Preliminary information about CBU cars of all kinds registered with the Customs in June 2021 With a preferential import tax of 0% under the ASEAN Trade in Goods Agreement ATIGA, cars fro
Sales contract of importing cars
Between Northern Car Import Export And Trading Joint Stock Company
Address: 10 Alley 8 Dinh Nguyen Temple Street, Tho An Commune, Dan Phuong District, Hanoi, Vietnam
Tel: 0108 268 041 Represented by Mr Dang Van Dinh Hereinafter called The Buyer
And: Ford Thailand Manufacturing (FTM)
Address: 500/103 Moo 3 Tambol Tasit, Amphur Pluakdaeng, Hemaraj Eastern Seaboard Industrial Estate, Rayong 21140, Thailand Tel: +66 38950510
Fax: +66 38950510 Represented by Mr Kel Kearns - President Hereinafter called The Seller
It has been mutually agreed to the sale and purchase of rice on the terms and conditions as follows:
- Overall dimensions DxRxC (mm): 5362 x 1860 x 1830 mm
- Engine: Bi Turbo Diesel 2.0 i4 TDCi
The maximum power output of the vehicles analyzed in the import business process case study reaches up to 160,213 horsepower.
- Unit price: USD 40000 per unit CIF Hai Phong Port, Hai Phong, Vietnam, Incoterms 2020
- In word: Two hundred thousand US dollar
5 Packing: as per manufacturer standard packing, and safety for long-sea transportation
- Time of shipment: 15 - 20 days after L/C opening date
- Port of Loading: Laem Chabang Port, Bangkok, Thailand
- Port of Discharge: Haiphong Port, Haiphong City, Vietnam
7 Retention of Title: The goods shall remain the property of the Seller until the complete payment of the price
- The Seller shall make a free prior- delivery inspection
The Ford Ranger will undergo rigorous quality assurance processes before shipment, ensuring it meets the company's high standards under the oversight of FTM and the Vehicle Evaluation Center (VEC) in Thailand.
The buyer is required to establish an irrevocable letter of credit at sight through Bangkok Commercial Bank, favoring Vietcombank Hanoi, at least 15 days prior to shipment This letter of credit must remain valid for 30 days and cover the total value of the goods to be shipped, ensuring secure payment for the seller.
- Full set (3/3) originals Ocean Clean on Board Bill of Lading, marked "Freight to collect"
A signed commercial invoice is a crucial document required for the importation of cars, typically necessitating three original copies This document plays a pivotal role in the import business process analysis, serving as a case report for car importation The commercial invoice provides essential details about the imported vehicles, facilitating a smooth and efficient importation process.
- Certificate of Quality and Quantity issued by The Seller : 03 originals
- Certificate of Origin issued by Thailand Chamber of Commerce: 1 original and
- All banking fees and charges shall be paid as follows: The Buyer and Seller bear their own banking charges
Parties are exempt from liability for partial or complete non-fulfillment of obligations due to force majeure events, including fire, flood, earthquake, war, and pandemics It is essential for the affected party to promptly notify the other party about the onset and conclusion of these circumstances Certificates from the Chamber of Commerce in either the Seller’s or Buyer’s country will serve as adequate proof of the occurrence and cessation of such events.
Shipment and delivery timelines outlined in clause 6.0 are approximate, allowing for a tolerance of plus or minus one week If there is a delay beyond this tolerance period, the Seller agrees to incur a penalty of 0.5% of the total value of the affected shipment for each day of delay.
12.2 In case of any delay of shipment not reasoned by Force Majeure, the Buyer will charge the cost of his production lost to the Seller
If the product quality fails to meet the standards outlined in clause 2.0, it will be returned to the Seller upon mutual agreement, with all related expenses incurred after the contract approval date charged to the Seller Before the return, the Seller must cover all costs associated with the product Should quality issues persist, the Buyer reserves the right to cancel the contract.
The maximum price reduction for retained non-conforming goods is limited to 10% of their price Buyers must report any non-conformity issues within 10 days of the goods' arrival at their destination.
13 Applicable Law: Any questions not covered by CISG will be governed by the law of the Socialist Republic of Vietnam
14 Resolution of Disputes: ICC Arbitration is applied
The report on the import business process analysis for car importation highlights key findings and insights It examines the various stages of the import process, identifying challenges and opportunities for improvement The analysis emphasizes the importance of compliance with regulations and efficient logistics management to optimize operations Additionally, it provides recommendations for enhancing supply chain efficiency and reducing costs associated with car imports Overall, the report serves as a comprehensive guide for stakeholders in the automotive import industry.
Any amendment of the terms and conditions of this contract must be agreed by both sides in writing
All commercial terms used for this contract will be interpreted according to the publication “Trade Terms” (Author: Michael B Smith & Merrit R Blakeslee – National Politics Publishing House 2001) –
This sales contract is done in Vietnam on 11 September 2021 in 04 (four) English originals, 02 (two) for each side
Made in Hanoi Capital, on 11 September 2021
FOR THE SELLER FOR THE BUYER
Car importing process and core activities
Car importing process
Northern Car Import Export And Trading Joint Stock Company and Ford Thailand Manufacturing have already agreed the delivery term is CIF Haiphong Port, Incoterms
In 2020, the process of delivering cars to the designated port of departure involved a comprehensive analysis of the import business process This included the generation of settlement reports related to car importation, which highlighted key aspects of the importation process The analysis aimed to streamline operations and ensure compliance with regulations, ultimately enhancing the efficiency of car imports.
10 charges for carriage and insurance till the designated port is the responsibility of the exporter - Ford Thailand Manufacturing
Northern Car Import Export And Trading Joint Stock Company has partnered with a Forwarder to manage essential customs documentation, facilitate the release of goods, and streamline the warehouse receiving process While outsourcing these tasks incurs additional costs, the expertise and efficiency of the Forwarder in navigating import procedures significantly reduce the time and effort required compared to handling these activities in-house.
Documents Northern Car Ministry of Industry and Trade Importer license
Importer Goods shipped from forwarder
The report analyzes the import business process for car importation, focusing on key aspects such as compliance, logistics, and market trends It highlights the importance of understanding regulatory requirements and the impact of tariffs on pricing Additionally, the report examines the efficiency of supply chain management and its role in optimizing import operations By identifying challenges and opportunities within the import process, the report aims to provide actionable insights for stakeholders in the automotive import industry.
Haiphong Port orthern Car’s Warehouse
Core activities and stakeholders involving importing cars
Input criteria to enter business process
Activities and associated documentary requirements
Output criteria to exit the business process
- Importer has a list of cars potential sellers and is eligible to import car
- Importer sends Offer according to Purchase Order
Importer and exporter have concluded trade contract and terms
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- Ministry of Industry and Trade
- Northern Car Import Export And Trading Joint Stock
Company and Ford Thailand Manufacturin g
Northern Car Joint Stock Company and Ford Thailand Manufacturing have already concluded a trade contract and terms
Northern Car Joint Stock Company prepares: importer's license, license for warranty and maintenance of imported cars to the Ministry of Industry and Trade
The Import license of Car
Northern Car Import Export And Trading Joint Stock
Company and issuing bank Vietcombank
Northern Car Joint Stock Company prepare documents:
Financial documents and application for opening L/C
Vietcombank opens LC and transfer it to the Bangkok Commercial Bank
The company receives Arrival Notice from the FTM
- The Forwarder goes to the shipping line to receive the Delivery Order from the owner of the ship with the documents
- It includes: Referral, Arrival notice, Copy of Bill of Lading with endorsement and stamp or Original Bill of Lading - with endorsement and
The forwarder visits the shipping line to obtain the Delivery Order from the ship owner, along with the necessary documentation for the importation process This step is crucial for analyzing the business processes involved in car imports, ensuring compliance and efficiency in the logistics chain.
13 stamp of the bank, ID Card
Declare and submit the customs declaratio n and document s in the customs dossier
The Fowarder prepares the necessary documents to open the declaration
- The Forwarder uses the electronic customs declaration software and fills in customs declaration
- After checking that the goods are the same as stated in the declaration and related documents, the customs officer presses the customs seal on the container and makes notes
+ Customs declaration and customs value declaration
+ Commercial invoice + Transport documents + Contracts for sales of goods
+ Import license (if any) + Certificate of Quality -
Forwarder receives request of inspection
The Forwarder has submitted all
- The Sub-Department of Customs uses the CKO
The report on the import business process analysis for car importation provides a comprehensive overview of the procedures and regulations involved It outlines key steps necessary for compliance, identifies potential challenges, and offers solutions to streamline the import process This analysis aims to enhance efficiency and ensure adherence to legal requirements in the automotive import sector.
14 goods and means of transport to the specified place for physical inspection
The Sub-Department of Customs requires specific documents and issues inspection inquiries to customs declarants This process involves informing them about the location, method, and scope of the physical inspection of goods.
- CEA operation is used to complete inspection of the customs dossier and actual goods
- IDA01 is used to text requirements procedures, modify the content of the declaration, tax assessment and send to the customs declaration sent to the Forwarder
2.4.3 Pay taxes and fulfill other financial obligations
- The Sub- Department of Customs
The delacration and inspection steps are done
The Forwarder pays taxes, fees and charges immediately and the VNACCS system has received information about the payment of taxes and fees
VNACCS will issue a decision on customs clearance of goods
Taking delivery of import/ discharge the import
The financial obligations are fulfilled
Forwarder arranges shipment from Haiphong Port to Northern’s warehouse
The cars are taken to Northern’s warehouse
The cars are taken to Northen’s
Importer check the quality of the cars received from forwarder whether they
The inspection of imported cars is a critical component of the import business process This report analyzes the various stages involved in the importation of vehicles, highlighting the necessary compliance measures and quality assessments required to ensure that imported cars meet regulatory standards Understanding these processes is essential for importers to navigate the complexities of car importation successfully.
15 warehouse by the forwarder’s means of transporation keep the maintenance or not finished to make a decision whether to make a claim or not
3.2 Claim and dispute resolution (if any)
The goods do not conform with the contract
If an exporter does not fulfill their contractual obligations in a sales agreement without justifiable reasons, the importer has the right to pursue a claim based on the terms of the contract.
+ Carrier: If the goods are deficient in quantity compared to the B/L or there is a loss occurring during transportation, the carrier is not exempt from liability
+ Underwriters: When the goods are damaged due to the insured perils, it is necessary to rely on the insurance certificate to make a claim
Analysing and some recommendations for import process
Advice for car importing companies
Companies involved in importing goods into Vietnam should adopt efficient strategies to minimize time and costs in trade This can be achieved by identifying and executing business processes that can be performed simultaneously For instance, analyzing the import business process for cars can provide valuable insights into optimizing operations and improving overall efficiency.
Import declaration and delivery order processes can be streamlined through collaboration with service providers like customs brokers and freight forwarders, who often perform tasks more cost-effectively than exporters Importers must remain proactive in monitoring outsourced processes to quickly address potential issues Forwarding agents handle essential documentation and customs paperwork, ensuring compliance with regulations while coordinating the movement of goods from port to warehouse, thus enhancing efficiency, security, and cost-effectiveness Additionally, managing multiple import-related documents can be challenging; therefore, implementing an Enterprise Resource Planning (ERP) system is advisable This system allows importers to effectively store, utilize, and share data, helping them manage documents, track progress, and avoid errors, ultimately keeping them on schedule.
Proposed innovation of payment term
For many years, letters of credit (L/C) have been a favored payment method in international trade finance However, in the age of technology 4.0, it is essential for businesses to integrate technology into their operations to enhance efficiency, a practice that is equally relevant in the import and export industry.
One significant drawback of Letters of Credit (L/C) is that they do not guarantee absolute security in transactions, as payments rely on the accuracy of written documents This reliance on documentation introduces several limitations, including high document costs, frequent errors during manual verification, and a disconnect between funding and payment processes.
The Bank Payment Obligation (BPO) has emerged as an effective alternative in response to the demands of the modern financial landscape Like Letters of Credit (L/C), BPOs serve to mitigate risk, assure exporters of payment, and function as collateral for financing.
Unlike a Letter of Credit (L/C), a Bank Payment Obligation (BPO) does not necessitate the presentation of trade documents through banks Instead, it relies on the electronic submission and matching of data, streamlining the import business process This innovative approach enhances efficiency in transactions, particularly in cases involving car importation.
17 documents are directly sent by the Seller to the Buyer without the involvement of the banks
BPO leverages technology, requiring messages to adhere to the ISO 20022 electronic format The "Transport Matching Application" (TMA) automatically matches these messages, which can utilize the SWIFT Commercial Service Application (TSU) or any other compatible alternative that supports ISO 20022 in line with the necessary processing cycle.
Impact of COVID 19 on the export/ import performance of Vietnamese
The Covid-19 pandemic has significantly impacted Vietnam's car market, leading to an overall consumption decline of 8% in 2020 compared to 2019, despite a notable increase in the last quarter of that year In 2021, recent data from the General Department of Customs revealed an 11% rise in car imports by volume in July, although the turnover value experienced a slight decrease of 0.9%.
In July 2021, Vietnam imported approximately 17,000 completely built-up (CBU) cars, generating an estimated revenue of 332 million USD This indicates that the average value of each imported vehicle during this month was around 19,500 USD, which is equivalent to about 450 million VND.
In August, the General Statistics Office reported that our country imported approximately 8,500 complete cars valued at 216 million USD, marking a significant decrease in both value and quantity compared to July 2021.
August marks a traditionally quiet period for the auto market, and this year has been particularly challenging due to the resurgence of the epidemic in various regions, leading to the implementation of social distancing measures under Directive No 16/CT-TTg Additionally, car sales have seen a decline over the past few months, further exacerbating the market's struggles.
In conclusion, as Vietnam continues to develop, the demand for modern transportation options is increasing To meet the diverse mobility needs of its citizens, advanced vehicles with various designs and technologies are essential While domestic enterprises are enhancing their production capabilities, importing completely built units (CBU) remains a viable solution to satisfy consumer demand and support the growth of the import-export sector.
Analyzing the current landscape of car imports, particularly the process and contracts for importing CBU cars from Thailand to Vietnam, reveals key insights into the industry's state By examining existing practices, we can identify necessary requirements for industry development and potential improvements in the import process and contractual agreements This understanding will guide recommendations for enhancing the car import situation in Vietnam.
In this report, we aim to provide readers with a comprehensive overview of the car importing process in Vietnam, particularly focusing on imports from Thailand We extend our heartfelt gratitude to Dr Phan Thi Thu Hien for her invaluable guidance and support throughout this project We welcome any feedback or corrections regarding the report to enhance its accuracy and clarity.