(Luận văn) the current situation of steel import activities of hong nam mechanical join stock company

Therefore, Vietnamese mechanical companies have to research carefully to find out the suitable market for their company, which helps the luan van tot nghiep download luanvanfull moi nhat

INTRODUCTION

1 Background

In the XXI century, the international economic integration trend has been taking place at a rapid rate in the ASEAN region as well as worldwide Countries all over the world have a strong connection with each other in various aspects, especially in economics and trade

After than more 30 years of international economic integration, Viet Nam recognized the importance of the import-export industry and the mechanical industry for the country’s development On the path of industrialization and modernization of the country, the Government identified the mechanical industry as the backbone for Vietnam’s economic development Therefore, the Government has supported and created favorable conditions for domestic mechanical enterprises to concentrate on producing mechanical products that serve the processing industry; agriculture, forestry and fishery Although steel

is one of the main raw materials for the mechanical industry’s production, domestic steel produced, cannot meet the demand of Vietnamese mechanical enterprises Besides, the domestic steel industry has not been able to produce specific types of steel for the mechanical industry with reasonable prices and good quality such as alloy steel, hot rolled steel plates, cold-rolled steel plates,

… that are important materials used for mechanical manufacturing Therefore, steel imports play an important role in the development of the domestic mechanical industry

The Chinese steel market is one of best choices for Vietnamese mechanical enterprises because of abundant steel supply, diverse types of steel as well as reasonable prices However, there are a lots of steel markets such as Taiwan, Russia, Singapore, … that also provide the types of steel with high quality and good prices Therefore, Vietnamese mechanical companies have to research carefully to find out the suitable market for their company, which helps the luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si

companies cut down raw material costs and also focus investment on the high technology machineries to produce high-quality mechanical products In the context of Vietnam’s global integration, Hong Nam Mechanical Joint Stock Company recognized both opportunities and challenges of importing steel from different markets

Hong Nam Mechanical Joint Stock Company is known as the first company capable of designing and manufacturing mechanical products for different types of industries across the country Therefore, the company always need to import large quantities of steel for production After an internship in General Sales Department, Hong Nam Mechanical Joint Stock Company, along with the school’s knowledge to learn more about the company’s steel import situation, I chose the topic: “The current situation of steel import activities

of Hong Nam Mechanical Join Stock Company.” for internship report

The purpose of the internship report is to analyze the company’s steel imports activities to find out achieved aspects and also limited problems in the company’s imports Thereby, there are some proposed solutions to enhance the efficiency of the company’s steel imports activities

· Analyzing key information of the company

· Researching the steel import activities from different markets of the company in order to find out limited problems

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· From results, propose suitable solutions to enhance the steel import activities of the company

- Data Analysis: Base on two data sources (Primary data and Secondary data)

to research and find out problems

CHAPTER 1 INTRODUCTION TO HONG NAM MECHANICAL

JOINT STOCK COMPANY 1.1 Establishment and development process

Hong Nam Mechanical Joint Stock Company is a state-owned enterprise established on November 4, 1971 under the Decision No 2445/ CLCV of the

Ministry of Mechanics and Metallurgy (now the Ministry of Industry)

In December 2003, the company was equitized according to Decision No 238/ 2003/ QD-BCN of the Ministry of Industry

Figure 1.1 Logo of Hong Nam Mechanical Joint Stock Company

· Company’s name: HONGNAM MECHANICAL JOINT STOCK COMPANY

· Abbreviated company’s name: HOMECO

Hong Nam Mechanical Joint Stock Company (HOMECO) is known as one

of the first Vietnam enterprises that can design, manufacture and supply transport lifting equipment such as crane, gate crane, conveyor belt, screw, elevators, hoists, … At the same time, the company also manufacture unique mechanical products for different types of industries in Vietnam like installing steel structures for warehouse frame, scaffolding, and other mechanical products

The company has the infrastructure including factories, auxiliary areas with high standards to manufacture lifting equipment, mechanical process and steel structure Besides, the company is equipped with state of the art equipment such

as lathes, horizontal boring machines, internal – external high precision circular grinding machines, planers of all kinds, high frequency furnaces, automatic steel plates cutting, US automatic welding machine, DC welding machine, mechanical testing machine for fabrication materials, steel structure oscilloscope, detector check the quality of welds, pneumatic sandblasting machine, modern paint praying system, theodolite, … with Vietnamese standards TCVN4244-2005

After equitization, the company has brought the ISO 9001-2008 quality management system into the manufacturing process, which helps the company improve management ability Also, the company has a team of specialized technical staffs with high qualifications

Over the past 40 years, the company has been constantly growing, always successfully fulfilling its assigned tasks and also have been awarded many Labor Medals, the certificates of merit from Ministry of Industry

1.2 Branch Offices of Hong Nam Mechanical Joint Stock Company

HOMECO currently has 5 branches nationwide

· HOMECO Ho Chi Minh Branch (Tax ID: 0101495214-005)

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· HOMECO Bac Ninh (Tax ID: 0101495214-001)

· General Service Center – HOMECO Branch (Tax ID: 0101495214-004)

· Ha Noi Crane Mechanical Factory – HOMECO Branch (Tax ID:

- Manufacture of lifting and handling equipment

- Installation of industrial equipment systems in the construction industry and civil construction

- Design, manufacture, repair and installation of lifting equipment, standard equipment and equipment for construction industry and civil construction

non-1.3.2 Products and Services

- Lifting equipment: suspension bridge crane, single girder bridge crane, double girder bridge crane, container gantry crane, car winch, grabbing crane

- Conveyor

- Hydro-mechanical equipment: valve gate of hydraulic engineering constructions

- Smart parking: smart car garage, smart multi-story garage

- Solar power panels

- Mechanical process service: burning tower crane

- Repair and maintenance services

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1.4 Management organization of HOMECO

Figure 1.2 The scheme of HOMECO's management organization

(Source: HOMECO’s Internal Documents)

Director

Deputy Business Development Director

Sales &

Marketing Department

Accounting Department

Administration Department

Deputy Technical Director

Production &

Technical Department

Purchasing &

Import-Export Department

Branch Offices

HOMECO Ho Chi Minh Branch

Ha Noi Factory

Bac Ninh Factory

General Service Center

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- Making policies and strategic objectives of the company

- Be responsible for the foreign affairs of the company

- Signing directly economic contracts

- Deciding financial indicators, signing payment orders, issuing payment orders and checks

- Deciding on salaries and allowances (if any) for employees in the company

- Appointing, dismissing and removing manager positions in the company

- Monitoring all activities of company’s departments

b, Deputy Business Development Director Mrs Phan Thi Tuoi

Main responsibilities

- Monitoring all activities of departments (Sales & Marketing Department, Accounting Department, Administration Department and Purchasing & Import-Export Department)

- Planning, budgeting for marketing activities for each quarter of each year to advise General Director

- Advising for General Director on the management of capital in the company luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si

- Checking the financial statement made by the Accounting Department

- Signing economic contracts as authorized by General Director and approving

a number of documents related to production activities in the company as authorized by Director

- Developing policies such as wages, social policies and other policies for employees

c, Deputy Technical Director

Mr Nguyen Dinh Quang Main responsibilities

- Monitoring all activities of departments (Production & Technical Department, Purchasing & Import-Export Department)

- Be responsibilities for manufacturing activities

- Annually, building recruitment plans, training and managing human resources

to meet requirements of production

- Managing the quality of mechanical products

- Supervising and approving the purchase materials for production activities

1.4.2 Sales & Marketing Department

Manager: Mrs Nguyen Thi Lien Numbers of employees: 10 Main responsibilities

- Researching and developing the domestic and foreign markets to expand the manufacture and business of the company

- Doing marketing activities and also making marketing campaign for company

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- Cooperating with Production & Technical Department to providing the specific information of company’s mechanical products

- Taking care of customers and solving customers’ requirements (if any)

- Researching the company’s products and comparing with other companies

- Supporting Purchasing & Import-Export Department to pay sales contracts using L/C or T/T

1.4.4 Administration Department

Manager: Mrs Nguyen Thi Thuy Number of employees: 4

Main responsibilities

- Arranging appointments and scheduling important events of company

- Storing and maintaining employees’ personal records

- Making monthly expenses reports submit to financial – accounting department

- Storing and printing documents of company when there are important events

or meetings

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- Updating policies and ensuring that all employees abide by the rules of company

1.4.5 Production & Technical Department

Manager: Mr Nguyen Van Thanh Numbers of employees: 10

- Supporting Sales & Marketing Department to advise customers

1.4.6 Purchasing & Import-Export Department

Manager: Mrs Nguyen Thi Hanh Number of employees: 10

Main responsibilities Purchasing & Import-Export Department has divided two main teams:

- Team 1: includes purchasing staffs that are responsible for cooperating with Production & Technical Department to checking inventory; collecting data about the markets to find out suitable markets for importing materials of company; making purchasing plan to submit to Deputy Technical Director and Deputy Business Development Director

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- Team 2: includes documents staffs, customs declaration staffs that takes responsibilities for handling sales contracts: checking and preparing a set of import-export documents, registering customs declarations for import cargoes, submit necessary documents for payment: B/L, sales contracts, … to Accounting Department to pay the imported cargoes

1.4.7 Branch Offices and Factories

- Branch Offices in Ho Chi Minh and Bac Ninh: Carry out all activities of HOMECO

- Factories in Ha Noi and Bac Ninh are responsible for manufacturing mechanical products under the requirements of the company

- General Services Center: maintaining the machineries of the company and mechanical products of customers

1.5 The situation of production and business of the company from 2017 –

130,741,635,482 149,595,573,534 180,724,884,633

3 Gross Profit 37, 683,108,789 31,207,679,374 31,229,794,724

4 Revenue from financing activity

349,053,370 501,856,662 497,588,204

6 Financial Expenses

88,075,867 58,040,657 108,788,241 luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si

7 Selling expenses

7,409,342,598 1,122,898,341 16,686,720,631

8 General administration expenses

20,272,590,367 18,810,524,052

9 Net profit from operating activity

13,848,993,443 14,146,284,613 12,675,260,371

14 Current corporate tax expense

2,991,711,949 2,999,631,625 2,558,009,722

15 Deferred corporate tax expense

15 Profit after corporate tax

10,857,281,494 11,146,652,988 10,117,250,649

(Source: Accounting Department)

The table provides information about the business result of HOMECO over the period of 3 years As can be seen from the table, HOMECO witnessed an luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si

increase in net revenue of the company in 3 years Net revenue of the company increased from 168,42 billion VND in 2017 to 180,8 billion VND in 2018 and reached over 211 billion VND in 2019

Figure 1.2 Revenue, Costs of goods sold and Net Profit from operating

activities of HOMECO from 2017 to 2019

The chart illustrates the figure for revenue, costs of goods sold and net profit of the company from 2017 to 2019 It is clear seen from the chart that there was a rise in all three indicators of the company In 2017, the figure for cost of goods sold was 130,74 billion VND and slightly increased to over 149 billion VND in 2018 and about 180 billion VND in 2019 Overall, the figure for net revenue was 33 billion VND higher than that of costs of goods sold from 2017 to 2019 Besides, the net profit from operating activities tended to grow over the years In 2017, the figure for net profit was about 10 billion VND, was 3 billion VND lower than that of net profit in 2018 Until 2019, the net profit of the company slightly decreased, which was nearly 12 billion VND

VND 0 VND 50,000,000,000 VND 100,000,000,000 VND 150,000,000,000 VND 200,000,000,000 VND 250,000,000,000

Net Revenue Costs of goods sold Net profit from operating activitiesluan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si

From the chart, there was no much change in all three indicators There are a number of reasons to explain this trend The first reason is that the company always concentrates on researching markets to find materials with reasonable prices and high quality, which helps the company cut down the cost materials for manufacturing The second reason why the net revenue of the company gradually increased over the years is that before choosing mechanical product to produce, the company tested and researched markets to find the suitable mechanical products Last but not least, the company also realizes that marketing plays an important in increasing revenue Therefore, HOMECO rose the selling expenses to boost the net revenue of the company luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si

CHAPTER 2 THE CURRENT SITUATION OF THE STEEL IMPORT

ACTIVITIES OF THE COMPANY 2.1 The steel import situation of HOMECO from 2017 – 2019

2.1.1 Import form of the company

Import form of the company is direct import that means the company directly deals and does business with partners and does not have to mediate Because the company imports steel for its production, the direct import helps the company take the initiative in controlling the amount of steel in the warehouse, finding a reasonable source of steel to reduce input costs of manufacturing

When importing by this method, the company must do by itself such as: researching domestic and foreign markets, calculating costs, and complying with national and international legal policies

2.1.2 Steel import process of the company

Figure 2.1 HOMECO's steel import process

(Source: Purchasing & Import-Export Department)

Making import plans

Negotiating and Signing contracts

Performing Contracts

Liquidation

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2.1.2.1 Making import plans

v Implementation department: Purchasing & Import-Export Department

HOMECO's steel import plan includes basic information such as: Checking steel inventories; the situation of steel market and suppliers; forecasting market fluctuations to determine the time of steel import; setting goals, specific action measures; evaluating preliminary effectiveness

To make a steel import plan, the following steps should be taken:

· Step 1: Coordinating with the Production & Technical Department to check the amount of steel in stock, which is one of conditions to decide the amount of import steel

· Step 2: Assessing overview of the steel market and suppliers Then, analyzing the difficulties and advantages of importing steel from different suppliers in different markets

· Step 3: Selecting types of steel that matching the company's production and business objectives

· Step 4: Setting specific goals with clear data: How many types of steel will be imported? At what prices? Which markets will the company import steel? and from which suppliers?

· Step 5: Proposing implementation measures

· Step 6: Evaluating preliminary economic efficiency of steel imports through the calculation of indicators

After that, the head of the department summarizes and reports to Deputy Technical Director who reports to Board of Directors for approval and import decision making

2.1.2.2 Negotiating and Signing contracts

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v Implementation department: Deputy Technical Director or Deputy Business Development Director

After the import plan was approved by the Board of Directors, the company chose suitable markets and partners Deputy Technical Director or Deputy Business Development Director represents for the company to negotiate with partners on issues related to goods: price, quality, delivery time, With traditional partners, the negotiation process is usually carried out by fax, telex With new partners, the company will meet face-to-face to negotiate

After the negotiation is over, the two parties agree and decide to sign a contract The ordinary contract has been prepared by the partners with terms of goods (commodity, quality, quantity, price), shipment term, payment term, penalty, claim, … After reviewing the contract in accordance with the request, the two parties sign the contract and are responsible for fulfilling the obligations in this contract

2.1.2.3 Performing contracts

v Import license (if any)

According to Circular No 14/2017 / TT-BCT of the Minister of Industry and Trade, from September 1, 2017 steel importers do not need to apply for automatic import license

v Payment procedures

Implementation department: Accounting Department

Depending on the value of the cargoes and the negotiation process with partners, the company will choose the suitable payment method Normally,the company use two payment method: T/T payment method and L/C payment method

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