(Tiểu luận) topic business process analysis of vietnam’s import of rubber and rubber articles

Bank information: - Bank: Joint Stock Commercial Bank for Foreign Trade of Vietnam - Address: B6-B7, Road 29/4, Ward 5, Trang Bom Town, Trang Bom District, Dong Nai Province - Swift code

SCHOOL OF ECONOMICS AND INTERNATIONAL BUSINESS

- ***

-MID – TERM ASSIGNMENT

Topic: Business Process Analysis Of Vietnam’s Import O f

Rubber nd ubber A R Articles Class: TMAE302(GD2-HK2-2223).1

INTRODUCTION 1!

1 Overview of imports of rubber and articles thereof 2!

2 Sales contract with primary conditions and terms 4!

3 Mapping import process of Vietnamese trader 9!

3.1 Process area: BUY 11!

3.1.1 Conclude sales contract and trade terms 11!

3.2 Process Area: SHIP 12!

3.2.1 Obtain Import Permit 12!

3.2.2 Select and book the vessel 14!

3.2.3 Prepare import documents 16!

3.2.4 Inspect the goods 18!

3.2.5 Clear the goods through customs 19!

3.2.6 Transfer goods from docks to the importer’s warehouse 21!

3.3 Process Area: PAY 23!

3.3.1 Use letter of credit (L/C) for payment to exporter 23!

4 Analysis of reclaimed rubber import process 28!

4.1 Descriptive bottlenecks of the process 28!

4.2 Root causes of the bottlenecks 29!

5 Recommendation to improve import performance of Vietnamese businesses 30!

5.1.! Recommendations for Vietnamese enterprises 30!

5.2.! Recommendations for improvement 31!

5.3.! Proposed simplification of process 32!

CONCLUSION 35!

REFERENCES 36!

TABLE

Table 1: Vietnam Import Turnover of Reclaimed rubber in primary forms or in plates, sheets or

strip (HS: 400300) from 2017 to 2021 2

Table 2: Importing rubber and rubber articles from China 27!

Table 3: The Time-procedure Chart of importing rubber and rubber articles from China 27!

FIGURE Figure 1: List of main supplying markets for a product imported by Vietnam 3!

Figure 2: Case Diagram "Import of rubber and rubber articles from China into Vietnam" 10!

Figure 3: Activity Diagram of step " Conclude sales contract and trade terms" 11!

Figure 4: Activity Diagram of step " Obtain Import Permit" 12!

Figure 5: Activity Diagram of step " Select and Book the Vessel" 14!

Figure 6: Activity Diagram of step " Prepare Import Documents" 16!

Figure 7: Activity Diagram of step " Inspect the goods" 18!

Figure 8:Activity Diagram of step "Clear the goods through customs" 19!

Figure 9: Activity Diagram of step: "Transfer the goods from docks to the importer's warehouse" 21!

Figure 10: Activity Diagram of step "Use L/C for payment to exporter" 23!

Figure 11: Time - schedule chart of proposed import process of rubber and rubber articles from China 34!

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Rubber is a versatile material that can be stretched, molded, and shaped into various products Rubber can be natural or synthetic, depending on the source and production process Natural rubber is obtained from the latex of certain plants, mainly the rubber tree

In contrast, synthetic rubber is made artificially from chemicals such as butadiene, polyacrylics, and polyvinyl acetate Rubber and articles thereof are classified under Chapter 40 of the Harmonized System (HS) of tariff nomenclature, which covers products such as tires, tubes, hoses, belts, sheets, gloves, and erasers

styrene-Rubber is also an essential import item for Vietnam, as it needs to import synthetic rubber and rubber articles to meet the domestic demand for industrial and consumer goods In 2021, Vietnam imported $8.99M in Reclaimed Rubber, becoming the 12th largest importer of Reclaimed Rubber in the world In the same year, Reclaimed Rubber was the 855th most imported product in Vietnam Vietnam imports Reclaimed Rubber primarily from: China ($4.56M), India ($2.08M), Malaysia ($1.26M), South Korea ($664k), and Japan ($191k)

To give recommendations on reducing bottlenecks and difficulties in the importation of reclaimed rubber in Vietnam, an in-depth analysis of the Import Business Process of reclaimed rubber in Vietnam using the BPA method is conducted in the paper Besides,

a sale contract with primary terms and conditions is drafted and based on it, and the import process is mapped This paper also gives recommendations to improve the import performance of Vietnamese businesses

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According to the trade statistics from ITC, Vietnam importation of reclaimed rubber in primary forms or in plates, sheets or strip reached the peak in 2019, with the figure of 9,894 Viet Nam's imports represent 1.9% of world imports for this product, its ranking in world imports is 13 This made Vietnam become the 13th largest importer of reclaimed rubber in primary forms or in plates, sheets or strip in the world Besides, in 2020, rubber and articles thereof were the 6th most imported commodity in Vietnam, with a total import value of around $9.5 billion USD according to the General Department of Vietnam Customs, attributed to the country's growing manufacturing and construction industries,

as well as its reliance on foreign inputs to support its export-oriented economy

Table 1: Vietnam Import Turnover of Reclaimed rubber in primary forms or in plates,

sheets or strip (HS: 400300) from 2017 to 2021

Unit: US Dollar thousand Source: ITC Trademap

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Figure 1: List of main supplying markets for a product imported by Vietnam

As can be seen in the graph, five main trading partners of Vietnam in reclaimed rubber importing are China, India, Malaysia, Japan and Taipei respectively Trading statistics were recorded in five years from 2017 to 2021 The second largest exporter of rubber into Vietnam, India had maintained a stable fluctuation in turnover, with the highest point of 2,908 thousand USD in 2021 Import value of rubber from Malaysia, Thailand and Japan saw different trends in development, with Taipei experiencing the most dramatic fall in imported value and ending with only 191 thousand USD in 2021 Although in the first three years, the proportion of rubber importation from Cambodia was insignificant compared to the runner-up India, it started to upsurge dramatically in 2020 and especially strip’s importation in 2021 with the value of 4,883 thousand USD This overwhelming imported value had made China the largest market for Vietnam’s reclaimed rubber in primary forms or in plates, sheets or

TMQT 100% (10)

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Đề thi cuối kỳ giao dịch thương mại… Giao dịch

TMQT 100% (10)

3

Incoterms-2020 bản tiếng việt

Giao dịch

127

VỞ GHI GIAO DỊCH Giao dịch

69

tiểu luận GDTMQT Giao dịch

91

Village, Zhongzhan

District,454191 Jiaozuo,

Henan

Address: Ho Nai Industrial Park -

Trang Bom District - Dong Nai Province

Contact: Echo - Business manager

BÀI TẬP PHẦN XÁC SUẤT – AAA Class… Giao dịch

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It has been agreed that the Buyer buys and the Seller sells on the terms and conditions

as follows:

Article 1: Conditions and terms of commodity

1) Commodity: Reclaimed rubber in primary forms or in plates, sheets or strip (HS code: 400300)

2) Quantity:

- Net weight: 20000 kg +- 5%

- Acceptable weight tolerance: 5% above or below at Buyer’s option The tolerance price is at the unit price of the contract

- Product weighing at: Departure

- Final certificate of quantity issued by Vinacontrol at Cat Lai port

- Storage: Dry storage in a cool atmosphere

- Packaging:

+ Whole and cut blankets are packed in polyethylene bags on pallets, and wrapped 40 such parcels are packed onto a strong pallet, giving a unit load of 1,000-kilos net weight

shrink-+ The pallets have overall dimensions of 1,120mm x 1,120mm x 1,120mm and should not be double stacked

Article 2: Contract price

- Unit price: USD 0.45/ kg, FOB Cat Lai port, Incoterms 2020

- Total price: USD 9000 +- 5%

- Invoicing: based on actual net weight of the shipment upon the inspection at loading port

- The above prices include packaging costs and loading costs at the port of departure

Article 3: Terms of delivery

- Port of loading: Qingdao Port, Shandong Province

- Port of discharge: Cat Lai Port, Ho Chi Minh City

- Term of delivery: FOB Cat Lai port, Vietnam - Incoterms 2020

- Notice of shipment (Three times):

+ The seller must immediately notify the buyer when the goods are ready for delivery

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+ The buyer must notify the seller before the ship arrives at Qingdao port more than 36 hours of information: Name, tracking/IMO number, ETA (Estimated Time of Arrival)

+ Within 24 hours from the completion of delivery at Qingdao port, the seller must inform the buyer of the following information: delivery status, number and date

of the bill of lading

The announcement is made by telex

- Loading term: When NOR (Notice of Readiness) before noon, laytime shall be

commenced from 13.00 hour on the same day, when NOR tender afternoon, laytime shall be commenced from 8.00 hour on the next day

- Other obligations: No transshipment, no partial deliveries allowed.

Article 4: Time of delivery

- Delivery time: 16th June 2023, Cat Lai port

Goods shall be delivered to the Cat Lai Port by no later than 15h June 2023

Article 5: Inspection of the goods by buyer

- Time and place of inspection: Before shipment at the seller’s premise

- Independent inspection company:

+ Vinacontrol Group

+ To be appointed and introduced by the Buyer 10 days prior to shipping

- Type and scope of inspection

+ Visual inspection: packaging inspection, checking label, inspecting product appearance

+ Quantity verification: Confirming order quantity, Sampling plan, Random selection

+ Documentation Review: Reviewing production records, verifying shipping documents, Ensuring regulatory compliance

- In the event the inspection result shows “nonconformity of the goods” then the transport company will not start the delivery process

- Inspection fees to be paid by Buyer

Article 6: Retention of title

The parties agreed on retention of title

Article 7: Payment conditions

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- Payment currency: US Dollar

- Payment period: Immediate payment

- Mode of payment: Letter of Credit

Payment is made by irrevocable letter of credit, at sight in US dollars with a letter of credit equal to 100% of the total commercial invoice value to the seller The letter of credit

is open Joint Stock Commercial Bank for Foreign Trade of Vietnam The letter of credit is

opened at least 45 days before shipment and is valid within 45 days of delivery

Bank information:

- Bank: Joint Stock Commercial Bank for Foreign Trade of Vietnam

- Address: B6-B7, Road 29/4, Ward 5, Trang Bom Town, Trang Bom District, Dong Nai Province

- Swift code: BFTV VNVX

Payment shall be made against presentation of the required documents:

+ Bill of exchange

+ Full set of original, clean ocean on board Bill of Lading

+ Signed commercial invoice

- Commercial Invoice: 1 original and 2 photocopies are required

The Commercial Invoice on company letterhead, written in English, including the following items:

1) A detailed description of the commodity

2) Kenda Rubber Contract Purchase Order Number(s), Purchase Order number, Total number in units per Purchase Order, in USA currency and the total extended FOB transaction price for each Purchase Order in USA currency The total invoice FOB transaction purchase price

3) Seller and Actual Manufacturer Names and addresses must also be written in words

4) Harmonized System code - HS400300

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5) Made in “Country of Origin” of the commodity covered under this Sales Agreement and Kenda Rubber Purchase Orders

- Certificate of Origin: 1 original and 2 photocopies are required

- Packing List: 1 original and 2 photocopies are required, including the following

data: Item or number, container number, description, quantity, package number, gross weight, net weight, size and volume, specifications, country of origin, and remarks

- Certificate of Inspection: issued by Vinacontrol Group

Article 9: Force ma jeure

- The ICC Force Majeure clause is incorporated in the present contract

- Force Majeure circumstances must be notified by each party to the other within 7 days and confirmed by writing within 10 days together Beyond this time, Force Majeure circumstances shall not be taken into consideration

Article 10: Resolutions of dispute

- Dispute settlement mechanism: ICC Arbitration

All disputes arising out of this Agreement shall be settled in good faith If no agreement can be reached, each party has the right to commence arbitration proceedings conducted under the Rules of the International Chamber of Commerce (ICC) and in line with international arbitration practice

- The seat of arbitration shall be Vietnam

3 Mapping import process of Vietnamese trader

Our report analyzes the business process of importing rubber and rubber articles pr

from China to Vietnam To be more specific, the product that we consider is reclaimed rubber in primary forms or in plates, sheets or strips (HS: 400300) The scope of the

trade process examined in this study includes all procedures involving the importer (buyer), from the signing of a contract between buyer and seller to the transportation of reclaimed rubber to Vietnam

● Starting Point: Qingdao Port

● Ending Point: Cat Lai Port

This research follows all the Buy-Ship-Pay process:

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The model suggests all activities related to the formation of commercial procedures

(commercial contracts), transport procedures (the arrangement of waterway and

cross-border transportation of goods), regulatory procedures (the export and import formalities

to meet regulatory requirements), and financial procedures (the payment for purchased goods) that occur during an international trade transaction

Figure 2: Case Diagram "Import of rubber and rubber articles from China into Vietnam"

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3.1.1 Conclude sales contract and trade terms

Figure 3: Activity Diagram of step " Conclude sales contract and trade terms"

3.1.1 Conclude sales contract and trade terms

Related rules and

regulations

Incoterm 2020

Partners/ Actors ● Importer

● Exporter

1.1.4 - After receiving the contract, the exporter will prepare goods for delivery

3.2 Process Area: SHIP

3.2.1 Obtain Import Permit

Figure 4: Activity Diagram of step " Obtain Import Permit"

3.2.1 Obtain Import Permit

Related rules and

regulations

Commercial Law - Decree 32/2011/TT-BCT Law on Foreign Trade Management – Decree 69 Partners/ Actors ● Importer

● Ministry of Industry and Trade Procedures 3.2.1.1 - Importer prepares required documents including:

registration form, commercial invoice, B/L, Certificate of business registration, Sales contract, L/C

3.2.1.2 - Importer directly submits the documents at the office

of Ministry of Industry and Trade

3.2.1.3 - Ministry of Industry and Trade examines the submitted documents

3.2.1.4 - If the documents meet all the requirements, the Ministry of Industry and Trade will issue an import permit for the importer

3.2.1.5 - Import permit will be sent to Importer by post

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3.2.2 Select and book the vessel

Figure 5: Activity Diagram of step " Select and Book the Vessel"

3.2.2 Select and book vessel

Related rules and

Procedures 3.2.2.1 - Importer entrusts a forwarding agent to arrange a

vessel for him

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3.2.2.2 - Importer provides Customs broker with basic information about date of delivery, port of loading, port of discharge and so on

3.2.2.3 - Customs broker reserve cargo space and make a booking request for vessel

3.2.2.4 - Shipping company acknowledges booking, then quotes price and informs shipping line

3.2.2.5 - Customs broker confirms the shipping information and price

3.2.2.6 - Importer acknowledges the booking confirmation 3.2.2.7 - Customs broker issue the shipping order for shipping company

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3.2.3 Prepare import documents

Figure 6: Activity Diagram of step " Prepare Import Documents"

3.2.3 Prepare import documents

Related rules and

regulations

Commercial Law - Decree 38/2015/TT-BCT

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Partners/ Actors ● Importer

● Exporter

● Customs Broker

Procedures 3.2.3.1 - Exporter delivers the documents including bill of

lading, packing list, commercial invoice and other documents required by importer

3.2.3.2 - Importer collects the documents from the exporter 3.2.3.3 - Importer adds up documents namely import permit, commodity inspection certificate of entrustment and shipping contract and a full set of documents to customs broker 3.2.3.4 - Customs broker collects the documents