Solutions to improve importing business of national fortune trading technical services co , ltd

ACADEMY OF POLICY AND DEVELOPMENT INTERNATIONAL SCIENCE AND ECONOMIC FALCUTY  - - GRADUATION THESIS Tutor: MA Nguyen Tran Khanh Student: Class: Pham Thi Trang CLC 8.2 Student number: 5083106564 HA NOI, 06 - 2021 ACADEMY OF POLICY AND DEVELOPMENT INTERNATIONAL SCIENCE AND ECONOMIC FALCUTY GRADUATION THESIS Topic: Solutions to improve importing business of National Fortune Trading & Technical Services Co., Ltd HA NOI – 06/2021 ACKNOWLEDGMENT During the internship and the process of completing my thesis at National Fortune Co., Ltd, I have received a lot of attention, support, and encouragement from teachers, family, and friends First of all, my appreciation goes to my amiable Supervisor, Mr Nguyen Tran Khanh, for his professional guidance and support As my teacher and mentor, he has supplied me with all the knowledge of conducting proper research and spent hours guiding and correcting my papers I would not be able to complete my work without his consultancy I would like to express sincere thanks to the Academy of Policy and Development for creating favorable conditions for me to execute this internship report and thank the lecturers of the ISEF for conveying background knowledge so that I can complete the internship until this graduation thesis Simultaneously, I would like to express my thanks to the Board of Directors, managers, and colleges at National Fortune Co., Ltd for their helpful, providing information and facilitating me to implement in the research process Finally, I would like to thank the family and friends for encouraging and supporting me throughout the course of study and thesis implementation TABLE OF CONTENTS ACKNOWLEDGMENT TABLE OF CONTENTS List of images, tables and acronyms INTRODUCTION CHAPTER 1: THEORETICAL FRAMEWORK OF IMPORTING BUSINESS .6 1.1 General overview of importing business 1.1.1 The concept, characteristics and role of imports in international trade 1.1.2 Import forms 1.1.3.The position of imports in supply chain management 13 1.1.4 Basic operations in import activities 13 1.2 General overview of business performance and importing business’ efficiency 24 1.2.1 System of perspectives on business performance 24 1.2.2 The concept of importing business efficiency 27 1.2.3 The need to improve business performance and importing business efficiency 27 1.3 Basic problems about the item "heavy industrial machinery and equipment" 28 1.3.1 The concept and characteristics of "heavy industrial machinery and equipment" 28 1.3.2 The system of circulars and policies that need attention applied to the item "heavy industrial machinery and equipment" 30 1.4 The criteria for evaluating the efficiency of importing business .30 1.4.1 General indicators 30 1.4.2 Division indicators 32 1.4.3.Criteria reflecting the efficiency of using labor for importing business 33 1.4.4 Indicators showing socio-economic efficiency 33 CHAPTER 2: CURRENT STATUS OF IMPORTING BUSINESS OF NATIONAL FORTUNE CO., LTD 34 2.1 About National Fortune Trading & Technical Services Co., Ltd 34 2.1.1 General information 34 2.1.2 Organizational structure 36 2.1.3 Company products and services .38 2.1.4 Import market of heavy industrial machinery and equipment of Vietnam and National Fortune Co., Ltd 39 2.2 Current status of importing business at National Fortune Trading & Technical Services Co., Ltd 42 2.2.1 Import process of National Fortune Co., Ltd 42 2.2.2 Evaluation of the import process of National Fortune Co., Ltd .51 2.2.3 Impact of the Covid-19 epidemic on the import activities of National Fortune Co, Ltd 52 CONCLUSION CHAPTER 56 CHAPTER 3: EVALUATING THE EFFECTIVENESS OF IMPORTING BUSINESS OF NATIONAL FORTUNE CO., LTD 57 3.1 National Fortune's business results from 2018-2020 57 3.2 Evaluate the efficiency of import activities based on the criteria 60 3.2.1 Evaluate import profit .60 3.2.2 Evaluation of import profit rates 62 3.2.3 Evaluation of the effective use of import working capital 65 CONCLUSION CHAPTER 66 CHAPTER 4: SOLUTIONS AND RECOMMENDATIONS 67 4.1 SWOT assessment of National Fortune Co., Ltd.: 67 4.2 Solutions: 71 4.3 Recommendations: 72 CONCLUSION CHAPTER 73 CONCLUSION 74 REFFERENCES 76 List of images, tables and acronyms - List of images: Figure 1.1: Supply chain management process Figure 1.2: Purchasing Process Steps Figure 2.1: Organization chart of National Fortune company Figure 2.2: Vietnam's export and import market share of machinery and equipment 2017-2020 Figure 2.3: National Fortune's import markets in 2020 Figure 2.4: Customs clearance process for imported consignments Figure 2.5: Metal prices trends in China market May/2020-April/2021 Figure 3.1: Profit margin by import revenue of the company from 2018-2020 Figure 3.2: Return on equity of the company from 2018-2020 - List of table: Table 2.1: Import turnover of heavy industrial machines and equipments of Vietnam from 2017 to 2020 Table 2.2: National Fortune's import process Table 2.3: Changes in metal prices in China from May/2020-Apr/2021 Table 3.1: Report of business results in 2019 Table 3.2: Report of business results in 2020 Table 3.3: Summary of business results from 2018-2020 Table 3.4: Importing business profit of the company in the period of 20182020 Table 3.5: Growth rate of revenue, costs and profit of the company's importing business in the period of 2018-2020 Table 3.6: Import profit ratio of the company in the period of 2018-2020 Table 3.7: Efficiency of using import working capital of the company 20182020 Table 4.1: SWOT assessment of National Fortune company - List of acronyms: ISEF: International Sicence and Economic Falcuty National Fortune Co., Ltd.: National Fortune Trade & Technical Services company limitted HR: Human Resources Iqs: Inquiries OEMs: Original Equipment Manufactures PO: Purchase Order INTRODUCTION Introduction to the research topic In 2020, the world economy in general and Vietnam's economy in particular experienced a heavy recession year due to the impact of the Covid-19 pandemic Up to now, the Covid-19 epidemic is still developing very complicatedly in many countries around the world, negatively affecting major economies such as the US, China, Japan, and the EU In Vietnam, in the first months of 2020, Covid-19 impacted the economy and made our country's economic growth drop to the lowest level in the past 10 years The negative effects of the economic recession on Vietnam have caused domestic enterprises to face many difficulties and challenges, the import market of Vietnamese goods has been narrowed, exporting enterprises in the the country faces difficulties to reduce production scale National Fortune Trading & Service Co., Ltd is not an exception During the internship at the company, through surveying, interviewing, collecting data sources, analyzing the characteristics of the situation of importing machinery and components of the company; I found the difficulties that the company encountered during the economic downturn was: Import costs increased, domestic demand for construction projects decreased, leading to revenue and profit from National Fortune's production and business activities also decreased Recognizing the importance of these issues in helping business orientiation in current situation, combined with the theories acquired in the process of studying and learning in practice, I have chosen the topic "Solutions to improve importing business of National Fortune Trading & Technical Services Co., Ltd" to analyze the current situation of import activities in the context of the epidemic and propose some recommendations, solutions to boost the company's business performance through the difficult period Research objects To be able to solve the above problems well, the research aim of the thesis is: - Overview of theoretical issues related to importing business along with basic theories about the efficiency of importing business of the Company - Research, analyze and evaluate the status of import activities of National Fortune Company - Propose a number of solutions and recommendations to overcome the effects of the economic downturn and promote the import activities of the company in the coming time Scope of the study Stemming from the practical situation of National Fortune Trading & Technical Services Co., Ltd., the thesis defines the content and scope of research as follows: - Research scope on space: The thesis is proposed to study the current status of importing business of National Fortune Trading & Technical Services Co., Ltd - Research scope on time: Study the impact in the period from 2018 to 2020 And propose solutions to improve the efficiency of importing business for the Company from 2021 to 2025 - Restrictions on business activities: Import activities - Research market limitation: Export market of heavy industry machinery and equipment in China, Europe and import market in Vietnam Methodology - Secondary data collection methods: Materials obtained from sources available inside and outside the company such as: Financial statements for years (2018-2018) The company's website (https://www.nationalfortune.vn) and publications and articles from many other sources such as gov.cn, gov.vn, - Methods of data analysis + + Statistical methods: Statistics from secondary data sources Comparative method: make statistical tables from which to show the difference in the company's business activities over the years, compare the achieved results with the set targets to give the achieved aspects , not yet and the solution Research subjects The topic studies the current status of import activities of National Fortune Trading & Technical Services Co., Ltd., thereby proposing some solutions for the future Thesis structure In addition to the introduction; table of contents; lists of tables, diagrams, figures, acronyms; and references; this study would be subdivided into for sections as below: - Chapter 1: "Theoretical framework of importing business" Chapter 2: "Current status of importing business of National Fortune Trading & Technical Services Co., Ltd" - Chapter 3: "Evaluating the effectiveness of importing business of National Fortune Trading & Technical Services Co., Ltd" - Chapter 4: "Solutions and recommendations" ❖ Profit ratio by revenue from importing business Unit: percent (%) Return on import revenue % 10 9 7.5 5.1 ROS 2018 2019 2020 Figure 3.1: Profit margin by revenue of the Company in the period of 2018-2020 Return on import revenue reflects business performance based on how much profit the company earns in a dollar of revenue from importing business In case production costs increase, according to the law of competition, enterprises cannot increase selling prices but must accept to reduce their profits From the summary table, it can be seen that the company's profitability from revenue in 2019 increased significantly from 5% to 9%, although this index has been reduced, but in general, it is still high at 7% The cause of the uneven increase and decrease in profit over the years is that the company expands its product line, in order to introduce products to customers The company offers many promotional and product promotion programs, so profits are not high 63 ❖ Return on Equity (Unit: Million VND) Return on equity 37.7 40 35 30 % 25 20 ROE 15 10 2018 2019 2020 Figure 3.2: Return on equity of the company from 2018-2020 Equity is part of the total capital – formed from the capital of the initial investors at the time of establishment (can be supplemented during the operation), undistributed profits and funds belonging to the business owners Return on equity is the clearest expression of the profitability of a business, since all business activities are aimed at improving profits and equity value In relation to the ratio of return on total assets, the company's return on equity last year also decreased a lot with a decrease of 8.7% According to international standards (CANSLIM of William O'Neil): ROS > 7.5%, ROE>15%, then the enterprise is assessed as having potential financial strength, operations and good capital management The company's profit margin indicators are all at the industry average and fluctuate slightly over the years The reason is that the profit after tax has increased but cannot keep up with the growth rate of other indicators 64 3.2.3 Evaluation of the effective use of import working capital The company's working capital is aggregated from two basic sources of capital: working capital and fixed capital Working capital accounts for the majority of the Company's working capital Unit: VND million Criteria Import revenue Import working capital Turnover capital (round) Average period (days) Table 3.7: Effective use of working capital of the company in the period of 2018-2020 (Source: Accounting Department of National Fortune Co., Ltd.) • The turnover of import working capital Looking at the table above, we can see that the growth rate of working capital is slower than the growth rate of revenue, causing the turnover of working capital to increase from 3.73 rounds in 2018 to 5.05 rounds in 2019 In 2020, National Fortune's efficiency in using business capital is not good The turnover of imported working capital decreased to 1.12 rounds • Average working capital period From the above table, we can see that in 2018 it took 96.58 days for working capital to turn around, but in 2019, the average working capital period decreased to 71.35 days, proving that in 2018 the efficient use of capital of the company is not good In 2020, the average working capital period increased to 322.58 days, higher than 2019 It can be seen that the fluctuations of the 65 average working capital period and the number of working capital turnover are opposite The number of working capital turnover increases, the average working capital period will decrease and vice versa The slow consumption of imported goods and debt collection of the Company led to the delay in collecting money to prepare for new shipments, the new business cycle resulted in increased capital turnover time There were also times when the Company had difficulty in purchasing foreign currency to pay for import contracts for goods to suppliers, leading to contract failure, stagnant local currency and hindered capital turnover , negatively affecting the business performance of National Fortune In general, in the past three years, the Company's capital efficiency is still low and unstable CONCLUSION CHAPTER Through the above analysis, it can be seen that the import process of National Fortune Co., Ltd has been carried out very seriously, in good compliance with the company's regulations and the provisions of the Law Purchasing and delivering goods is one of the most difficult stages, and encounters the most inadequacies But the success in implementing the effective process will bring obvious economic benefits to the company, avoiding unnecessary losses in the process of importing goods Although there are still small shortcomings, the process has also shown the professionalism, ability and working spirit of the staff of the Purchasing Department as well as of National Fortune Co., Ltd In addition, the company needs to continue to promote the efficiency of the process, gradually adding measures to overcome existing problems Chapter 4, the last chapter of the thesis, will provide analysis, recommendations and suggestions for the company to further improve and develop 66 CHAPTER 4: SOLUTIONS AND RECOMMENDATIONS This chapter would give some assessment of National Fortune Co, Ltd by summarising SWOT and suggest solutions and recommendations for the company to improve importing business 4.1 SWOT assessment of National Fortune Co., Ltd.: Strengt S1: Capture marke quickly S2: Young, highly efficient human re S3: The brand is g being known Opportun SWOT O1: The economy continuing to thriv O2: Joining intern organizations open development oppo O3:New human re Table 4.1: SWOT assessment of National Fortune Co., Ltd\ 4.1.1 Strengths: S1: Grasphing market trends quickly: With a young human resource and the Board of Directors has many years of experience in the industry, National Fortune always updates and captures the latest changes and development trends in the industry as well as in the market to apply both to the process of managing organizational structure and business operations 67 S2: Highly qualified, efficient young human resources: Most of the staff in the company are highly educated people, from College to University and Postgraduate The ability to work in a team as well as independently is relatively good, working professionally and responsibly with the department and the company S3: The company's brand is gradually becoming more known: This is really the company's advantage Thanks to the motto of working with prestige, product quality and service quality, the company has increasingly won the trust of domestic and foreign customers and partners Besides, its improves relationships when working with banks, State agencies 4.1.2 Weaknesses: W1: Lack of experienced employees: The biggest weakness of the company at the moment is that there are not many experienced and skilled employees to perform the company's operations such as negotiating, handling procedures, and doing business custom, etc W2: The competitiveness is not high The size of the company is small and the brand name is not really wellknown, which reduces the company's competitiveness In addition, the company does not have many after-sales services and truly focus on this side W3: Existing resources and potentials have not been fully exploited The business scale of the company is not really high when the market demand is very large Therefore, it is necessary to exploit all potentials, financial and human resources to focus on further improving the business scale and competitiveness with rival companies 68 4.1.3 Opportunities: O1: Vietnam's economy is continuing to thrive: Along with the general development of the world economy, Vietnam's economy also promises to develop deeply and strongly in the coming years With the concerns and help of developed countries in Vietnam in addition to the State's policy support, this is an opportunity open to all companies, especially young companies like National Fortune It is a chance to promote the company's business development in general and improve the efficiency of import and export activities in particular O2: Joining international organizations opens up many development opportunities: Vietnam's accession to the EU-Vietnam Free Trade Agreement (EVFTA) is really an opportunity for small and medium enterprises to develop even stronger, with the attractive tariff preferences that the Agreement brings Especially the company that has many commercial activities with Europe like National Fortune O3: New and abundant human resources Currently, young human resources are well-trained at prestigious universities and colleges This is really a powerful resource if businesses use them properly With the stabilization, coordination and training of young human resources, high morale and responsibility will be the premise develop and become excellent individuals in the future of National Fortune Co., Ltd 69 4.1.4 Threats: T1: Impact of the Covid-19 epidemic Up to now, the Covid-19 epidemic is still the biggest concern not only of National Fortune company but also of the Vietnamese economy as well as the world T2: There are many growing competitors As the economy grows, business opportunities open up for all businesses, the competition becomes increasingly fierce In the near future the competition is not only between Vietnamese enterprises but also foreign enterprises investing in Vietnam Fierce competition makes businesses have to put more effort into developing their products and services National Fortune Company Limited is no exception Faced with this challenge, the company needs to focus and strongly develop its business T3: New policies, new business rules after joining international organizations: Faced with new opportunities, one of the inadequacies in Vietnamese businesses today is understanding the rules when participating in international organizations Knowing the Law and those regulations in the new era is very urgent, in order to limit disputes and risks for your business This poses a requirement for the Board of Directors of National Fortune Co., Ltd to further promote the task of training and coaching employees in the coming time 70 4.2 Solutions: 4.2.1 Improve marketing activities, improve product quality: Further promoting marketing activities, searching for markets, finding customers, contributing to increasing the company's revenue Besides, the development of product lines is the strength of the company to capture the tastes of consumers, increasing the reputation of the company to the customers, partners and creating good relationships with State agencies Focusing on the value of products such as quality; in the current business era, customers are always demanding more and more quality products Besides, there are after-sales strategies such as warranty and maintenance Create a good image for the company in today's fiercely competitive environment 4.2.2 Strengthen coordination between departments, improve business management efficiency: Each department needs to complete their assigned tasks are the main tasks, in addition to supporting other departments Departments must clearly understand their responsibilities and duties when supporting work related to their departments This is invest in terms of awareness and time in order to create the smoothest and most effective coordination for the general business activities of the company, avoiding conflicts of interest and troubles among departments 4.2.3 Focusing on training import operations for purchasing staffs: Training is always one of the most urgent issues that the company's management is most concerned about This is a right decision of the company and in the coming time, special attention should be paid to the training and practical training of employees in the company, especially the purchasing staffs With the new policies of the State and international regulations, this is really an issue that needs to be implemented immediately and strictly by the 71 company to avoid the case of employees being passive at work, affecting to company development 4.2.4 Appropriate investment in facilities, technical equipment for the job: Besides the investment in people, it is also an investment in facilities and equipment for the work of each department: replacing old equipment, maintaining existing equipment, etc to create the most favorable and effective working environment for employees Promoting employee work efficiency is helping to save costs for the company and bring good results in business 4.3 Recommendations: 4.3.1 For National Fortune Co, Ltd.: Update market situation, consumer tastes, continue to bring customers the best and most reliable products Training people is the right direction and a premise for the company to develop stably Update support policies of the State, new regulations are applied Making full use of government support will bring great advantages 4.3.2 For Customs agencies: Applying science and technology to management, proceeding to simplify procedures, saving time, costs, and people Ensure that the e-customs system operates correctly and efficiently, and applies it on a broader scale Guiding businesses in the process of carrying out procedures at the office, avoiding the situation that causes trouble for businesses 72 4.3.3 For the State: Guiding enterprises in the process of accessing the State's support policies, creating favorable conditions for their development Managing well interest rate mechanisms, exchange rate stability, inflation rate, etc to stabilize the economy CONCLUSION CHAPTER The above solutions and recommendations are made based on the analysis of advantages and disadvantages that National Fortune Co., Ltd That is still exists Grasping the inadequacies and accepting changes to move forward, the company will become more and more perfect and develop more sustainably Any company or organization has its own problems, but if they are aware of those problems, focusing on solving them will bring good results for that organization 73 CONCLUSION The conclusion will provide the summary of whole research’s main findings In addition, the study limitation and recommendations for other researches are also given in detail Summary of the study: This thesis collected analysis and evaluation of the business activities of National Fortune Co, Ltd in general and importing business in particular through the author's internship period of more than three months This enables gaining deeper insight into the difficulties that a Purchasing staff frequent struggle with during implementing the import process for the company with Covid-19 effects From what has been collected and analyzed in the previous chapter, the study could affirm that National Fortune Co, Ltd has shown initial successes when entering the market so far although it is a new, fledgling company with its first steps in recent years Moreover, there are three main obstackles that a purchaser in National Fortune facing during Covid-19 pandemic including: Input costs increase, uncontrol and slow order progress, unqualified import products In addition, the survey also revealed that import process at National Fortune would not an easy task because of the lack of experienced employees From the research findings, several approachable solutions would be proposed so that the company and its staffs can overcome their obstacles To be specific, to solve fledgling employees, National Fortune Co, Ltd should focus on professional training for employees, creating an attractive working environment to retain experienced employees Besides, when struggling with difficulties that Covid-19 epidemic caused, the company needs to proactively 74 take measures to respond and reserve inventory when imported goods not arrive in time, expand the customer base and company size by strengthening marketing to increase revenue; manage debt collection operations to ensure the financial viability of the company The limitation of the study: Although several significant findings and solutions are provided, there are some disadvantages which would be mentioned as the limitation of the study Foremost, the study was conducted in a short time as an intern This could trigger that some potential difficulties have not indicated yet as well as some effective solutions have not given Furthermore, due to the limited time for conducting the data and writing the thesis, self-analysis and personal evaluation in the chapter findings and discussions could be inadequate Finally, because subjective opinions and limited advices could increase the risk of not gaining deepest insight into the company’s obstacles, some solutions recommended maybe haven’t solved completely the difficulties that company and employees have struggled with Suggestions for further studies: From the thesis limitation, several topics for further studies are recognized To be specific, researchers could conduct some investigation about mentioned difficulties of a purchaser in current pandemic situation and recommendations to solve these, which increases the chance of having awareness of obstacles purchaser struggling with more adequately and correctly In addition, these studies should broaden the research time, so that the author has a deeper, more specific and detailed view of the importing business of an enterprise Obviously, this would be particularly valuable for people who are interested in working in import-export field, specially, purchasing business 75 REFFERENCES National Fortune Co, Ltd website: https://www.nationalfortune.vn/ National Fortune Trading & Technical Services Co., Ltd: Report on business results, Accounting Department of National Fortune Co., Ltd in 2018, 2019,2020 National Fortune Trading & Technical Services Co., Ltd: Balance sheet, 2018, 2019,2020 National Fortune Trading & Technical Services Co., Ltd: Internal report of purchasing department 2018, 2019, 2020 Principles of Supply Chain Management, Second Edition by Richard E Crandall, William R Crandall, and Charlie C Chen (2017) Henna Ylinen: Evaluating and selecting suppliers - Case Study of Tuppu-Kaluste (2017) P.D Tran Van Duc, Le Thu: Basic issues on improving economic efficiency of social production (1982) Lequiller, F; Blades, D.: Understanding National Accounts, Paris: OECD (2006) Import Export Clearance Procedures, Mr Em Khin Vorac (2018) 10 General Statistics Office of Vietnam: https://www.gso.gov.vn/ 11 Vietnam General Department of Customs: https://www.customs.gov.vn/ 12 China General Department of Customs: http://www.customs.gov.cn/ 13 Website: https://www.indexmundi.com/ 14 Webpage:Inc.com–Purchasing: https://www.inc.com/encyclopedia/purchasing.html 15 Webpage: Entrepreneur - How to Find and Work with Suppliers Available at: https://www.entrepreneur.com/article/66028 16 Webpage: Investopedia - What is an ‘import’ Available at: https://www.investopedia.com/terms/i/import.asp 76 77 ... business of National Fortune Trading & Technical Services Co. , Ltd" - Chapter 3: "Evaluating the effectiveness of importing business of National Fortune Trading & Technical Services Co. , Ltd" -... certificate of National Fortune Trading & Technical Services Co. , Ltd ., issued on May 1 6, 2013 National Fortune Trading & Technical Services Co. , Ltd has the following functions: Supply of machinery... practice, I have chosen the topic "Solutions to improve importing business of National Fortune Trading & Technical Services Co. , Ltd" to analyze the current situation of import activities in the context