case of delay in delivery is the partner's fault, the company often negotiates to lower the cost of goods due to ineffective compensation negotiations 31 Luan van (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company CHAPTER RECOMMENDATIONS AND SOLUTIONS 3.1 The development orientation of steel import activities for HOMECO's manufacture in the next years The company realized that importing equipment for manufacture, in general, and steel materials in particular plays an important role in expanding production scale and developing the company's competitiveness Therefore, the company bases on its business development goals and the fluctuations of the domestic and world steel market to make specific steel import plans In the next years, besides maintaining the products that have been the company's strengths such as lifting equipment, the company will expand the scale of production of potential and high-demand products of the company like solar panels, smart car parks, In addition, the company will develop a new line of mechanical products for agricultural production and food processing such as agricultural drying equipment, crushing and mixing equipment, harvesting equipment, etc Therefore, the demand for steel imports in the next years will increase and the demand for importing some new types of steel such as steel sheets, box steel for new product lines also increases In the next years, the company will actively invest in researching steel import markets In addition, to maintaining traditional partners from China, Taiwan and Russia, the company will seek new partners in other potential markets to diversify its import channels The import turnover of steel and some new steel will increase in the near future The company's expected steel import turnover in 2021 is 100 billion VND 3.2 The solutions to improve the company's steel import activities 3.2.1 Focusing on market research - The department of company implements this solution: Purchasing & ImportExport Department 32 Luan van (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company - The essential tasks: Establishing a wide range of supplier relationships is very important to create a stable and quality source of goods of the company Therefore, Purchasing & Import-Export Department concentrates on research markets of different aspects such as carefully researching information on the economic political - legal environment of the countries in order to create a basis for the contract negotiations, to predict the fluctuations of the steel supply market; establishing extensive relationships with suppliers in each country of their customers, regularly updating information on the production capacity, scale and supply capacity of each supplier Besides, this department make plans to promote exploration of a number of markets with good quality steel, stable and less volatile prices such as Japan and Korea Finding partners in the ASEAN region is also a good option to take advantage of transportation costs 3.2.2 Import steel at FOB price instead of CIF price - The department of the company implements this solution: Purchasing & Import-Export Department and Deputy Technical Director Importing steel at FOB price brings a lot of benefits for the company The first benefit is that if the company use L/C payment method to pay the cargoes, enterprises pay less to open L/C instead of having to deposit 100% of the value of the imported consignment when the company purchases goods at CIF price Another benefit is that importing steel at FOB price, when the goods arrive at the import port, enterprise must pay the freight so the enterprise will not have to accumulate capital, or pay the bank interest for the freight, which helps the company reduce the cost of imported goods - The essential tasks: 33 Luan van (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company Purchasing & Import-Export Department needs to study carefully the price of steel from the markets when importing to Vietnam with the FOB price Then, calculate the price of the goods after adding the import fees to consider comparing imports with CIF or FOB in the case that it is beneficial for the company 3.3.3 Check the content of the contract and negotiate additional terms if necessary - The department of company implements this solution: Purchasing & ImportExport Department and Deputy Technical Director - The essential tasks: As mentioned in the restrictions on the company's steel imports, to ensure the interests of the company when the goods are delayed is due to the partner's fault, it is necessary to add a provision on fines The penalty term can be: “The Seller must pay the penalty of 2% of the contract value for each delay week but not over 5% of the contract value.” 3.3 The recommendations for the steel import activities of the company 3.3.1 Human Resources recommendation Training and enhancing human resources Human resources are the most important factor in the formation and development of the company because if the human resources develop well, the company will create skilled staff To train the professional staff, responsible in the work requires the management board must the following: - From the beginning of the selection of employees to the company, the employees to be recruited must have a certain level depending on the hob position requires employees to have sense of responsibility, the ability to communicate 34 Luan van (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company - In the process of working the company must always create conditions for employees to work the most comfortable environment, giving a creative environment - The management of the company must be aware of the employees, provide opportunities for improvement as well as reasonable incentives to encourage motivated employees to work Staffing needs to pay attention to the factors that shape the quality and professionalism of the staff because the right person is the right job to create a love of work and passion in the workplace, resulting in high productivity Focus on the development of young human resources by they have the advantage of access to new knowledge, capable of sensitivity… 3.3.2 Legal recommendation Updating the steel import policy, import tariff of Vietnam's steel products and the various trade agreements that Vietnam has participated in Import policies and import-export tariff of Vietnam change from time to time so iron importing enterprises need a clear understanding, to avoid unnecessary risks occurring in the process of steel imports Since integration, Vietnam has joined many trade agreements to facilitate import and export activities Trade agreements are gradually helping Vietnamese businesses liberalize trade globally Therefore, a deep understanding of the content of trade agreements gives the company an overview of the policies and preferences of the countries for Vietnam Since then, it is one of the important bases for choosing steel supply partners for the company 3.3.3 Strategy recommendation Researching business strategies and developing products clearly in stages 35 Luan van (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company Business strategy plays a very important role in the existence and development of every business The right business strategy will create a good direction for businesses, the business strategy can be considered as a guide to guide businesses in the right direction The production strategy creates the basis for businesses to proactively develop production directions suitable to the economic context on the basis of taking advantage of opportunities, avoiding risks and promoting enterprises' advantages in business In the coming years, the mechanical engineering industry in Vietnam will focus on developing product groups for agriculture such as agricultural drying equipment, food blending equipment, tractor engines, etc Therefore, the company needs to change its production and business strategy focusing on manufacturing agricultural mechanical products to serve a large amount of demand in the future This strategy leads to a large demand for steel materials in the company, so the company needs to have a plan to import specific steel for production Thanks to a clear production and business strategy in the ongoing context, businesses can go in the right direction and thrive in the future 36 Luan van (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company (Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company(Luan.van.tot.nghiep).the.current.situation.of.steel.import.activities.of.hong.nam.mechanical.join.stock.company
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