CHAPTER 4.
EXPORTS IMPLEMENTATION
Lecturer: Dr.Vu Thi Hanh (SBS, Belgium)
Email: vuhanhftu@gmail.com
Phone: 0914676782
4.1. MARKET AND PARTNER SELECTION
- Export market selection:
+ To examine the supply and demand as well as the capacity of a market for the amount of goods identification.
+ To examine the political, economic and trade conditions for business strategy identification.
+ To study law system and trade policy.
+ To study natural condition such as ports of export, roads.
+ To study consumption habits
4.1. MARKET AND PARTNER SELECTION
- Partnership selection
+ Types of ownership
+ Financial capacity
+ Reputation
+ Business area
+ Goodwill of partnership
4.2. TYPES OF EXPORT
- Direct export
- Indirect export
- On-spot export
4.3. EXPORT PRICING
- Export pricing procedure
+ Pricing objective identification
+ Market demand identification
+ Cost analysis
+ Competitors’ price analysis
+ Ultimate price identification of a product
4.3. EXPORT PRICING
- Adjustment techniques of prices
4.4. BUSINESS PLANNING
- Business plan assessment
+ Cost, turnover
𝑇 𝑁 𝑒𝑥
+ Foreign currency rate of export 𝑇 S𝑒𝑥 =
𝐶 𝑃 𝑒𝑥
+ Payback time index 𝑆
𝑇 S𝑒𝑥S:
= Total cash costs, B: interest rate, A:
Depreciation amount, I: Income 𝐵+ 𝐴+ 𝐼
𝐵+ 𝐴
+ Profit rate of cost 𝑅𝑏 = ×100 %
𝑆
+ Break-even point
4.5. CONTRACT NEGOTIATION
4.5. PRICE CONVERSION
- Into an unit of measurement
- Into a currency
- Into a commercial term CIF = C+F+I
Converting into FOB price from CIF: FOB = CIF – F – I = CIF – R(CIF + CIF*p) – F =
Converting into CIF price from FOB price: CIF = C + I + F = FOB + R.110%CIF + F 𝐶𝐼𝐹 = C+ 𝐹
1 −110 % 𝑅
CIF – R (1+p)CIF = C + F, CIF = C + F/(1-R (1+p)) = CIF
- Into an unit of time: Price of goods born from different in time results in different price indices
- P1/P0 = I1/I0. P1 = P0*I1/I0
4.5. PRICE CONVERSION
- Into a term of credit
Average credit period (T) means a period that a party can use total loan amount without paying
interest. ∑ 𝑥𝑖 𝑡 𝑖
𝑇=
∑ 𝑥𝑖
¿
EXERCISE 1
A Vietnamese firm planned to purchase 10 cars and received the following 2 offer letters:
In the first offer letter, the price is quoted of 10,000 USD/item, FOB Tokyo port; Payment:
80% - 4 months after delivery, 10% - 6 months after delivery, 10% - 8 months after delivery.
In the second offer letter, the price is understood to be 10900 USD/item CIF Hai Phong,
payment: 20% - 2 months after delivery, 30% - 4 months after delivery, 50% - 5 months
after delivery.
10.546
Knowing that the freight cost from Tokyo - Hai Phong is 500 USD/item, the insurance
premium rate (R) is 0.4%,
Please indicate which offer is appropriate to be chosen?
EXERCISE 2
A Vietnamese firm received two letters of asking to buy 500 tons of coal dust cat I, shipment
is made in the third quarter of this year.
• In the first letter, the price is understood to be 35 USD / MT FOB Hai Phong port, payment:
60% - 1 month after delivery, 20% - 8 months after delivery and 20% - 12 months after
delivery.
• In the second letter, the price is quoted of 57 USD / MT CIF Hong Kong, payment: 30% - 2
months after delivery, 30% - 6 months after delivery and 40% - 10 months after delivery.
• Knowing that the freight cost from Hai Phong - Hong Kong is 20 USD / MT, the insurance
premium is 0.25%, bank interest lending rate is 6% per year. Please indicate that which
inquiry letter should be more appropriate to be chosen?
4.6. EXPORT ORGANIZATIONS
4.6.1. Products preparation
+ Product sources classification
+ Modes of export product speculation
+ Signing and implementing contracts of export product speculation.
+ Payment for export product speculation
+ Warehouse cost
4.6. EXPORT ORGANIZATIONS
4.6.2. Shipment advice, checking L/C
+ Shipment advice
+ Checking L/C
• If the L/C is not in conform with the commercial contract, the exporter must send notification
letter to the importer for amending and adjusting request.
• In case the amendment of the L/C is requested by the Exporter, the Exporter must make a proposal
and the amendment fee of the L/C is born by the Exporter.
4.6. EXPORT ORGANIZATIONS
4.6.3. Product quality inspection
+ By quality control unit of the manufacturer
+ Ministry of Science and Technology
+ Quality control agency
4.6. EXPORT ORGANIZATIONS
4.6.4. Quarantine
- For animals and plants
4.6.5. Hygiene inspection
4.6. EXPORT ORGANIZATIONS
4.6.5. Applying for export license
+ Granted by the Prime Minister for the forbidden items.
+ Granted by responsive division of ministries towards conditional export products.
4.6. EXPORT ORGANIZATIONS
4.6.6. Customs procedure
+ Custom documents
+ Custom duty and fee
+ Post- Clearance inspection
4.6. EXPORT ORGANIZATIONS
4.6.7. Forwarding
- Goods can be delivered to the forwarder
- Or the carrier
- Shipping goods in container
4.6. EXPORT ORGANIZATIONS
4.6.8. Payment
- By L/C
- Other modes of payment
4.6. EXPORT ORGANIZATIONS
4.6.9. Applying for a certificate of origin
4.6. EXPORT ORGANIZATION
4.6.10. Dispute settlement
- Being claimed
- Being sued
CASE STUDY: Timber export contract
The Seller: KEGO company limited
Add: No 415, Hoang Tang Bi str., Dong Ngac ward, Tu Liem Dist, Hanoi, Vietnam
The Buyer: Woodmac machinery SDN BHD
Add: 8 Lorong Usahajaya 3, Kaw Perindustrian Usahayjaya, Permatang Tinggi, 14100 Bukit Mertajam,
Penang, Malaysia
COMMODITY AND OTHER TERMS
• Commercial plywood from eucalyptus (7layers) AB GRADE
• Size: 1220*2440mm
• Thickness: 11.5mm
• Quantity: 1402pcs (48CBM)
• Unit price: 302USD/CBM CIF K’Lang port
• Packing by pallets, 48CBM/ cont 40’HC
• Port of loading: Haiphong port, Vietnam
• Transshipment is allowed
• The delivery quantity and amount: ± 10%
PAYMENT TERM
• By L/C at sight for 100% total value of the Sale contract
• The Buyer should open L/C within 7 days after the sale contract signed and come
into effect
• Seller’s bank: - Beneficiary: Kego company limited
- Account: 049 137 000 0868
- Bank’s name: VCB, Thang Long branch
- Bank’s address: 98 Hoang Quoc Viet street, Cau giay Dist, Hanoi
city, Vietnam; Swift code: BFTVVNVX 049
