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Chapter 2
Business forms in foreign trade

MA Tran Trong Duc

 Chapter 2’s objectives

1. Study the business forms in the international

trade, distinguish them and understand the
advantages and disadvantages to apply in
international business.
2. Understand the operations for each of the
above business forms
3. Applying business profession in accordance
with each mode of international business

2
 Transaction methods on international
market

1 2 3 4 5

International Other special

Common sales Countertrade Transactions at
outsourcing transaction
fairs and methods
and re-export exhibitions
transactions

3
 1

Common sales

4
 Common sales

Common sales is the most common transaction

method on the basis of money and goods
relations in foreign trade.
Buyer: A person use money to buy goods
Seller: A person who has goods for sale

Currency - Commodity

5
 Characteristics of common sales

• Participants: different countries - Các quốc gia khác nhau=> văn hóa khác
nhau, ngôn ngữ khác nhau, cách làm vc khác

▪ culture, legality, prestige, size? nhau, hệ thống luật pháp

• Currency: foreign currency to one or both

parties
▪ Currency? consider có phải ngoại exceptional: 1 quốc gia có tỷ lệ lạm phát cao => đổi cả 2 bên sang dollars
tệ với cả 2 bên k?

▪ Exchange rate? exchange

• Commodities: the object of trading activities,
rotation through national boundaries

6
 Types of common sales

Common
sales

Direct Indirect
Broker
Agent
Differences btw
direct & indirect

7
 Direct sales

Direct sales is an agreement in which the buyer and seller directly establish a
selling and purchasing relationship under ordinary conditions of sales.
Direct import and export
❖ Advantages: dễ dàng thay đổi để đáp ứng nhu cầu khách hàng
The parties reach their full potential
Fairness => easily accepted
Be proactive and decide on your own issues
Directly approach international customers => relationship, information,
experience gia tăng được mqh quốc tế giảm chi phí do k cần bỏ tiền cho trung gian
Savings: no transaction fees for brokers, commission for agents ....
❖ Disadvantages:
ko phụ thuộc vào ông trung gian do kcan đáp ứng nhu cầu

Requires understanding of partners' culture and transaction practices

High requirements on appropriate transactions
Accessibility of information
Requires experience in international direct trading
8
 Indirect sales

Indirect sales is a type of common transaction in which a selling and

purchasing relationship is established through a third person (intermediary -
agent, broker).
3rd person => help buyer-seller conduct business transactions
• Holding transaction information, negotiation experience => catalysts in
foreign trade mg dc hưởng phí mg/đại lý dc

• Brokers: introduce partners => brokerage fees nhuậnhưởng hoa hồng đại lý => lợi
đều hơn so với môi giới

– Not responsible for business dealings

– => thoroughly research the credibility, responsibility and service of the
broker
• Agent: agency contract specifying the rights and obligations of the parties
(performing the work authorized or on their own behalf)
– Join as a part of business
– Responsible for operations and business outcomes

9
Agent types

10
 Indirect sales (con’t)

❖ Advantages
▪ On the basis of the common and fundamental goods relations => fair
▪ Take advantage of intermediaries: information, experience, cost
savings (market research, establishment of business relations,
establishment of facilities ...)
▪ => Fast, effective (entering new markets)
❖ Disadvantages
▪ Limiting opportunities to directly contact business partners,
customers
▪ Share benefits with middlemen
▪ Satisfy the requirements of the middleman
▪ Difficult to grasp customer and partner information
▪ The risk of reduced competition due to lack of market information
▪ Business costs increased

11
 Steps: Common sales

1. Search information about goods and trading partners

2. Assessment of goods (quality, price) and trading partners (size, market
share, distribution network, solvency ...)
3. Contract signing negotiation: terms of contract
Goods: Price, quantity, weight, packaging
Delivery: Delivery method, delivery term
Payment: Payment method, payment term, number of payments
Terms of inspection, penalty, force majeure, complaint ....
4. Perform sales contracts
Seller: Delivery (gathering goods, hiring vehicles, transporting to the place
of delivery, ...)
Buyer: Making payment (cash / money transfer / collection / L / C and
fulfill payment obligations as committed)

12
 International payment

1. Cash
2. Telegraphic transfer
3. Collection of payment
4. L/C
1) revocable L/C)
2) irrevocable L/C)
3) at sight L/C)
4) usance L/C)
5) transferable L/C)
6) Revolving L/C)
7) Anticipatory L/C)
8) standby L/C)
9) Back-to-back L/C)
….. 13
 TT before shipment

(1) Sale contract

Importer Exporter
(5) Goods are shipped
(2)
Payment (4)
request Payment is
advised

Importer’s Bank Exporter’s Bank

(3) Bank arrange
transfer
 TT after shipment

(1) Sale contract

Importer Exporter
(2) Goods are shipped
(3)
Payment (5)
Instructions Payment is
advised

Importer’s Bank Exporter’s Bank

(4) Bank arrange
transfer
 Collection of payment

DRAFT

A draft, sometimes referred to as a bill of exchange, is the instrument

normally used in international commerce to effect payment. A draft is
simply an order written by an exporter instructing an importer, or an
importer’s agent, to pay a specified amount of money at a specified
time.

Drafts fall into two categories, sight drafts and time drafts.
A sight draft is payable on presentation to the drawee.
A time draft allows for a delay in payment—normally 30, 60, 90,
or 120 days

16
 Collection of payment

Drawee Drawer
(Buyer/Importer) (Seller/Exporter)

(0) Contract
(1) Shipment + invoice
and documents

(4) (2)
(5) Pay
informs Submit Draft (7)
the Draft
the (Bill of Payme
importer exchange) nt
about the And collection
Draft order

(3) Send Draft and collection

order

(6) Payment
Collecting Bk/ Remitting Bk
Presenting Bk (Seller’s Bank)
(Buyer’s Bank)
 Collection of payment

Document against payment

Export
Import
(0) Sale Contract
(1) Shipment of
Goods

(4) (7)
(5)
informs the Credit
Payment (2)
importer payment
and Submit Draft,
about the
receive Documents and
arrival of
documents collection order
documents

(3) Pass Draft, documents and

collection order
(6) Payment
Remitting Bank
Collecting Bank/
Presenting Bank
 Collection of payment

Documents against Acceptance

Drawer
Drawee (0) Ký kết hợp đồng
(1) Giao hàng

(8) (5)
Thanh Chấp (4) (7)
Thông (2)
toán nhận Thông (10)
báo BCT Xuất
khi đến HP và báo Báo
trình
hạn nhận đến chấp có
BCT
BCT nhận

(3) Gởi BCT đi nhờ thu

(6) Chấp nhận thanh toán
(9) Thanh toán
Collecting/Presenting Bk Remitting Bk
 Irrevocable L/C At Sight

6
Issuing Bank Advising
Bank
2
5
7 1
3

Importer 4 Exporter
 Letter credit process

Step 0: The importer and exporter start negotiating the terms and conditions of the
deal. Once they reached an agreement, they sign a sales contract.
Step 1: Letter of Credit Application: After exporter and importer sign the sales
contract, importer, who is defined as applicant under letter of credit rules, applies
to its bank to issue a LC.
(Note: the letter of credit application must be in accordance with the terms of the
sales agreement)
Step 2: Letter of Credit Issuance: Importer’s evaluates the letter of credit
application. If importer’s bank and importer could reach an agreement ,
importer’s bank issues the LC.
(Issuing bank sends the LC to advising bank via secure swift platform by online
means)
Step 3: Advising LC to the Exporter: Letter of credit advised to the beneficiary by
the advising bank
(Advising bank hss no payment responsibility)
Step 4: Shipment: Exporter prepares the goods and makes the
shipment, if terms and conditions of the LC workable for him
Step 5: Presenting documents to advising bank
In most cases, the advising bank is also the nominated bank, so the
bank can accept the presentation and forward the documents to the
issuing bank.
Step 6: Forwarding Documents to the Issuing Bank
Step 7: Checking Documents, Payment at Maturity: At final stage,
issuing bank checks the documents according to the teams and
conditions of the credit and governing letter of credit rules.
If documents are complying, issuing bank must pay the LC amount to
the exporter at maturity.
Issuing bank should release the complying documents to the applicant,
after securing its payment, LC amount plus commissions
22
 2

Countertrade

23
 Countertrade

Counter trade is a method of exchanging goods, in which exports are closely

associated with imports, sellers are simultaneously buyers, and the amount of
goods delivered is equivalent to the amount of goods received.
• The goods exchange
⇒Currency: calculation function (without payment function)
• Export is closely associated with imports
⇒Procedures: the buyer and seller jointly complete the import and
export procedures
⇒Do not increase or decrease the national trade balance
• Purpose of exchange should make the amount of goods delivered and
received with equivalent value (quantity, price, sales terms)
Example: Saudi Arabia agreed to buy ten 747 jets from Boeing with
payment in crude oil, discounted at 10 percent below posted world oil
prices.
24
 Characteristics of counter trade

❖ Balance requirements
▪ Obligations and Rights
▪ Prices and transactions
▪ Merchandise: value and value of use
❖ Balance characteristics:
▪ Price
▪ The total value of goods delivered to
each other
▪ Delivery conditions
25
Counter trade types

26
 Barter

Barter is a form of counter trading where

the parties exchange equivalent goods
and the exchange activity takes place
almost simultaneously.
▪ Do not use currency as a payment function
▪ Equivalent goods
▪ Delivered and received at the same time
Barter is the direct exchange of goods and/or
services between two parties without a cash
transaction. Although barter is the simplest
arrangement, it is not common.
27
 Compensation

Compensation is the method of counter trading

that the delivery and receipt of goods will be
recorded so that during each business period, it
will be settled and compensated each other.
● Parallel compensation - Before / after
compensation
● Actual compensation / escrow account
● Partial / full compensation

28
 Clearing

Clearing is a form of counter trade, which the

parties appoint the payment bank to open an
account (called a Clearing account) to record
and settle the total value of goods delivered
and goods of each side.
● Purchases and payments take place on
the account
● 4 subjects open tracking accounts:
○ 2 Transaction subjects
○ Banks of seller and buyer

29
 Counter purchase

Counter purchase is a form of purchase and

sale whereby one party undertakes to
repurchase certain goods of the other party in
the future
● The previous delivery party will accept to
receive back some of the other party's
identified items within a specified time
● The shipper will repurchase the goods for
the counter purposes of the goods
delivered

30
 Offset

Offset is a form of purchase and sale whereby one party undertakes to

repurchase certain goods of the other party in the future in order to
offset the consignee of the corresponding amount of foreign currencies.
● The forwarder will accept future purchases of some unspecified
goods
● Purpose: to return the goods to the previous delivery party an
amount of goods = foreign currency equivalent to proactively
deliver the goods according to the received value.
● Suitable for countries with strict foreign exchange control
regime, large trade deficit

31
 Switch

Switch is a form of purchase and sale in which one party transfers

its repurchase obligations from one party to a third party in order
to fulfill its committed obligations in the future.
▪ Usually happens when the company receives goods that are
not in its specialty => transfers to a third party to fulfill its
obligations.
▪ Creating better conditions for specialized companies to
engage in the nations’ counter trading commitments
▪ Usually takes place between rich (technologically strong) -
poor (agriculturally strong) countries

32
 Buy backs

Buy backs is a form of purchase and sale by one party to hand over the
production line and equipment to the other in order to receive back the finished
products produced from such production line or technology.
(if selling equipment, lines, technology and acquiring finished products)
-> often associated with technology transfers (total equipment supply /
inventions / technical know-how)
• Take advantage of cheap raw materials and labor in the country
participating in the exchange
• Participants: Governments of the countries or companies guaranteed by
the government
• The effect is not considerable:
– High equipment prices
– Control the price of the product
– Restrict activities of the transferee
– The profits of the transferee are low due to low risk
33
 Advantages and disadvantages of
countertrade

❖ Advantages
▪ Do not use currency => do not bear the risk of exchange rates, reduce
transaction costs and payments
▪ Promote trade even in the absence of transaction conditions: foreign
currencies, imperfect goods, inventories, etc.
❖ Disadvantages
▪ Complicated business and application principles
▪ Requires intensive foreign trade skills and international experience
▪ Limited items
▪ Conflicts of interests imposed by the parties
▪ The trend of trade liberalization does not create an incentive for this
kind of trade

34
 Countertrade transactions

1. Contract forms
1 contract with 2 lists of goods
2 contracts each one has a list of goods
1 document regulating general principles -> signing specific purchase and
sale contracts
2. Contract content
List of goods, quantity and value
Price, how to determine price
Delivery terms
3. Terms of counter guarantee
Use reciprocal letters of credit
Use the 3rd person: The Bank controls the documents of goods
ownership
Use a special account at the bank
Penalty for missing or delayed delivery
35
 Reciprocal L/C

2’

A’s Bank B’s Bank

2
1’
3’ 1
3

4’-y
A B
4 -x

36
 3

International outsourcing and re-

export transaction

37
 International outsourcing

Definition:
International outsourcing is a business transaction
method in which one party (the outsourcee) imports
raw materials or semi-finished products of another
party (the outsourcer) to process them into finished
products and deliver them to the outsourcee and
receiving remuneration (called processing fee)
● Buying and selling: money - services
● Labor export on the spot

38
 International outsourcing

Characteristics:
● Outsourcing activities associated with export -
import activities
● Commodity: The value of labor synergy, does not
require much intellectual thinking
● One-way operation:
○ Outsourcer: a country with a developed
technology
○ Outsourcee: less developed countries in
technology, labor-intensive
39
 Types of international outsourcing

Based on payment methods

● Contractual method: determining target price for
each product including contractual cost and
contractual remuneration
● Cost plus contract: payment of the entire product at
the actual cost plus processing costs.
Commonly used when the outsourcer is
knowledgeable and has good control of the
outsourcee' activities
40
 Types of international outsourcing

Based on the right to transfer ownership of materials and finished

products
❖ Delivery of raw materials to receive finished products:
The outsourcer orders the raw material / semi-finished product to the
outsourcee
The outsourcee produces finished products within the prescribed time
limit
The outsourcer receives the finished product and pays the processing
fee to the outsourcee
During production, material ownership remains with the outsourcer
❖ Buy semi-finished materials
The outsourcer sells the raw material to the outsourcee and acquires
the finished product of the outsourcee.
Ownership of raw materials belongs to the outsourcee 41
Types of international outsourcing

Based on the subjects involved

● Two-sided outsourcing: only the outsourcer and outsourcee
● Multi-side outsourcing: (transition outsourcing)
● A outsourcer
● Many parties act as outsourcee
● A outsourcer processing transactions on its behalf with
multiple outsourcee.

42
 Advantages and disadvantages of
international outsourcing

❖ Advantages:
▪ Promote specialization and international division of labor
▪ Enterprises in outsourcee countries have access to modern production
technology, learn from experience in international management and
production of goods.
▪ Labor is trained to produce goods that meet international standards and
earn income (solve the employment issues for the densely populated
and underdeveloped country)
▪ Collect foreign currencies, improve the national trade balance
❖ Disadvantages:
▪ Cheap remuneration
▪ It is difficult to establish long-term outsourcing relationship (when
cheap labor is no longer a competitive advantage)
▪ Cultural conflict and abuse of labor by the outsourcee

43
 International outsourcing

❖ Regarding finished goods:

❖ Specific determination of goods names, quantities, qualities, packaging
and standard bases.

❖ Regarding Materials: clearly classify into two types of materials:

❖ The main material is the core material used to make the finished product,
clearly identifying the supplier and origin of the raw material.
❖ Accessory material is a supplementary material that has a small value in
the price to complete the product, clearly identifying the supplier and
origin.

44
 International outsourcing

❖ Regarding processing fee, it is possible to determine the cost which is:

❖ CMT - If the outsourcee is responsible for cutting, making, trimming the
product.
❖ CMP - If the outsourcee is responsible for cutting, making, packaging the
product

❖ In addition, it is possible to define some additional costs in processing fees

such as CMT or CMPQ, with the implication that Q is quota.
CMTthQ: + tiền chỉ (thread)

45
 Master-Baby L/C

Delivery of raw materials - Receive finished products

2
Master L/C at sight

Outsourcee’ Outsourcer’
5
Bank Bank
Baby deferred L/C

6 1
3 4

(7)

Outsourcee Outsourcer

8
46
 Master-Baby L/C

Purchase raw materials - Sell finished products

6
Master L/C at sight

Outsourcee’ Outsourcer’
2
Bank Bank
Baby L/C at sight

3 5
7 1

(4)
Outsourcer
Outsourcee

8
47
 International outsourcing

❖ Regarding delivery:
❖ Should specify the time, location, delivery method, delivery
conditions for both raw materials and finished products.
❖ Usually Vietnamese companies usually receive under CIF terms and
deliver under FOB terms, although it is unbalanced in terms of
delivery but because they are weak in foreign trade and chartering
ships.
❖ Complaints and arbitration
❖ Clearly define the method, procedure for making a complaint.
Usually the two sides have to negotiate first then set the terms of the
arbitration.
❖ Usually, all parties want to hear their claims in their countries or
third parties that are more favourable for them.
48
 Re-export

Definition:
Re-export is a form of international business in which export
activities take place on imported goods that have not been
processed domestically.
Nature: Commercial intermediaries, collecting money
from re-export services
3 parties = Exporting country, importing country, re-
exporting country
Re-export transactions = 3-party transactions / triangle
transactions

49
 Types of re-export

(1) Common re-export (Temporary import and re-export)

Ký hiệu:
Exporting Hàng hóa
country Tiền thanh toán

Re-exporting Importing
country country
(2) Transshipment of goods
Exporting
country

Re-exporting Importing
country country
50
 Advantages and disadvantages of re-
export
❖ Note:
▪ Common re-export:
• Often requires changes in brands and packaging
• The re-export party does not want to deliver goods directly from the exporting country
to the importing country
• Keep information about the source confidential
▪ Transshipment of goods:
• Do not focus on information security or auxiliary packaging services
• Pay much attention to payment
❖ Advantages
▪ High profitability with excellent profession and geographical and financial privileges (Hong
Kong, Singapore, UK, USA, Netherlands ...)
▪ Limit deficit of the national trade balance
❖ Disadvantages
▪ It is no longer effective when trade liberalization develops
▪ Not a national sustainable development solution

51
 Re-export

❖ Simultaneously signing the Import Contract and Export Contract: suitable

for:
▪ Goods
▪ Packaging, brand
▪ Delivery term
▪ Voucher of goods
❖ Payment: Back-to-back L / C - opened on the basis of another letter of credit
(original letter of credit):
▪ The value of back-to-back letter of credit is lower
▪ Larger number of documents
▪ Sooner delivery time

52
 Back-to-back L/C

Issuing (2) Bank of Advising

Bank re- (5) bank
exporter

(3) (4) (6)

(1)

(8)
(9)
Importer Re- Exporter
exporter

(7)
 4

Transactions at fairs and

exhibitions

54
 Transactions at fairs and
exhibitions

❖ Definition
Transactions at fairs and exhibitions is a form of transaction
occurring periodically in a certain time at a defined location and
regulations.
❖ Characteristics:
• At 1 place, 1 specific time
• Take advantage of time and seize the maximum opportunity
• Requiring standards on product quality, decoration,
advertising ...
• High transaction professions are required
• Requires thorough preparation

55
 Types of transactions at fairs and
exhibitions

❖ Based on the content:

General exhibition fair
Trade fairs and exhibitions
Highly targeted and focused on a specific group of customers and
customers
❖ Based on organization size
Local fairs and exhibitions
National fairs and exhibitions
International fairs and exhibitions
Not targeted to groups of customers, but to businesses attending

56
Note when participating international fairs

1. Consider the nature, location, time of the fair or exhibition

2. Do research about conditions and display methods
3. Evaluate participants, visitors
4. Select the location of the stall, calculate the rental price of the
stall and related service costs
5. Analyze benefits and costs when attending

57
 Advantages and Disadvantages when making
transactions at fairs and exhibitions

❖ Advantages
▪ Contact potential customers selectively
▪ Develop business profession and promote businesses
▪ Collecting information about competitors
❖ Disadvantages
▪ Only takes place in 1 place in a short time
▪ Requires high professional and management skills (import-
export, marketing ...)

58
 Profession: Transactions at fairs and
exhibitions

❖ Make a general plan

❖ Planning to implement when there are situations when customers
come to buy, sign contracts or contact customers post-exhibition.
❖ List the display list and items to bring
❖ Outsource or design your own art and advertising techniques
❖ Select and train participating staff
❖ Planning and schedule of transportation and loading and unloading
of goods

59
 5

Other special transaction methods

60
 Special transaction methods

1. International Auction
2. International Bidding
3. Transaction at commodity exchanges

61
 International auction

Definition:
International auction is a special method of sale
held in public in a certain place where buyers are
free to preview the goods and compete to bid for
them.
Nature: 1 seller, many buyers

62
 Types of auction

❖ Based on the purpose of use

▪ Commercial auction: commercial purposes
▪ Non-commercial auction: goods with cultural or unique values
(antiques, memorabilia ...)
• Possession purposes
• Humanitarian and charitable purposes
❖ Based on the auction content
▪ Up auction: offer the lowest price and pay up gradually up to the
highest price that can be sold.
▪ Down auction: the highest bid offered will be sold and paid down
gradually, going to the highest bidder accepted to buy.
❖ Based on the scope and form of implementation
▪ Public auction
▪ Ballot

63
Advantages and Disadvantages of auction

❖ Advantages
▪ Seller benefits: 1 seller, sets their own purchase rules and auction
rules
▪ Buyers benefit: fairness, publicity, quality assurance
❖ Disadvantages
▪ Trade frauds are likely to occur: collusion with prices (detrimental
to sellers), inciting high bids (detrimental to buyers).
▪ High cost

64
 International Bidding

International bidding is a special transaction method whereby the

buyer makes a predetermined demand for goods and services,
under the terms of sales; so that many competitors make their
offers to win the right to supply, and the buyer chooses to sign the
contract for the supplier has the most reasonable price and
condition.

65
 Types of international Bidding

❖ Based on the object

▪ Construction and installation bidding, management bidding,
consultancy bidding ...
▪ Distinguish based on the object of trade
❖ Based on scope
▪ Open bidding
▪ Limited bidding
▪ Appointing bidding
❖ Based on the form of bidding
▪ Bidding 1 envelope / 1 bag of documents
▪ Bidding 2 envelopes / 2 bags of documents
❖ Based on how to organize bidding
▪ 1-phase bidding
▪ Multi-stage bidding

66
Several principles in international bidding

o Information: public, early and accurate

o Fairness, confidentiality, objectivity
o The source of capital is clear
o Economical and highly effective

67
 Advantages and Disadvantages of international
bidding

❖ Advantages:
▪ The bid solicitor has the opportunity to choose
the contractor that is most satisfied
▪ Management and funding agencies: avoiding
losses in goods and capital construction
▪ The contractor is guaranteed of solvency
❖ Disadvantages
▪ High cost
▪ Difficult to control fraud: bid rigging

68
 Profession: International Auction

1. Prepare for auction

Prepare goods
Set up auction rules
Publicizing information about auctioned goods
Post ads, notice the time, location, quantity of goods, auction rules
2. Display of goods
3. Conducting auction
Layout hall
Prepare equipment
Auction methods: up, down
4. Contracting and delivery
Predefined contract
Within 3-14 days customers pay and receive the goods

69
 International bidding

1. Bidding preparation
2. Prequalification of bidders
3. Answer and explain questions of bidders
4. Collect records
5. Organizing bidding opening and contractor selection
6. Organize the announcement of bid results and sign
contracts

70
 Transaction at commodity exchanges

Definition
Transaction at commodity exchanges is a mode of
purchase and sale through brokers appointed by the
Exchange, to purchase and sell goods in great quantity,
of similar nature, of interchangeable qualities; following
certain contract forms at a fixed location.

71
 Characteristics

1. Standardized trading conditions

2. Everytime everywhere
3. Giao dịch khống
Refer to international prices
Sharing commercial risks

72
Types of transaction at commodity
exchanges

73
 Immediate transaction

Prices of goods and delivery time almost

simultaneously
Make offers, sign contracts and fulfill contractual
obligations (payment, delivery) immediately (3-10
days).
Subjects: available and classified goods
Do not attract speculators to trade

74
 Forward trade

❖ Prices are set at the time of signing the contract

❖ Time of delivery and payment: after 1 period (1
time in the future).
❖ Attracting speculators
▪ Đầu cơ giá lên (Bull) – backwardation
▪ Đầu cơ giá xuống (Bear) – contago

75
 hedging

Through a forward transaction at an exchange, the

owner of the commodity signs a forward contract
for selling the goods with a guaranteed price fixed
in the future.

76
 Advantages and disadvantages of
transaction at commodity exchanges

❖ Advantages
▪ Sharing commercial risks
▪ Large import-export transactions with countries with
international commodity exchanges
▪ Refer to international commodity prices
▪ Rapid capital turnover
❖ Disadvantages
▪ Requires high profession
▪ Large trading capital
▪ Requires the ability to analyze information and forecast the
market

77
 Profession: Transactions at commodity
exchanges

❖ The customer authorizes to buy or sell on behalf of the customer and to pay an
initial security deposit.
▪ The contents of the authorization letter are registered in a separate book and
transferred immediately to the transaction bureau to the clerk of the trading
broker.
❖ The broker signs a contract to buy or sell, the department's staff records the
quotation, quantity, and delivery time.
▪ The bid and offer sides will meet and hand over the contract.
▪ If at the end of the day, a certain type of transaction does not have a contract,
the clerk records on the relevant published price the letter "N" (means
nominal).
❖ The broker awarded the contract to the customer. The customer signs the stub and
returns the stub to the broker, the client holds the contract
❖ At the end of the term, the customer hands the contract back to the broker so that
this person can come to pay at the clearing house.
❖ If it can be sold, the commission will be excluded. If it cannot be sold, it can issue
new orders or withdraw orders ..
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 Discussion

1. What do you think is the biggest difference between export

outsourcing and re-export? When is it easy to mistake re-export
as export outsourcing?
2. Evaluating the following opinion: "In the context of increasingly
globalized, highly specialized economy, Vietnam should focus on
international outsourcing".
3. In fact, If farmers have high crop yield, they see a loss in prices.
When they have low crop yield, there’s an increase in prices. As
a foreign trader, what would you recommend to Vietnamese
farmers?
4. Analysis of principles in international bidding? To you, Why
are these principles proposed?

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