(Tiểu luận FTU) REPORT FOR THE MID – TERM PROJECT

The import and export activities will be depicted between a Vietnamese enterprise, NGUYEN MINH STEEL GROUP JOINT STOCK COMPANY and a Chinese steel supplier, CHENGTONG INTERNATIONAL LIMIT

FOREIGN TRADE UNIVERSITY FACULTY OF ECONOMICS & INTERNATIONAL BUSINESS

-o0o -REPORT FOR THE MID – TERM PROJECT

Course : International Transaction Sale Instructor : Mrs Trần Hồng Ngân

TABLE OF CONTENT

A INTRODUCTION 3

B RESEARCH 5

I MARKET RESEARCH 5

1 Company Introduction 5

2 Product Introduction 5

3 The Domestic and International Steel Market 6

II PARTNER RESEARCH 8

1 China Chengtong Holding Group Ltd 8

2 Chentong International Limited 8

III VIETNAMESE REGULATIONS IN CUSTOMS FORMALITY 10

1 Importing License 10

2 Information needed for the declaration of imported goods (Customs clearance) 10

C CONCLUSION 12

D TASK EVALUTION 13

E REFERENCES 14

A INTRODUCTION

Today globalization has initiated thousands of trade activities every day

They are not simply the transactions between two people living in the same area, but the buying and selling activities that are beyond a country’s border

International trade gives countries and global consumers the opportunity to be exposed to various markets and products at the reasonable prices Professional modern transactions help trade activities more accessible, still secured, while ensuring benefits for buyers and sellers Trading by commercial contract is one

of the most significant procedure

International trade contract is a legally binding agreement between two or more parties having the headquarters located from different countries, whereby the exporter (the seller) has the obligation to transfer the title of a certain property called as a good, the importer (the buyer) has the obligation to receive that good and to fulfil payment Thus, the most basic element in the contract is the agreement between parties among a number of clauses under the transaction

Executing by negotiation, an agreement can establish, adjust or terminate the obligations of each party Attached with international trade contracts are considerable related documents to ensure a uniform legislation with the careful balance between the interests of each involved party

In this assignment, based on the knowledge learned from the International Trade Transaction course, the group organizes an international trade transaction.

The import and export activities will be depicted between a Vietnamese enterprise, NGUYEN MINH STEEL GROUP JOINT STOCK COMPANY and

a Chinese steel supplier, CHENGTONG INTERNATIONAL LIMITED The group will represent the former company to accomplish a transaction of importing materials for production After conducting a market research, the group will collect and analyze related documents to, therefore, executing the negotiation By accomplishing the stage of signing the contract, the implementation will be presented This report will mainly focus on the part of researching the market While the group’s video clip of negotiation and presentation will depict clearly how the sales contract is arranged and executed

This is the great opportunity for the group members to understand and practice knowledge learned into the actual work, specifically in forming and

implementing international contracts There might be mistakes and misunderstandings occur within the group assignment Therefore, we would appreciate any feedback from the lecturer and other classmates in order to

comprehend our work and build a solid foundation in International Trade Transaction.

B RESEARCH

1 Company Introduction

Nguyen Minh Steel Producing and Trading Co., LTD (NMI Steel) is specialized in manufacturing and trading steel and iron products for construction and consumer other uses Established in 1999, the company now has two factories located in Ho Chi Minh City and Long An Province

The company offers a variety of steel products with annual production capacity that can respond to and accommodate a wide range of demand:

 Hot rolled and cold rolled pipes in shapes of customers’ preferences Its production lines are 300,000 ton/year

 Zinc-coated galvanized pipes (GI) with a purity ranging from Z60-Z275

and the quantity product of 50,000 ton/year

 Cold rolled steel coils and strips have the production of 250,000 ton/year

with widths ranging from 450mm-650mm and thickness ranging from 0.4mm-3.0mm

 Zinc-coated galvanized coils and strips ranging from 450mm-650mm in

width and 0.7mm-3.5mm in thickness The company has produced 120,000 ton

of Zinc-coated galvanized coils & strips per year

 Stainless steel pipes – INOX has the production capacity of 15,000 ton per year, while Cut-to-length steel plates have the production capacity of 50,000 ton per year

A national and international network of representatives and agencies, along with the variety of product categories, NMI Steel continues to gain credibility among its global customers In order to sustain reputation and compete in the industry, machinery and other advanced technology for production are consistently upgraded With the committed standard being experienced by trusted customers, the company’s products have been supplied to many other construction works and uses around the country and some regional NMI Steel maintains to be a dominant exporter to the United States, Australia, Thailand, Malaysia, Bangladesh, Indonesia, Laos, and Cambodia

2 Product Introduction

In order to maintain the annual production capacity mentioned above, the company decided to import the commodity named Prime hot dip galvanized steel sheet in coil, with the quantity of approximately 3500MT In details, the grade of steel needed is SGCC JIS G3302 regular spangle; the zinc coating is no less than Z60 with the tolerance of +/-0.02MM

Hot dip galvanized steel (HDG) is the product that combines the strength and formability of steel and the corrosion resistance of zinc The steel is embedded in molten zinc to form a rust-resistant coating Hot dip galvanized steel has a unique crystal steel configuration on the surface When exposed to air, zinc reacts with oxygen, water, and carbon dioxide to form a relatively stable zinc carbonate (ZnCO3) layer The zinc surface will slow down the oxidation of iron, which can protect steel for a long time

Hot dip galvanized steel is commonly used in outdoor steel applications, subjected to direct weather effects HDG is used in a wide range of applications such as structural steel girder, roofing, bolts, steel pipes, electric ladders, and grates Hot dip galvanized steel has a relatively long lifespan, over 50 years in normal environmental conditions However, in areas which are exposed to seawater, mechanical abrasion agents, acids, or other extreme conditions, the hot dip galvanized steel might easily lose its zinc coating

The investment cost for hot dip galvanized steel is much lower than for stainless steel Therefore, it becomes one of the most sought-after household appliances, interior construction materials

3 The Domestic and International Steel Market

The steel supply is continuously increasing In 2015, Vietnam’s production of steel products rose by 21.54%.The total domestic consumption increased 28.02%

in comparison with 2014 (Vietnam Steel Association, 2016) The scene for steel consumption in 2016 was forecasted to increase, with the rate of more than 20%

The General Department of Customs stated that the volume of steel semi-finished and semi-finished products for export tended to decrease, but the speed was small In general, the circumstance was stable The above statistics on the steel industry is relatively beneficial to the company in order to maintain the current production and business

China is the major steel supplier for Vietnam The price offered is often lower than other suppliers around the world According to statistics of the

General Department of Customs, by the end of December 2015, the amount of iron and steel imported into Vietnam from China in 2015 was 9.6 million tons, accounted for 61.3% of total imports of this country; with a value of 1.32 billion USD (which was 28.57% higher than the same period last year) The figure collected from the Center for Industry and Trade Information (Ministry of Industry and Trade) has shown that, in the first two quarters of 2016, the total quantity of steel imported from China was accounted for 55.1% Japan, South Korea, and Taiwan are the three other steel exporter with the supplied proportion

of 14.6%, 12.8% and 8.9% respectively (Ministry of Industry and Trade, 2016)

The main reason for the excess in low-price Chinese steel is that China has applied steel export to other countries in the context of excess supply and weak domestic consumption The yuan devaluation policy is recently executed to support exports In addition, the European Union has imposed anti-dumping duty

on cold rolled stainless steel imported from China with tariffs at more than 24%

also resulted in the increase in export to Vietnam

In addition, the geographical distance between Vietnam and China is favorable for shipment The time travel from any ports in China to Ho Chi Minh City port varies from three to ten days, which is considerably shorter than that of Korea or Japan NMI Steel can have needed materials in short time and start the further production straightaway This will benefit both the company’s manufacturing as well as the prompt accommodation with orders from customers

Vietnam regulations for importing goods as raw materials for the further process should also be mentioned Since manufacturing Prime hot dip galvanized steel sheet in coils for export purpose, NMI Steel is free from an obligation to disburse the anti-dumping tax and value-added tax This regulation is stated in the XN210 Moreover, the good is listed in the appendix of Circular 58/2015/TTLT-BCT-BKHCN, thus, it does not need a quality inspection during customs clearance This will help create a prompt procedure

Above information are advantages for Vietnamese companies as NMI Steel

to import the needed Prime hot dip galvanized steel sheet in coils as raw materials By using the company’s current machinery and process, NMI Steel assures to manufacture qualified products that are appropriate for export Hence, NMI Steel needs to find a reputed enterprise that has high-quality products with competitive price among the Chinese enterprises to accomplish the purchase

II PARTNER RESEARCH

1 China Chengtong Holding Group Ltd

China Chengtong Holdings Group Ltd (China Chengtong) is a large enterprise group under the supervision of the State-owned Assets Supervision and Administration Commission (SASAC) of the State Council, with total assets

of RMB 55 billion It was a board-of-directors pilot for wholly state-owned companies founded and completed by the State-owned Assets Supervision and Administration Commission in the first batch It also was a pilot for the companies operating state-owned assets

The main businesses of China Chengtong are assets management, integrated logistics service, capital goods trade as well as production, development, and exploitation concerning forestry, pulp and paper The group's business also covers prompt goods wholesale market, tourism, cultural and packaging industries

At present, China Chengtong owns more than one hundred subsidiary companies all over China, among which, are listed companies such as Chentong International Limited, Zhong Chu Development Stock Co., Ltd., Foshan Huaxin Packaging Co., Ltd, China Chengtong Development Co., Ltd., Guangdong Guanhao High-Tech Co., Ltd., and Yueyang Forest & Paper Co., Ltd Besides,

it also has set up overseas business platforms in Russia and other areas Now, it

is focused on developing advantageous businesses and further expanding the capital market

In recent years, China Chengtong, as an important platform for the State-owned Assets Supervision and Administration Commission to advance the layout, restructuring and strategic reshuffling of central enterprises, has made remarkable achievements in terms of enterprise restructuring, business integration, and asset disposal It is involved in industry consolidation, non-performing assets disposal, corporate restructuring, corporate trusteeship, etc

and has played a positive role in the reshuffling and integration of central enterprises and won the high praise from all circles of the society

2 Chentong International Limited

 Type: Private company limited by shares

 Address: Room 2105, HZ2486, Trend Center, 29 – 31 Cheung Lee Street, Chai Wan, Hong Kong

 Incorporation date: 24 January 2014

 Register capital: 100 million RMB

 Business sectors

No Business sectors Main products

International Co, Ltd follows the customer-focused principle and pay attention to the development of the overseas market network

Products are mainly sold to Korea, Vietnam, Brazil, Africa and Central & South America market

2 Steel products Hot rolled, Cold rolled, Beams, Galvanized

sheets, Plates, Cold rolled coil, Hot rolled coil, Wire rod, Rebar, Strip steel, Stainless steel, and Billets

PET Products: Polyester raw materials polyester yarn

Rubber Products: natural rubber, compound rubber, synthetic rubber, latex and mixed alcohol products

products

Copper, Aluminum, Zinc, Silvers

(Focusing on end customers' needs, providing non-ferrous products distribution service and engage in finished products export.)

5 Rubber products Natural rubber, Compound rubber, Synthetic

rubber, Latex and mixed alcohol products

 The reputation

- As a subsidiary of state-owned China Chengtong Holding Group Ltd, China Chengtong International Co.,Ltd is a large circulation enterprise in bulk commodity import & export

- Chengtong International Ltd has established a long-term partnership with famous domestic production, logistics and trade enterprises to set up rational marketing network and logistics system

 Conclusion: Chengtong International Limited is a reputable company with the high-quality products, and important long-term partnership

III VIETNAMESE REGULATIONS IN CUSTOMS FORMALITY

1 Importing License

Imported steel is categorized under the license and subject to the specialized management of the Ministry of Industry and Trade Placed as good which is applying automatic import licensing

The Import and Export Bureau of the Ministry of Industry and Trade shall grant automatic import licenses in the form of certification of import registration applications for each goods lot The validation of the certification is 30 days

Nguyen Minh Steel Producing and Trading Co., LTD, which has been operating since 2011, has the business license number 1101359647 for iron and steel production The company has registered for a trader profile

After registering online at http://www.nhapkhau.gov.vn and being approved, the company will have to come to the licensing office to present relevant documents The needed documents to obtain the license are the printed application form, sales contract, commercial invoice, letter of credit, and bill of lading The licensing office in this instance is Ho Chi Minh City office of the Import and Export Bureau of the Ministry of Industry and Trade

2 Information needed for the declaration of imported goods (Customs clearance)

Customs clearance for commodity HS: 72104912, which are flat-rolled products of iron or non-alloy steel, with a width of 600 mm or more, coated, galvanized or zinc coated of a thickness not exceeding 1.2 mm Imported under clause 12, Decree 134/2016 / ND/CP (valid from 01 September 2016)

As well, the good that NMI Steel planned to import is categorized as followed:

- The commodity is categorized under Type E31 (Imported raw materials for export)

- The number of the representative goods in the declaration is 7210

- Refer to the Commodity under Section XVI

- Refer to Chapter 72 on Iron and steel