eller agrees to deliver the goods to buyer under the term of ddp at thewarehouse of the buyer in tokyo japan the goods were transported andunloaded at the port and kept at customs shed for inspection and payment ofduties

FINAL EXAM

SUBJECT: EXPORT — IMPORT MANAGEMENT Student: Lé Anh Hoang

Student IDr: 31191023326 Class: IBC05 - K45

Hồ Chí Minh, 24 tháng 4 năm 2022

“Q1 Seller agrees to deliver the goods to buyer under the term of DDP at the warehouse of the buyer in Tokyo, Japan The goods were transported and unloaded at the port and kept at customs shed for inspection and payment of duties The buyer was notified of the arrival of the merchandise and its location Before the buyer picked up the goods, the customs shed (including the merchandise in it) was destroyed by fire The buyer claims refund of the purchase price, stating that buyer did not receive the goods.”

- “Ts the seller responsible? Why?”

- “Discuss the major differences between DAP at buyer’s warehouse in Tokyo and DDP at buyer’s warehouse in Tokyo.”

Answer - “Is the seller responsible? Why?”

Yes The risk is transferred under DDP terms when the goods are cleared and duty paid (but not unloaded) and delivered to the agreed-upon location The products have been unloaded at the port and have not been delivered to the buyer's warehouse in Tokyo, Japan, therefore the seller retains responsibility for the goods

However, in this case to reduce liability and costs, there are two ways that the seller must do:

1 Previously purchased insurance

Under the rules of DDP, the seller has the option to purchase insurance to protect their rights, decrease risks, and prevent damage to the seller's shipment of goods before the risk is transferred to the buyer If the seller has previously agreed with the insurer, the seller may be repaid an amount equivalent to the value of the cargo or a portion of the shipment

2 Case of force majeure

If the buyer and seller agreed in the previous sale contract to a force majeure situation In this instance, the seller's expenditures can be minimized or avoided entirely, depending on the contract's agreement between the seller and the buyer.

- “Discuss the major differences between DAP at buyer’s warehouse in Tokyo and DDP at buyer’s warehouse in Tokyo.”

seller must bear import duties, import clearance documents and necessary costs for import clearance

IS a pricing strategy that grounds a product's cost of creation, manufacture, and delivery on the cost of producing, making, and delivering it A product's pricing is dertved by adding a percentage of the manufacturing cost to the selling price in order to generate a profit

Too long to read on your phone? Save to read later on

that it either wants to use can't sell for a better price, happens

Gain Entry to Markets Marginal cost pricing can be used to gain entrance into a market if a firm is ready to forfeit earnings in the short term However, by doing so, it is more likely to attract price-sensitive clients, who are more likely to quit if price points rise

Increase Sales of Accessories If customers are willing to pay a high price for product accessories or services, using marginal cost pricing to sell a product on a regular basis and

Easy to Calculate

Cost-based pricing systems, such as cost-plus and break-even, are preferred by businesses because they are simple Simply add a

manufacturing cost, or establish a price simply based on the manufacturing cost Regardless of whatever option you choose, production and administrative costs will be covered

Ensures Profit

Cost-based pricing might aid in maintaining a _ steady profit margin This is one of the few pricing strategies that guarantees a profit If you price your goods and services in relation to their production costs, you will generate money regardless of the state of the industry

Simple for Customers t0 Understand

On occasion, you may need to boost the pricing of your goods

then profiting from future sales may make sense

and services A price increase would irritate most customers, but if you blame it on growing production costs, it will be much easier to defend the increase without getting mired down in industry jargon

While cost-based pricing systems offer certain advantages, they also have some disadvantages Let's take a closer look at them down below

Not Competition-Aware and Demand-Aware

Cost-based pricing does not take demand or competition into consideration Companies must be aware of all costs related with a product's sale Competitors will make more money if they create the same product for less money and sell it for the same price To be competitive, you'd either have to keep costs low or demand a higher price

Results in Different Prices Compared to the Market Cost-based pricing frequently yields prices that differ

Disadvantage

were set at or near market rate

Encourages Customers from the Periphery

If a firm uses marginal cost pricing frequently and then tries to raise its prices, it may discover that it is selling to people who are particularly price sensitive and will desert it immediately

Costs are the main focus A firm that uses this pricing approach on a regular basis will discover that it needs to keep prices low in order to make a profit, which is ineffective if the company wants to move into a higher-service, higher-quality market segment

considerably from market rates This might imply that a company is selling a product at an absurdly high or cheap cost People are willing to pay that much for a product if a competitor is selling it at a lower price and buyers are willing to pay the higher price If you price much more than the competitors, on the other hand, you will almost likely lose customers You will lose money in either situation Because no company sells its product in a vacuum, it's almost always vital to consider what your competitors are doing

Could Result in Manufacturing Inefficiencies

Cost-based pricing can also result in inefficient manufacturing and production Because the cost is passed on to the — client, expense-based pricing minimizes the need for a company to scrutinize the manufacturing process This means that, rather than optimizing manufacturing procedures, organizations implementing a cost-based

strategy may unintentionally inflate their processes Streamlining supplier and production costs is an important

way for a company to save costs

and increase revenues

Could Result in Unethical Practices

On the other side, cost-based pricing may lead to unethical production practices If you're trying to maximize profits based on production costs, you can find yourself cutting corners while keeping the markup the same That's why cost-based providers, like Everlane in the cost-based pricing example below, must maintain openness

Example

Hoang is the owner of Hoang Motorbikes, a private company In his first year in operation, he produced and sold ten bikes for $100,000, despite the fact that

they cost $50,000 to produce

He proceeded to make and sell 15 motorbikes for $150,000 in

the second year, with a Hoang Lee is the owner of a smartphone manufacturing company The whole cost of making a smartphone for him is $1,000 Hoang Lee calculated the selling price by adding 10% of the cost to get at $1,100, which is the amount at which consumers

may purchase it ($1,000 + 10% *

manufacturing cost of $75,000 | $1,000) First, we figure out how much the entire cost has changed That increased from $50,000 to $75,000 in this example, a

difference in increment numbers from 10 to 15 1s then calculated and multiplied by 5 The difference in total price

A letter of credit (LC) at sight is one that is due immediately (within five to ten days) when the seller satisfies the letter of credit's terms For vendors who frequently ship to foreign purchasers, this sort of LC is the quickest method of payment

Procedure

“1 Buyer applies for and opens a the L/C with issuing bank 2 Issuing bank issues the L/C, forwarding it to advising bank 3 Advising bank notifies seller the L/C

4 Seller delivers goods to the buyer Once the terms of L/C have been met 5 Seller forwards documents as stipulated in L/C to advising bank.

6 Advising bank will pay for the seller within 5-10 days ( The seller will sign a sight-draft (or not) to demand payment

7 Advising bank forwards documents to issuing bank for review

8 Issuing bank reviews and accepts, issuing bank pays the seller’s bank (advising bank)

9 Issuing bank forwards documents to buyer Buyer makes payment or his /her account is debited”

2 “Compare the role and responsibility of banks in documentary collections and letters of credit.”

Documentary collections - Remitting bank

- Receive documents from

seller

- forwards documents to collecting bank - Advises seller of

acceptance or remits payment

- Collecting bank - Receive documents from remitting bank

- Presents documents to Buyer

- Collect money from buyer or sign time draft with buyer - Advises remitting bank of

acceptance or remits payment

Letters of credit

- Notifies seller the L/C - Receive documents as stipulated in L/C from seller - Forwards documents to issuing bank for review - Receive money from Issuing bank

- Pays seller as specified in

the L/C - Issuing/ Opening bank - Do registration procedures and open L/C for buyers - Issues the L/C forwarding it to advising bank

- Reviews and accepts, issuing

bank pays the seller’s bank (advising bank)

- Forwards documents to buyer and collect money from

- Do not check the right and wrong, legality of the document the goods shipped might not conform to the goods specified - No guaranty of payment by any bank

- No protection against order cancellation

- The payment is not made

until after the goods are shipped

- Made when the buyer registers and opens the payment of L/C

- Receive documents and check, review whether the documents are consistent with the signed contract or

not

- Goods are guaranteed to be delivered in accordance with the contract

- Protect the seller when

the order is canceled As payment of LC is the buyer Is required to open and register for payment of LC The buyer and Issuing bank had to enter into a contract and agree on legal

arrangements to protect

both the seller and the buyer

“1 Commodity: Coffee 2 Quality: as sample

3 Quantity: 200 T more or less 5% at the seller’s option or buyer’s option 4 Price: USD1,500/T

5 Payment: By L/C to be opened not later than 9 April, 2022 The buyer will present following documents:

- Pro Forma Invoice

- Certificate of Quality and Quantity

- Packing List - Bill of Lading marked Freight prepaid made out to order of any bank - Certificate of Insurance two copies

- Certificate of Origin form D 6 Delivery: not later than 9 April, 2022 Port of loading: Osaka, Japan Port of discharge: Saigon, Vietnam

Partial shipment: allowed The buyer will advise the seller the name of vessel not later than five (05) days before shipping date by fax

7 Arbitration: all disputes arising out of this contract or breach thereof which cannot be settled amicably by the parties concerned shall be settled by the Arbitration 8 Other term: the contract will come into force from 11 April, 2022 The contract is made in two (02) copies in English.”

Answer “The errors, the missing points in the sales contract:”

- Lack of consent lines of both parties when performing the contract 1 Commodity: Coffee

The missing The description is not detailed enough

Right

2, Quality: as sample

The missing It is not clear which sample, where the sample is

located, whether it has been sent or not, whether the two parties have agreed on the sample or not, lack of information

Right

According to the sample that both parties agreed on

3 Quantity: 200 T more or less 5% at the seller’s option or buyer’s option

Wrong 200 T more or less 5% at the seller’s option or buyer’s option

Right “200 MT more or less 5% at the buyer’s option.”

TOTAL AMOUNT: 300,000 USD (+/-5%)

SAY: United States Dollar three hundred thousand

Delivery terms must be set before payment 5 Delivery: not later than 9 April, 2022 Port of loading: Osaka, Japan Port of discharge: Saigon, Vietnam

Partial shipment: allowed The buyer will advise the seller the name of vessel not later than five (05) days before shipping date by fax

14

The errors, missing Missing terms of delivery, time of delivery, Port of

loading and Port of discharge is wrong “The buyer advise the seller the name of vessel” is wrong

Wrong “not later than 9 April, 2022

Port of loading: Osaka, Japan Port of discharge: Saigon, Vietnam

Partial shipment: allowed The buyer will advise the seller the name of vessel not later than five (05) days before shipping date by fax”

Right

Term of delivery: CIF

“Port of loading : Saigon, Vietnam Port of discharge : Osaka, Japan

Partial shipment: allowed The seller will advise the buyer the name of vessel not later than five (05) days

6 “Payment: By L/C to be opened not later than 9 April, 2022 The buyer will present following documents:

- Pro Forma Invoice

- Certificate of Quality and Quantity - Packing List

- Bill of Lading marked Freight prepaid made out to order of any bank - Certificate of Insurance two copies

- Certificate of Origin form D”

15

The errors, missing Information about payment terms is missing, Issuing

bank and Notifying bank is missing, Lack of time to present documents and payment time, Missing documents, the buyer will present is wrong, how many copies are missing, wrong C / O, insurance and certificate of origin lack of information who issued it, Bill of lading Full name must be entered, time of open LAC is wrong

Wrong “By L/C to be opened not later than 9 April, 2022 The

buyer will present following documents:” “- Pro Forma Invoice”

- Certificate of Quality and Quantity

- Packing List - Bill of Lading marked Freight prepaid made out to order of any bank

- Certificate of Insurance two copies - Certificate of Origin form D

“Payment will be made by irrevocable L/C at sight for 100% of invoice value, L/C to be opened not later than 13 April, 2022.”

- Issuing bank: (Japan)

- Notifying/advising bank: (Viét Nam) The seller will present following documents: - Pro Forma Invoice in two copies

- Commercial invoice in three originals