PRACTICE OF EXPORTING FREEZING SHRIMPS AT HANOI SEAPRODUCTS IMPORT AND EXPRT JSC

FOREIGN TRADE UNIVERSITY FACULTY OF ECONOMICS AND INTERNATIONAL BUSINESS ---***--- INTERNSHIP REPORT Major: International Business Economics PRACTICE OF EXPORTING FREEZING SHRIMPS AT

FOREIGN TRADE UNIVERSITY FACULTY OF ECONOMICS AND INTERNATIONAL BUSINESS

-*** -

INTERNSHIP REPORT

Major: International Business Economics

PRACTICE OF EXPORTING FREEZING SHRIMPS

AT HANOI SEAPRODUCTS IMPORT AND EXPORT

JSC

Full name : Nguyễn Thị Hoa Student ID : 1111150153 Class : A30 (High – quality program) Instructor : Cao Thị Hồng Vinh (MA)

Hanoi, July 2014

Table of Contents

PREAMBLE 1

CHAPTER 1 3

INTRODUCTION TO HANOI SEAPRODUCTS IMPORT AND EXPORT JOINT STOCK CORPORATION 3

1.1 COMPANY DEVELOPMENT HISTORY 3

1.2 STRUCTURE ORGANIZATION 5

1.2.1 Shareholders’ General Meeting 5

1.2.2 Board of Management 6

1.2.3 Board of Directors 6

1.2.4 Board of Controllers 7

1.2.5 Departments 7

1.3 GENERAL EVALUATIONS ON BUSINESS SITUATION OF SEAPRODEX HANOI PERIOD 2010-2013 7

CHAPTER 2 10

THE PRATICE OF EXPORTING FREEZING SHRIMPS IN SEAPRODEX HANOI 10

2.1 ORGANIZING EXPORT OF SHRIMP IN SEAPRODEX HANOI 10

2.1.1 GENERAL INFORMATION ON THE CONSIGNMENT 10

2.1.2 Steps 10

2.1.1.1 Before Contract 11

2.1.1.2 Signing Contract 12

2.1.1.3 Prepare products 12

2.1.2.4 Sending documents to forwarder 13

2.1.2.5 Notifying and sending documents to Importer 15

2.1.2.6 Getting payment 15

2.2 Comparisons with theory 16

2.2.1 Theoretical framework 16

2.2.2 Similarities and differences 17

2.3EVALUATION OF ORGANIZING, IMPLEMENTING EXPORT IN SEAPRODEX HANOI 19

2.3.1 Achievement 19

2.3.2 Drawback 19

CHAPTER 3 21

PROPOSALS TO IMPROVE THE IMPORT-EXPORT TRANSACTIONS IN SEAPRODEX HANOI 21

3.1 ANTICIPATION OF INFLUENTIAL FACTORS 21

3.1.1 Legal system – national policy 21

3.1.2 Competitors 22

3.1.3 Market demand 23

3.2 PROPOSALS TO IMPROVE IMPORT-EXPORT ACTIVITIES IN SEAPRODEX HANOI 24

CONCLUSION 26

ABBREVIATION

Seaprodex Hanoi: Hanoi Seaproducts Import and Export Joint Stock Corporation

Enlight: Enlight Import LLC

LLC: Limited Liability Company

JSC: Joint Stock Corporation

T/T: Telegraphic Transfer

L/C: Letter of Credit

USA: United State America

EU: Europe Union

PREAMBLE

Recently, international trade has been in upward trend in the world in general and in Vietnam in particular One of the most developed exporting industries in Vietnam is fishery, say increasing rate being 24.5% in the first seven months in 2014 compared to 2013, reaching USD 4.2 billion Our greatest partners come from USA,

EU, Japan, South Korea and China With this trend, the fishery industry in Vietnam is dramatically developing, contributing hugely to the growth and development of Vietnam

With the recognition of this trend, I grasped the opportunity of doing internship that my university offered to do summer internship within five weeks at Hanoi Seaproducts Import and Export Joint Stock Corporation The internship provided me the chance to realize what I have learned in university and see the similarities as well

as differences between theory and real performance to cultivate my experience and knowledge

My report consists of three chapters:

Chapter 1: Introduction to Hanoi Seaproducts Import and Export Joint Stock Corporation

Chapter 2: The process of exporting freezing shrimps by sea in Hanoi Seaproducts Import and Export Joint Stock Corporation

Chapter 3: Proposals to improve import – export transactions in Hanoi Seaproducts Import and Export Joint Stock Corporation

In completing this report, I give my deepest thanks to the Board of Directors and Import - Export Department No.2 in Seaprodex Hanoi who did favorable conditions

and environment for me to do that five-week internship I am also grateful to MBA

Cao Thị Hồng Vinh for instructing me during the time I did internship

Although I tried my best in doing this report, the mistakes and drawbacks are

inevitable due to the narrow knowledge and the lack of long-term experience I expect

to receive opinions and comments from you to complete my report

Hanoi, August 1 st 2014

Student

Nguyễn Thị Hoa

CHAPTER 1 INTRODUCTION TO HANOI SEAPRODUCTS IMPORT AND

EXPORT JOINT STOCK CORPORATION

1.1 Company development history

General information

Hanoi Seaproducts Import and Export Joint Stock Corporation (called

“Seaprodex Hanoi” from now on) was transformed from the former state-owned enterprise Hanoi Seaproducts Import and Export Corporation into a joint stock corporation on January 1st 2007 under business license number 0100102848 first issued

on December 22nd 2006 with VND60 billion chartered capital and Mr.Dinh Quyet Tam being the representative

Full name: Hanoi Seaproducts Import and Export Joint Stock Corporation

Transactional name: Seaprodex Hanoi

Addess: 20 Lang Ha st., Dong Da dis., Hanoi city, Vietnam

successfully demonstrated its credibility, role and position in the field of producing, processing and trading sea-products in Northern Vietnam It has made transactions in various countries, including Japan, South Korea, Hongkong, the US, the EU, and the ASEAN

Fields of Business Activities:

Exploting, catching, culturing, purchasing, processing and trading items namely seafood, agricultural and forest products, general food, other garment and consumer goods;

Producing and trading in various kinds: construction materials, metal and chemical, fishing net and equipment, machines, accessories, means of transports, packing and wraping;

Trading in cold storage, forwarding, handling, and transporting by road, seaway and airway;

Trading in various services: apartments, infrastructure, office buildings, premises, storage and ground, restaurants, hotels, super markets, tourism, hospitals and other real estate;

Training and supplying labor resources

Producing, processing, preserving and trading various kinds of animal products; producing and trading feeds used in fishery industry and other domestic animal;

Trading nitrogenous fertilizer and fertilizer, agricultural and forest products, materials and equipment served in agriculture, forest and fishery industries;

Trading services on advertising, marketing information, local and international travels, tourist;

Trading handicraft items, home decoration and light industrial food

1.2 Structure organization

Specific Functions of the organization are:

1.2.1 Shareholders’ General Meeting

Shareholders’ general meeting is held annually to discuss and approve: Annual

Financial Statement; Report of Board of Controllers; Report of Board of Management;

Report of Board of Directors; Short-term and long-term development plan

Annual and irregular shareholders’ general meetings are held to approve written

decisions on the following issues: Approve annual Financial Statement; The quantity of

dividends paid to shareholders together with the rights of those dividends; The number

of members of Board of Management; Electing, expelling and replacingmembers of

Board of Management and Board of Controllers; Supplementing or editing company’s

regulations; Other issues

Export Enterprise of

Special Seafood

Hai Phong Procession

Enterprise of Seafood

Hanoi Seaproducts Import and Export Joint Stock Corporation

Hanoi Seaproducts Import and Export Joint Stock Corporation in Quang Ninh

Import – Export I

Export II

Export III

Import-Financial economic Department

Organizational Administratives

1.2.2 Board of Management

Members:

Mr Dinh Quyet Tam – Chairman

Mr Le Cong Duc – Member

Mr Nguyen Phu Cuong – Member, General Director

Mr Do Xuan Thu – Member

Mr Le Hong Son – Member

Functions

They have all and due rights and responsibilities to regulate business activities

of the company They have all rights to carry out all rights on behalf of the company except the rights of Shareholders’ General Meeting

They are responsible for supervising General Directors and other managers

To be specific, Board of Management has the rights and responsibilities as follows: Decide annual budget and business and production plans; Determine the target for the company based on strategic plan approved by Shareholders’ General Meeting; Choose auditing company; Decide organization of the company; Approve the type of shares to be issued and the total number and price of each type; Electing, expelling and replacing General Directors

1.2.3 Board of Directors

Members:

Mr Le Van Toan – Deputy Director

Ms Pham Van Anh – Deputy Director

Mr Tran Thi Hien – Chief Financial Officer

Functions:

Selected advisory and oversight responsibilities: Approve the corporate strategy; Test business model and identify key performance measures; Identify risk areas and oversee risk management; Plan for and select new executives; Design executive compensation packages; Ensure the integrity of published financial statements;

Approve major asset purchases; Protect company assets and reputation; Represent the interest of shareholders; Ensure the company complies with laws and codes

1.2.4 Board of Controllers

Members:

Mr Nguyen Thanh Trung – Chief Controller

Ms Thieu Thi Thanh Thuy – Member

Mr Pham Trong Vinh – Member

Functions

Control the whole financial system of the company: financial statements, general ledger, cost accounting, payroll, accounts payable, accounts receivable, budgeting, tax compliance, and various special analyses

On behalf of Shareholders’ General Meeting, supervise and evaluate the work of Board of Management and Board of Directors

1.2.5 Departments

Branches: There are five branches located in Ha Noi, Hai Phong, Quang Ninh,

Nam Dinh, Ho Chi minh responsible for processing products

Trading departments: There are three trading departments namely I, II, III

The first one specializes in import, the second and the third in export They are responsible for organization transactions

Management department: There are two management departments One’s

responsibility is dealing with financial issues of the company while the other decides administrative organizational issues such as human resource

1.3 General evaluations on business situation of Seaprodex Hanoi period

2010-2013

Unit: Billion Given exchange rate: VND 20000/USD

Year Total

Revenue

Revenue on Import-Export and Services

Processing Contribution to

National Budget

Before Tax Profit

Table 1.1: Financial Results of Seaprodex Hanoi 2010-2013

(Source: Financial Statement of Seaprodex Hanoi period 2010-2013)

As illustrated in the table, the financial situation of Seaprodex Hanoi during the whole period was good On one hand, the total revenue and revenue from import-export and services dramatically and continuously increased which leaded to a rising amount of contribution to national budget every year and processing value plunged On the other hand, the before-tax profit, although was always positive, fell in 2013

In 2010, all the figures were above planned compared to the previous year The most distinct number is before-tax profit, 133,39% above planned This year was the year that Xuan Thuy Procession Enterprise of Seafood was established As a result, they expected to set up a strategic development plan for this enterprise At the same time, they continued to complete procedures to invest in Nhan Chinh branch project

The year 2011 continued bringing good news to Seaprodex Hanoi with all figures above planned at the beginning of the years and both revenue and profit being higher than previous year Although the national and international economy was going down, the company still made profit

In 2012, all figures went up except the processing value which decreased down

to one third compared to the year 2011, accounting for just 46% of the expected value

by the Board of Management at the beginning of the year The company was directed

to develop in all areas, commerce – services – production, focusing on commercial services, expanding product types, reinforcing procession of seafood and suggested to increase chartered capital to executive Nhan Chinh project in the coming years

In 2013, the company passed the expected amount for total revenue and revenue from import-export and services However, processing value and before-tax profit strongly leveled off, occupying 20% and 42%, respectively, the planned figures at the beginning of 2013 The reason for not reaching plans is that Seaprodex Hanoi was affected by the negative changes of the market and some policy changes by the government such as interest rate, exchange rate management, tax rate and renting rate Under this urgent situation, Board of Management decided to call for irregular shareholders’ general meeting In the meeting, Board of Management had written report sent to Ministry of Agriculture and Rural Development about the bad situation

of the company and asked for directions from the Ministry as soon as possible One of the solutions suggested was to reduce governmental capital in Seaprodex Hanoi

CHAPTER 2 THE PRATICE OF EXPORTING FREEZING SHRIMPS

IN SEAPRODEX HANOI

2.1 Organizing export of shrimp in Seaprodex Hanoi

2.1.1 General information on the consignment

Seaprodex Hanoi exports a container 40ft of freezing shrimp tiger (preservation degree -20 degree celsius more or less 2 degree celsius) to Enlight Import LLC (called Enlight from now on) The following steps describing the process of exporting this consignment

2.1.2 Steps

Figure 2.1: Overall steps of exporting

(Source: the writer collects)

Step1 • Contract preparation

Step 2 • Signing contract

Step 3 • Preparing products

Step 4 • Doing neccessary procedures (by hiring forwarder or self-doing)

Step 5 • Notifying and sending documents to Importer

Step 6 • Getting payment (by T/T)

Enlight is a loyal partner of Seaprodex Hanoi so they did not send the enquiry for Seaprodex Hanoi But if the customer is a new one, then this step normally happens

In the very first trantraction between two companies, after receiving the enquiry from Importer, Exporter actively contracts them through email Generally, this step establishes background for future transaction between two parties and improves Exporter’s image In the case of Seaprodex Hanoi, Seaprodex Hanoi provided the information that Enlight requires, for examples, the price list shrimp products, images

of products and procession, images of packaging, some certificates, the CIF price

Sending samples

Seaprodex Hanoi considers the requirements from Enlight, especially quality requirements then sends them the samples of freezing shrimp Because this product has export standards and Enlight is a long-term customer of Seaprodex Hanoi, sending samples stage is not necessary However, this stage helps reducing the risk of the return

Offering through email

Sending samples

Negotiating though email

payment and transportation mode One note here is Enlight is a loyal partner of Enlight,

it means that they have done many transactions before, so almost all the article in contracts are the same except the delivery date The method of payment is through Telegraphic Transfer (T/T) The price is CIF price

2.1.1.2 Signing Contract

After two parties have negotiation through email, Seaprodex Hanoi write contract and scan it to be sent to Enlight Afterward, Enlight has the contract printed, stamped and signed by the Director and sent back to Seaprodex Hanoi

2.1.1.3 Prepare products

Seaprodex Hanoi does not growth shrimp or other sea food After signing the contract, they collect shrimps to be processed or buy shrimps from the other company Their processing factory is Xuan Thuy Procession Enterprise of Seafood Seaprodex Hanoi processes shrimp, preparing for exporting

In this stage, to check the process of production, Importer may:

 Assign staff to check the process of processing products, or

 Require Exporter to send images of production process, or

 Let them finish this stage then hire a company to do this job

In this case, Seaprodex Hanoi periodically sends images showing the process of producing to Enlight Then Enlight assigns an investigation company to investigate the freezing shrimp The cost is paid by Enlight All the products are processed before the date of invalidity of the Contract and before the date of payment

After the shrimps are processed, Seaprodex Hanoi registered to get Health Certificate and Microbiological Report and Analysis that would be shown more details later The shrimps’ microorganism and antibiotic content are not allowed to be higher than the customer requires

After that, they book containers to preserve shrimps The container’s degree is

-20 degree celsius more or less 2 degrees