global strategic management essay

Import and export contracts are fundamental to international trade, revolving around a variety of connected but different interactions such as cargo insurance, transportation, and paymen

UNIVERSITY OF UEH BUSINESS SCHOOL FACULTY OF INTERNATIONAL BUSINESS - MARKETING

TP Hỗ Chí Minh, April 24, 2023

TABLE OF CONTENTS

TIT, EXPORT DEAL CASE Go 0 0 HH TH HH 4 TH nà TH Tà 0094 10

3.3.3 Competitiveness of Vietnamese enterprises to the Canadian market 12 3.2.4 Politics in Canada for Foreign Business 0 00ccccccccceecescecetstseeeetseeeenes 13 3.3, The export package requirement to transport in container, route planning

3.4 The total cost, selling price and profit per unit for each condition with

SUMMARY

Contracts for import and export are important to international trade Import and export

contracts are fundamental to international trade, revolving around a variety of connected but

different interactions such as cargo insurance, transportation, and payment agreements Price is a significant component in determining a company's competitiveness in the global market Many businesses keep their pricing policies and procedures private and do not make them public Products are rarely sold just on price, and exporters must compete with different forms of non- price variables All of these variables influence the price and profitability of trades The paper focuses on examining the key material of International Trade Valuation and Export Sales Contract in the sphere of import and export, with the assumption that exporting cashew nuts to the Canadian market will supplement knowledge for the following content

I INTRODUCTION

The legal system of each country may differ, but the fundamental concepts of a contract, such

as good faith and consideration, are widely recognized and accepted in many countries In the

realm of international business law, there is also a tendency for diverse legal systems around the world to converge Price may be used by the firm to obtain a certain level of market share, profit,

or return on investment, or to achieve some other specific aim These factors have an impact on the prices and earnings of import and export businesses "Incoterms" is a brief and simple way of expressing International Trade Terms Incoterms are a set of 11 rules that outline the responsibilities of each party in an international transaction They were first drafted in 1936

Incoterms cover all of a transaction's obligations, risks, and costs Buying and selling items from

one seller to another The value of an export consignment can be calculated using the Incoterms guidelines

Il MAIN CONTENTS

2.1, Trade Documents and Transportation

Transport documents are simply understood as documents issued by the transport unit (master and ship owner) confirming receipt of goods for transportation

Transport documents usually include:

— Bill of lading (sea waybill): sea waybill, mate's receipt, manifest, consignment note, list

of events, stowage chart, broken cargo record damaged, spreadsheets of rewards and penalties for loading and unloading goods, certificates of missing goods, receipts of goods

Each payment method will have different requirements for the set of documents in which the transport documents are according to the L/C payment method With LC - the payment

method commonly used today because of its safety, the preparation of documents is somewhat

more complicated than other international payment methods

When paying by documentary credit, the Open bank retains ownership of the shipment by keeping the documents in hand before the buyer receives the documents and goes to the port to receive the goods In the event that the buyer is unable to pay the bank (because the deposit is not

100%), the bank will keep the documents and, in the worst-case situation, they will have to resell

this document to the bank As consequently, Open Bank will conduct a thorough examination of the documents If their complaint is reasonable and valid, they will reimburse the seller The set of documents includes

Number of originals and copies:

If the L/C is not specified: it is best to submit 3 originals and 3 copies

If the L/C requires "at least two B/L:", two originals and one copy are required (The leftover original is supplied to the importer as proof that that the goods were delivered by the provider.)

Name of bill of lading:

If the requested L/C is Bill of Lading, the name must be Bill of Lading

If the requested L/C is Sea Way Bill, the name must be Sea Way Bill

Names do not need to contain the words "ocean" or "marine"

Name of shipper:

The name of the Shipper must be exactly the same as the name of the exporter - Expoter, according to common understanding and custom

In case of two-party trade:

The name written in the shipper box is also the name of the exporter Export, is the name

of the seller Seller

In the case of tripartite trade (through intermediaries)

* Use transfer L/C (now there is a Supplier, the person in the middle - a Trader, and the final buyer - a Client): The name of the Shipper will be the name of the Supplier

* Use back to back L/C (now there is a Supplier, the person in the middle — a Trader, and the final buyer — a Client)

The name written in the Shipper box on the B/L (in the set of documents that the Supplier sends to the Trader) is the legal title of the Supplier, according to the L/C that the Trader opens for the Supplier

The name mentioned in the shipper box on the B/L (in the set of paperwork that the Trader sends to the Client) is the Trader's name, according to the L/C that the Client opens to the Trader Because the Trader is interested in concealing the Supplier's name by using back-to-back L/Cs, he went to the shipping company to switch B/Ls and changed the name that was written in the Shipper box from the Supplier's name to his own

In brief, if you are a trader, your business is three-party, and the L/C has no other

requirements, it is reasonable to write the name of the Shipper and avoid being caught unconstitutionally by the bank

Name of Notyfv Party:

Enter the name of the importer (the person requesting the opening of L/C)

Name of vessel, number of trips, port of departure, port of destination (add domestic pick-up point of exporting country and final delivery point in inland of importing country - if using multimodal transport)

Must show exactly as required by L/C

The loading port must be a cluster of ports in Ho Chi Minh City, according to the L/C

"Port of loading: HCMC Port", the B/L merely needs to show the name of any port in the HCMC area Ho Chi Minh City (such as the Cat Lai Port or VICT Port ) The same interpretation works

for the port of discharge

If the L/C prohibits transshipment, the bank will still accept multimodal transport documents even if they show the transfer of cargo, as long as the entire carriage of the goods (whether using multiple modes of transport) is accomplished using only a single multimodal transport document (provided the goods are shipped according to the itinerary specified in the L/C)

Description of goods — Description of goods

The goods do not need to be described in detail on the bill of lading This section just has

to include the information that the L/C requires Other transport documents must match other L/C payment methods such as INV, PL, CO, and so on

If the L/C demands the bill of lading to indicate "on board" (goods have been placed in the ship's hold), then the phrase "on deck cargo" (loaded on the deck) will not be permitted The case on the B/L only shows the date of issue of the bill of lading, not Laden on Board or Shipped

on Board The exporter wants the documentation to satisfy the specifications of the L/C (the date

of issue of the bill of lading will become the date of delivery) The exporter must request the shipping line to add the words "Loaded on board date month : shipped (or laden) on board date " and sign the seal, as stipulated in the L/C and sales contract It will then become the bill

of lading loaded on board and payable under the L/C and contract of sale on this line

2.2 Risks In International Payments

Classification by causes of international payment risks

a Credit risk

This is the risk of insolvency of one of the parties to the payment, especially in the mode

of documentary credit Causes of this type of risk:

To get started in a market economy, businesses must operate in a fiercely competitive environment, and are heavily influenced by the laws of supply and demand, competition laws,

and so on, causing a chain reaction that causes businesses to face difficulties, losses in business, even losses, defaults, bankruptcy, and thus they are insolvent

Second, because of insufficient credit information, if a party does not have a strong

understanding of the partner's financial status, creditworthiness, solvency, does not comprehend,

cannot examine the technical parameters, and efficacy of For projects that we finance, credit risk

is unavoidable This is known as information asymmetry

For example, the QD opens an L/C worth USD 699,556 to buy DOP oil from ELOPI for VIMEXCO, Vung Tau VIMEXCO Company does not use all of the goods by the due date and does not have enough money to pay

Finally, the Military Bank had to pay for it and requested that VIMEXCO accept the compulsory loan As a result, selecting foreign consumers and banks with solid credit relationships is critical in international payments

b Country risk

These are risks associated with a country's political, economic, and foreign exchange management policies, which cause exporters to not receive money for goods and importers to not receive goods

The danger to the importing country arises as a result of fluctuations or extraordinary events in the importing country, which force the importing country's government to restrict its companies from paying foreign currency overseas or importing commodities Imports are prohibited from being imported, so they are not permitted to carry out customs clearance procedures When the exporting country's foreign trade policy changes, the tariff of that country makes it difficult to supply goods and receive money the exporter’s goods

Country risk can also affect both exporters and importers if, after signing a foreign trade contract, the governments of the importing and exporting nations refuse to let the import and export of such items

c Moral hazard

Are the risks that arise when a party purposefully fails to perform its commitments adequately, causing harm to others' interests In business, ethics is synonymous with credibility and distinction This is a major issue in international trade and payment because partners are frequently separated, even if they do not meet during the negotiation process Importer risk,

exporter risk, carrier risk, bank risk, and so on

Classification by international payment methods

a Risk of money transfer (TTR) payment method

This strategy is typically used when the buyer and seller know and trust each other This payment option is straightforward and inexpensive However, this 1s the riskiest method for both

the seller and the buyer There are two methods for transferring money:

+ Prepaid money transfer (TT): is the importer paying an amount in advance to the exporter before delivery Risk of advance remittance:

Y Risk for the exporter (low): Delivery after receiving the goods, so the exporter does not bear any risk

¥ Risks for importers (high):

« The exporter may deliver goods that do not conform to the quality requirements

« Exporter may not deliver or deliver late

«In the above case profit will be reduced

+ TT after shipment: the importer pays the exporter after receiving the goods The following remittance risks:

Y Risks for exporters (high):

Person responsible for payment of draft, non-payment-due to dispute

« Person responsible for payment of bill of exchange, unable to pay- unable to pay/ no cash

« Not enough foreign currency

« No longer control the goods

Y Risks for importers: none

Mark and Label 40,000

Export customer clearance 1,200,000

Export documents 500,000

Inland freight to main carrier 3,000,000

Original terminal charges 2,800,000

Vessel loading charges 2,800,000

Port loading and unloading fee 2,500,000

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11 price of cashew nuts is 9,800 USD/ton, or about 10-12 USD/kg The average price of processed cashew nuts exported from Canada is 12,000 USD/ton

However, the market has increasingly high requirements for food quality and safety (including the percentage of impurities, pest marks on the grain surface, product uniformity in taste and color) The issue of preservative residues is also something to keep in mind to avoid retumed goods without customs clearance The process of importing cashew nuts is similar to other food products In the long term, due to increasing labor costs in Canada, it is likely that large Canadian cashew nut processing and packaging enterprises such as Basse, Kirkland will shift production links to Vietnam to process for trade their mark Canada's Dan D Park Company

has been at the forefront of this trend and is entirely manufactured in Vietnam for Dan D Park's

brand and the brands it outsources

3.2.2 Macroeconomic Environment

Analysis of the macroeconomic environment in Canada, about the economy, Canada is

the second largest country in the world by area, located at the northernmost tip of North America Canada is known as one of the most prosperous economies in the world In terms of agriculture, despite being one of the largest countries in the world However, the amount of land available for

agriculture in Canada is relatively small However, Canada's agricultural industry has achieved

many great achievements Accordingly, by applying advanced technologies as well as high quality inspection stages Canada's agricultural industry still produces quality products and is always appreciated Examples include wheat and cereal grains These are the two most famous products of the country of maple leaves Canada's agricultural industry also receives significant support and subsidies from the government About 4% of Canadians work directly in the

agricultural industry and account for about 6.2% of the country's GDP

In Canada in the post-Covid period, the Central Bank of this country in the short term will maintain interest rates at 1.75%, in terms of monetary policy, Canada has a different view from the United States and many other countries, where central banks recently lowered interest

rates With the "backing" of food prices and durable goods prices Stronger inflation will be a reason for the Bank of Canada to question the need to lower interest rates, which will directly affect import-export businesses in the Canadian market

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Going deeper into the analysis of the Canadian cashew nut market, currently, the country

has a rapidly increasing demand for processed nuts over the years due to the need to eat clean, eat plant-based protein sources to protect health strong Nuts are known for being a great source

of fiber, easily digestible protein, and a source of heart-healthy fats, as well as many minerals and vitamins According to the annual Statista Market Forecast, Canada consumes nearly $1.8 billion worth of nuts, which means each person consumes an average of nearly $50 per year, or about 4kg per year This market is forecast to continue to grow at a rate of about 5.4% per year from now until 2027 In general, Vietnam's cashew exports to the region have entered a stable phase, even tended to decrease There have been periods, cashew nut was in the top 10 items with the largest export value to the area (top 7 in the years 2015-2018 and then dropped to the top 9 in 2019-2020) In 2021, cashew nut only occupies the 14th position in Vietnam's key export products to the area The good news is that although the market has reduced imports in terms of import volume, due to high prices, export turnover in 2021 is still higher than in 2020

3.3.3 Competitiveness of Vietnamese enterprises to the Canadian market

Vietnam is considered by most Canadian businesses as a reasonable gateway to enter the

region thanks to its advantages in geographical location, infrastructure, labor, and socio-political

stability Secondly, both Vietnam and Canada are members of the CPTPP and APEC, especially

the two countries have soon established a mechanism of the Joint Economic Committee to periodically exchange views on economic and trade cooperation prospects The Vietnamese community in Canada currently has about 300,000 people, is the 4th largest Asian community in Canada, very successful integration and quite attached to the country Especially, the increasing number of Vietnamese students studying here has served as a bridge not only in culture, art and cuisine but also in economics and commerce.Recently, the two countries have put into operation

a large container ship route running directly from Hai Phong to Vancouver, reducing the transit time to 17 days, significantly reducing transportation costs for Vietnamese exporters Regarding Vietnam's strong exports to Canada, according to information from the Vietnam Trade Office in

Canada, including: Seafood; tea, coffee and spices; textiles, footwear, furniture and furniture

Although there are many advantages in the ability to increase import and export turnover with Canada, the representative of the Vietnam Trade Office in Canada also recommended that: Not out of the general context, the Canadian economy will still be affected by many impacts in

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