Recommendations to improve import activity of fabric at dong tai global logistics and trading co ,LTD

LIST OF SYMBOLS, ABBREVIATIONSYOY: Year over year VINATEX: The Vietnam National Textile and Garment Group CFS: Container Freight Station CSF : Container-Freight Station NVOCC: Non-Vessel

TABLE OF CONTENTS

PREFACE 1

LIST OF SYMBOLS, ABBREVIATIONS 4

LIST OF TABLES 6

INTRODUCTION 7

CHAPTER 1: LITERATURE REVIEW 9

1.1 Import definition and Types of import 9

1.1.1 Import definition 9

1.1.2 Types of import 9

1.1.3 The importance of Import 10

1.2International sale contract 11

1.2.1 Definition 11

1.2.2 Classification of International sale contract 11

1.3Documents procedure 12

1.3.1 Commercial invoice 12

1.3.2 Bill of Lading 13

1.3.3 Certificate of quality 13

1.3.4 Certificate of quantity/weight 14

1.3.5 Certificate of origin 14

1.3.6 Packaging list 14

1.4 International payment 15

1.4.1Overview of international payment 15

1.4.2Current form of International payment 16

CHAPTER 2: THE ACTIVITY OF IMPORTING FABRIC 19

2.1 Introduction of Dong Tai Logistics And Trading Co., Ltd 19

2.1.1 The establishment of the company 19

2.1.2Organization 21

2.1.3 Personnel 22

2.2The activity of import fabric 23

2.2.1 Sending fixed order 23

2.2.2Evaluating: 25

2.2.3Choose partner and establish contract: 37

2.2.4 Open Letter of Credit (L/C): 45

2.2.5 Receiving and delivering cargo 54

2.2.6 Contract liquidation 66

CHAPTER 3: EVALUATION AND RECOMMENDATION 67

3.1 Evaluation to improve import activity 67

3.1.1 Evaluation about analyzing market and choosing partner 67

3.1.2 Evaluation about receiving and delivering cargo 67

3.1.3 Evaluation about payment activity 68

3.2 Recommendation to improve import activity 68

3.2.1 Recommendation about analyzing market and choosing partner 68

3.2.2 Recommendation about receiving and delivering cargo 69

3.2.3 Recommendation about payment activity 69

CONCLUSION 70

REFERENCES 71

LIST OF SYMBOLS, ABBREVIATIONS

YOY: Year over year

VINATEX: The Vietnam National Textile and Garment Group

CFS: Container Freight Station

CSF : Container-Freight Station

NVOCC: Non-Vessel Operating Common Carriers

LCL: Less-Than-Container Load

FCL: Full Container Load

GPS : Global Positioning System

UNSTAT: United Nations Statistics Division

FAOSTAT: Food And Agriculture Organization Of The United Nations

GDP: Gross Domestic Product

OECD: Organisation for Economic Co-operation and Development

IMD: Insurance Mediation Directive

FSA: Financial Services Authority

VAT : Value Added Tax

CIF: Cost, Insurance And Freight

WTO's: The World Trade Organization's

NBS: National Bureau of Statistics

ITMF: International Textile Manufacturers Federation

KOFOTI : Korea Federation of Textile Industries

TEXPROCIL: The Cotton Textiles Export Promotion Council of India

SITP: The Scheme for Integrated Textile Parks

D/O: Delivery Order

THC: Terminal Handling Charge

CY: Container Yard

GSO: General Statistics Office

EEZ: Exclusive Economic Zone

FOB : Free On Board

L/C: Letter of Credit

B/L: Bill of lading

VCCI: Vietnam Chamber of Commerce and Industry

B/E: Bill of exchange

TTR: Telegraphic Transfer Reimbursement

FCR: Forwarder Cargo Received

SOA: Statement of Account

UPAS L/C: Usance LC payable at sight

LIST OF TABLES

The textile and garment sector in Vietnam is one of the country’s largest industries and

a key contributor to its economic growth In 2014, Vietnam’s textile and garmentexports increased 18 percent year over year (YOY) to total approximately US$20billion, accounting for 15 percent of the country’s gross domestic product and 18percent of its total exports, according to the Vietnam National Textile and GarmentGroup (VINATEX) The textile and garment industry comprises some 4,000enterprises and provides employment for more than 7.7 million people In this study, Iwill investigate and evaluate the importing procedure of fabric at Dong Tai GlobalLogistics and Trading Co., LTD

Dissertation Methodology

Method of analysis: the dissertation is composed based on the real process collectedinformation of handling paperwork for importing fabric being implemented by DongTai staff The dissertation also gives an analysis of pros and cons of the procedure andgives some recommendations based on those points

Statistical methods of data are also applied to given statistics in this dissertation Thedata is collected from the company accounting and operation departments of Dong TaiGlobal Logistics and Trading Co., LTD

Dissertation Scope

The dissertation is implemented in order to analysis and evaluate current situation ofimporting at Dong Tai company The dissertation focus on the detail steps of theimporting procedure of Dong Tai for understanding the real activities In addition,dissertation also gives some suggestions to improve the efficiency of import procedure

Duration Time

The statistics and documents in dissertation are collected within the 2-monthinternship During this period, I had chance to get in import-forwarding job and gainknowledge and experience to complete this dissertation

Research Result

By applying observation method, the implementation of the procedure shall beevaluated and compared with the requirements of the company procedure So that,advantages and disadvantages of this procedure implementation are figured Finally,some recommendations are built based on the above analysis The result of this studywill provide several recommendations that help the managers to further exploit currentlogistics as well as investing on human resources to improve this process

CHAPTER 1: LITERATURE REVIEW1.1 Import definition, types and the importance of import

1.1.1 Import definition

Imports are the goods and services that are bought by residents, governments orbusinesses of a country, but made outside of the country It doesn't matter what thegoods or services are, or how they are sent They can be shipped, sent by email, or evenhand-carried in personal luggage on a plane If they are produced in a foreign countryand sold to domestic residents, they are imports

For example, tourism products and services are still imports, even though they are sold

to tourists outside of their country In a way, when you travel outside the country, youare technically importing those souvenirs

1.1.2 Types of import

There are two basic types of import:

1 Industrial and consumer goods

2 Intermediate goods and services

Companies import goods and services to supply to the domestic market at a cheaperprice and better quality than competing goods manufactured in the domestic market.Companies import products that are not available in the local market

There are three broad types of importers:

1 Looking for any product around the world to import and sell

2 Looking for foreign sourcing to get their products at the cheapest price

3 Using foreign sourcing as part of their global supply chain

Direct-import refers to a type of business importation involving a major retailer (e.g.Wal-Mart) and an overseas manufacturer A retailer typically purchases productsdesigned by local companies that can be manufactured overseas In a direct-import

program, the retailer bypasses the local supplier (colloquial middle-man) and buys the

final product directly from the manufacturer, possibly saving in added cost data on thevalue of imports and their quantities often broken down by detailed lists of products areavailable in statistical collections on international trade published by the statisticalservices of intergovernmental organizations (e.g UNSTAT, FAOSTAT, OECD),supranational statistical institutes (e.g Eurostat) and national statistical institutes.Industrial and consumer goods

1.1.3 The importance of Import

On a national level, in most countries international trade and importing goodsrepresents a significant share of the gross domestic product (GDP) International tradehas a significant economic, social, and political importance in many countries Importsprovide countries with access to goods and services from other nations Withoutimports, a country would be limited to the goods and services within its own borders

International trade is generally less expensive than domestic trade despite additionallyimposed costs, taxes, and tariffs However, the factors of production are usually moremobile domestically than internationally (capital and labor) It is common for countries

to import goods rather than a factor of production For example, the U.S imports intensive goods from China Instead of importing Chinese labor, the U.S importsgoods that were produced in China by Chinese labor

labor-On a business level, companies take part in direct-imports, which occur when a majorretailer imports goods that are designed locally from an overseas manufacturer Thedirect-import program allows the retailer to bypass the local supplier and purchase thefinal product directly from the manufacturer Direct imports save retailers money byeliminating the local supplier

1.2 International sale contract

of cargo , the buyer must pay for goods and receive goods

International sale contract has 3 characteristics:

- The subject of the contract (buyer and seller) has business establishments registered intwo different countries Here it should be noted that nationality is not a factor todistinguish, whether the buyer and seller have different nationalities but if the sale isperformed on the same country, the sales contract is not international in nature

-The currency used to pay can be foreign currency of either country or of the 2countries

-The cargo - the object of the contract is transferred out of the country to suppliersduring the contract performance process

1.2.2 Classification of International sale contract

1.2.2.1 In terms of implementation time

- Short-term contract

Short-term contract is concluded in a relatively short time, and after two parties havefulfilled their obligations, the legal relations between the parties in that contract willalso end

- Long-term contract

Short-term contract is performed in a long time and during that time the delivery isconducted several times

1.2.2.2 In terms of contract form, have the following categories:

-Written contracts

Written contracts provide more certainty for both parties than verbal contracts Theyclearly set out the details of what was agreed Matters such as materials, timeframes,payments and a procedure to follow in the event of a dispute, can all be set out in acontract

-Verbal contracts

Many independent contracting arrangements use verbal contracts, which only workwell if there are no disputes A handshake agreement may still be a contract and may(though often with difficulty) be enforced by a court However, verbal contracts canlead to uncertainty about each party's rights and obligations A dispute may arise if youhave nothing in writing explaining what you both agreed to do

-Standard form contracts

A 'standard form' contract is a pre-prepared contract where most of the terms are set inadvance and little or no negotiation between the parties occurs Often, these are printedwith only a few blank spaces for filling in information such as names, dates andsignatures

1.3 Documents procedure

1.3.1 Commercial invoice

The commercial invoice is a legal document between the supplier and the customer thatclearly describes’ the sold goods, and the amount due on the customer The commercialinvoice is one of the main documents used by customs in determining customs duties

A commercial invoice must identify the buyer and seller, and clearly indicate the dateand terms of sale, quantity, weight and/or volume of the shipment, type of packaging,complete description of goods, unit value and total value, and insurance, shipping andother charges

The number of copies of the invoice (both original and copies) required for the delivery

of the goods, must be agreed with the importer Usually, invoices are issued with theoriginal and two copies Although normally the legislation in different countries doesnot limit the number of originals, it is not advisable to make more than those strictlynecessary in order to accomplish with the customs needs required by the buyer It isadvisable that the importer confirms with the exporter all data that the invoice mustprovide before its issuing, as well as the particularities it must include in order toaccomplish with the regulation of the destination country

1.3.2 Bill of Lading

Bill of Lading is a document signed by a carrier (a transporter of goods) or the carrier'srepresentative and issued to a consignor (the shipper of goods) that evidences thereceipt of goods for shipment to a specified designation and person

The information in the bill of lading is critical as it directs the actions of personnel allalong the route of the shipment - where it's going, the piece count, how it's billed, andhow it's to be handled on the dock and trailers It could be on a prepaid or collect basis.The consignee has to check whether the shipment is collect on delivery which meansthat the driver will collect the cost of the merchandise on delivery of the freight

A bill of lading is generated by a shipping line or its agent, giving details of a shipment

of merchandise Alongside this principal purpose, the bill of lading also certifies thatthe goods have been shipped aboard a vessel (and in some cases certifies the condition

of the goods at the point of loading), assigns title to the goods, and requires the carrier

to release the merchandise to the holder of the title or a named party at the destinationport

1.3.3 Certificate of quality

A document certified by a competent authority that the supplied good or service meetsthe standards of producing countries or international standards Certificate of qualitymay be granted by the suppliers, can also by the assessment of goods, according to anagreement between two parties

The content of C/O includes: name of and address of the buyer, name of and address ofthe seller; name of goods; quantity; statements of shippers about the production site orexploitation of the goods; certified by authorities.

1.3.6 Packaging list

Packing List is a document which details the contents, and often dimensions andweight, of each package or container It serves to inform all parties involved withshipping, including transport agencies, government authorities, and customers, aboutthe contents of the package

A packing list should be made for all shipments consisting of more than one shippingpiece for the following reasons:

They aid in identifying lost cargo, especially for carrier and insurance claims

They permit selective inspection by customs authorities, and many government requirethem for large shipments

They provide a “map” of the shipment, enabling the buyer to easily unpack and stockthe shipped goods.

A packing list is expresses the contents of a package, along with details about thequantity, description, and weight of these contents Content pricing is not included Apacking list is created by the seller and sent to where the goods are located in order tohave an accurate tally of the sent goods Once the goods have been tallied and packed,the list is sent along with them to their destination

1.4 International payment

1.4.1 Overview of international payment

International payment is one of the bank's operations in the payment for the value ofthe shipment between the buyer and the seller in the foreign trade fields Theinternational payment method is currently the most popular:

+ Transfer by TTR (Telegraph Transfer Remittance) or MTR (Mail Transfer

Remittance): forwarding documents and telegraphs between units incurringinternational transactions and international settlement department of the paymentcenter are implemented on T24 Browser

+ C.A.D: A payment arrangement in which an exporter instructs a bank to hand

over shipping and title documents (see document of title) to the importer whenthe importer fully pays the accompanying bill of exchange or draft Also calleddocuments against payment

+ Collection: A payment method that after delivering or supplying services the

sellers (the exporter) entrust their serving bank to present the buyer (the importer)documents by the agent bank in order to be paid, accept the draft or agree otherconditions or terms

+ L/C: is an agreement, in which, as the request of the customer (who requests to

open L/C) a bank (Issuing Bank) will issue a certificate, called a letter of credit.Accordingly, the issuing bank is committed to pay or accept the draft for the 3rd

party if they present issuing bank the payment documents matching withconditions and provisions of the L/C.

1.4.2 Current form of International payment

1.4.2.1 Transfer by TTR or MTR

- Nowadays, the Bank in general and SeABank in particular rarely uses the transfer form of TTR because of out-of-date and wasting of time receiving document; therefore, MTR is popular to use in a fast and convenient manner Telegraph

Transfer lies in the payment "By Remittance - By Transfer" The bank on behalf of the buyer will compose the telegraph to its agent bank overseas paying to the seller MTR has two forms of payment namely prepaid and postpaid

- In case of Prepaid MTR, it takes following steps:

+ Step 1: The Buyer goes to the Buyer's bank order money transfer to pay for the

Seller

+ Step 2: The Buyer's bank send a debit notice to the Buyer

+ Step 3: The Buyer's bank remits to the Seller's bank

+ Step 4: The Seller's bank sends received notice to the Seller

+ Step 5: The Seller delivers good and set of documents to the Buyer

- In case of Postpaid, it is also implemented in 5 phases:

+ Step 1: The Seller delivers good and set of documents to the Buyer

+ Step 2: The Buyer requests their bank to transfer to the Seller

+ Step 3: The Buyer's bank send a debit notice to the Buyer

+ Step 4: The Buyer's bank remits to the Seller's bank

+ Step 5: The Seller's bank sends received notice to the Seller

1.4.2.2 L/C - Letter of Credit

At the present, the payment method of L/C is a common tool in internationalpayment operation since it ensures maximum advantages for both sellers and buyers.The overall process of this method can be presented in following diagram:

Step 1: Parties of Importer and Exporter enter into the commercial contract with

each other

+ Step 2: The Importer implements procedure to request the Issuing Bank to open

L/C for the Beneficiary, known as the Exporter

+ Step 3: The Issuing Bank opens L/C as required by the Importer and moves to

the Advising Bank

+ Step 4: The Advising Bank notifies the Exporter that the L/C was opened.

+ Step 5: Based on the content of L/C, the Exporter delivers good to the Importer + Step 6: After delivery the Exporter establishes a set of documents then send to

the Advising Bank to be paid afterwards

+ Step 7: The Advising Bank sends the documents to the Issuing Bank to consider

the payment

+ Step 8: The Issuing Bank checks the validity of document sets; if valid, deducts

money to remit the Advising Bank and if invalid refuses paying

+ Step 9: The Advising Bank notifies the exporter money received.

+ Step 10: The Importer remits to the Issuing Bank

+ Step 11: the Issuing Bank returns the set of documents to the Importer to be able

to receive good

CHAPTER 2: THE ACTIVITY OF IMPORT FABRIC

2.1 Introduction of Dong Tai Logistics And Trading Co., Ltd

KOREA, founded in June 1987

Head office: RM 302, DONGYANG BLDG, 89-20, SEOSOMUNRO, JUNG-GUSEOUL, KOREA

Registered Multimodal Freight Forwarding Business (No.1725) Joined KIFFA (KoreaInternational Freight Forwarding Association) (No.1003) Registered InternationalMultimodal Freight Forwarding Business (IncheonCustoms: DSLG)

Website: www.dongsuero.com

Dong Tai Logistics's Offcies:

 Hai Phong Office: RM 202-204 TasacoBldg, KM 104+200 Nguyen BinhKhiem,Hai An, Hai Phong

 Ha Noibranch: RM 1601 Thanh Cong Building, 57 Lang Ha, Ba Dinh, Ha Noi

 Noi Bai Office: RM314, NTSBuilding, Noi Bai InternationnalAirport, SocSon,

Ha Noi

 Hồ Chí Minh City Office: 5th floor, C2Thuy LoiApartment 301, D1Str., Ward

25, BinhThanh Dist., HCMC

2.1.1 The establishment of the company

Dong Tai Global Logistics and Trading Co., LTD established on December 21, 2009.Business Registration No 0201019508 in the Department of Planning and Investment

of Hai Phong city, the tax code 0201019508, chartered capital of VND 1.5 billion initially, the one is representatived is Mr Do Viet Thanh Vietnam

English Name: Dong Tai Global Logistics and Trading Co., Ltd., referred to as the Global Dong Tai.

Before 2009, the precursor Dong Tai Global is a representative office of Dongsuero in Haiphong, at the same time set up offices in the city Ho Chi Minh City

In 2009, Dong Tai Global company officially established, and become an agent of Dongsuero

In 2009, at established date, headoffice of Dong Tai Global is at Rm 202-204, Tasaco Building, Km104 + 200 Nguyen Binh Khiem Street, Hai An District, Hai Phong City

In 2010, Dong Tai Global became a member of Vietnam Chamber of Commerce and Industry of Vietnam (VCCI)

In 2012, Dong Tai Global registered and become a member of the Vietnam Freight Forwarders Association (VIFFAS)

2013, after 03 years of operation, Dong Tai Global has opened an office in Hanoi in room 1601, Building Success, 57 Lang Ha Street, Ba Dinh District, Hanoi With the functions of the business office and handle cargo air transport through airports Noi Bai International

In late 2013, early 2014, the official Dong Tai Global become a member of many associations Forwarder and Logistics domestic and international

In early 2014, Dong Tai Global continues to participate in associations such as

Vietnamese Logistics Association (VLA), the Association of Enterprise Logistics India(GWHAR), such as WCA Forwarder Association Inter Global , Freight Net,

2014, with the development of a Forwarder, Dong Tai Global oriented markets of Asean and international , with world trends, and future vision correctness, Dong Tai Global was extended to most of the warehouses, port and depot at the the Dinh Vu, HaiPhong, international gateway of Vietnam, coordinate partners around the world

Dong Tai Logistics And Trading CO.,LTD

Address: Room 202-204, Tasaco Building, Km 104+200 Nguyen Binh Khiem, Hai An,Hai Phong, Viet Nam

Tell : (84)313 979356 Fax : (84) 313 979494Email: thanh@globalnetwork.com.vn

2.1.2 Organization

Organization and Administration Department: It is responsible for monitorring, sortingworkforce in the company Simultaneously, it plans employee trainings to meet thegrowing demands of today's market This department have to comply with theregulations of the State about labor management, salary, reward and discipline regimes.Business Department: It is in charge of all import and export business acitivies of thecompany, including: market research, finding customer, commodity sourcing,marketing activities, planning, implementation of the import and export contract,…

Therefore, this is the most important parts of the company to operate businessactivities.

Accounting Department: it organizes the accordant works of finance, accounting andstatistics Accounting Department will reflect honest, timely and complete about allassets of the company and it also analyses the business results of the company.Besides, this department it monitors the situation of the purchase and sale of goods,inventories of stores, checking the internal accounting of the company and then, thedepartment advises the Director on the business plans of the company

2.1.3 Personnel

Total number of employees in the moment is over 100 people, including:

The policy towards laborers has some highlights, such as:

-Salary payments and bonuses are made on business efficiency of each workers

-Companies always comply with current regulations about social insurance, healthinsurance and unemployment insurance for workers

-Companies always perform good the welfare regimes: travel, sickness allowance andother benefits This policy contributes to improving the physically and mentally life forworkers and it creates the bond between workers and the company

2.2 The activity of import fabric

2.2.1 Sending fixed order

After receiving commodity catalogue of potential partners, the Company will analyze,calculate and consider to give the most reasonable purchase price In order to importfabric, company decided to send 3 orders to 3 companies in :

Dong Tai Logistics And Trading Co., Ltd

Adress: Room 202-204, Tasaco Building, Km 104+200 Nguyen Binh Khiem, Hai An,Hai Phong, Viet Nam

Thank you for sending your catalog so promptly It arrived within a few days of

my request Please send me the following items by parcel post :

1 Commodity: 100% cotton framework knitted fabric

2 Price: USD 5000/ ton CIF Dinh Vu port Viet Nam-Incoterms 2010

3 Quantity: 25 tons

4 Total: 125.000 USD

5 Specification

 Material: 100% Cotton

 Type: Mesh Fabric

 Yarn Type: Carded

 Pattern: Plain Dyed

6 Delivery: No later than August 6th, 2015

7 Payment: By Irrevocable and transferable L/C 100% at sight

8 In the meantime, we are looking forward to hearing from you within

2.2.2 Evaluating

2.2.2.1 Receiving acceptance

2.2.2.1.1 Acceptance from Hangzhou Lake Melan Home Textiles Co.,Ltd in China:

HANGZHOU LAKE MELAN HOME TEXTILES CO., LTDWulian Village, Xintang Town, Xiaoshan District, Hangzhou, Zhejiang, China

Tel:+86-571-82561812Fax: +86-571-82560312Email: kevin.huang@lakemelan.com

ACCEPTANCE

To : Dong Tai Logistics And Trading Co., Ltd

Adress: Room 202-204, Tasaco Building, Km 104+200 Nguyen Binh Khiem, Hai An,Hai Phong, Viet Nam

Tell : (84)313 979356

Fax : (84) 313 979494

Email: thanh@globalnetwork.com.vn

Dear Sir

We have received your order and very pleasure that you agreed with all ourrequest about the goods with their specification, the quantity, the delivery time and thepayment made And we agreed with your price that you gave.We have all the items instock and will be advising you in time requested.

Please send us your confirmation

E-Mail : Billy@Onfabric.Com

ACCEPTANCE

To : Dong Tai Logistics And Trading Co., Ltd

Adress: Room 202-204, Tasaco Building, Km 104+200 Nguyen Binh Khiem, Hai An,Hai Phong, Viet Nam

2.2.2.1.3 Acceptance from Kasim Textile Mills (P),Ltd in India:

KASIM TEXTILE MILLS PVT LTD.,

39/1, Ramnad Main Road,Puliyankulam, Madurai – 625 201

Tamilnadu, India.Telephone: 91-452- 2465555, 666, 777Mail id : mktg@kasimtextile.com, export@kasimtextile.com

ACCEPTANCE

To : Dong Tai Logistics And Trading Co., Ltd

Adress: Room 202-204, Tasaco Building, Km 104+200 Nguyen Binh Khiem, Hai An,Hai Phong, Viet Nam

Thank you for your order and we look forward to working with you

Please send us your confirmation

Yours faithfully

in July 2009, the textile industry reported year-on-year growth of 8.6 percent.

In April 2008, the China National Textile and Apparel Council, which representsChina's textile industry, joined the Switzerland-based International TextileManufacturers Federation (ITMF) as a member association, and in October 2009hosted the ITMF Annual Conference in Shanghai In an interview with Textile WorldAsia , ITMF Director General Dr Christian P Schindler explained why theorganization selected Shanghai as the location for the 2009 ITMF Annual Conference:

"Shanghai is one of the most booming cities in the world, with a huge textile cluster inand around the city As the world's biggest producer of textiles with the largestdomestic market and one of the fastest-growing economies in the world, China is andwill be of great importance as a production site and increasingly also as an exportmarket."

In the last few years, Vietnam has been especially sensitive to Chinese economic andtrade predominance The trade balance between Vietnam and China has consistentlybeen in China’s favor, and Vietnam’s trade deficit with China has ballooned.Unprocessed goods, such as crude oil and coal, account for a significant portion ofVietnam’s exports to China Meanwhile, Vietnam’s manufacturers, even export-centricones, are becoming more reliant on Chinese inputs Imported Chinese goodsencompass various essential materials for export-specific production, including rawmaterials, machinery and equipment, steel, chemicals, oil and fabrics One of the most

popular reasons given is the asymmetrical North-South divide between theireconomies, a serious concern for Vietnam.

Though the Vietnamese textile and garment sector is a major exporter of textiles andgarments, it is heavily dependent upon imported raw materials and inputs, especiallyfrom China, to meet its production quotas Vietnam’s cotton production satisfies only 1percent of the sector’s demand, and its fabric production satisfies only about 12 to 13percent of demand, VINATEX reports According to data from the GeneralDepartment of Vietnam Customs, in 2013, Vietnam imported 581,179 tons of cottonvalued at US$1.17 billion, representing a tonnage increase of 39.1 percent; 696,194tons of yarn valued at US$1.52 billion in 2013, a tonnage increase of 7.7 percent; andfabric valued at US$8.40 billion, a dollar increase of 19.3 percent According toVINATEX, Vietnam annually imports from China cotton worth US$7.5 million, yarnworth US$350 million and fabric worth nearly US$3 billion

According to CRI's 2013 Research Report of China's Textile Industry, industry supplyand demand data indicate that domestic demand will begin to play a major part instimulating the industry's continuing development China's domestic consumption oftextiles appears to be rising: According to the WTO's Trade Policy Review, in 2012,China consumed 75 percent of the textile and apparel sector's output The NBSreported that retail sales of apparel increased 18.7 percent year-on-year in October

20013, and first-quarter 2014 apparel sales increased 14.3 percent year-on-year.China's response to international trade barriers, increasing environmenal-protectionrequirements and climbing labor wages are among factors that will play a major role indetermining the future of its textile and apparel industry The country's rapidlydeveloping economy and increasing demand - along with rising export tax rebates andgovernment policies issued to foster the textile industry's growth - should help Chinaride out the effects of the global economic downturn and return to an upswing

2.2.2.2.1.2 Korea:

The Republic of Korea (hereafter Korea) and Vietnam have been enjoying a mutualfriendship and multifaceted collaboration since the establishment of formal diplomatic

relations in 1992 Thanks to their historical and cultural similarities, both sides haverapidly formed close and cooperative ties covering a wide range of areas such as trade,investment, science and technology, culture, security, as well as education and training.

In particular, bilateral trade relation between Korea and Vietnam has expandedtremendously Trade between the two countries has increased steadily in volume andproduct variety, thanks to their establishment and rapid development of institutionaland physical infrastructure for bilateral trade relations As shown in Table 1, the value

of Korea’s merchandise trade with Vietnam was US$9.8 billion in 2008, up from onlyUS$0.5 billion in 1992, or an average annual growth rate of 20.6 percent

During the period from 1992-2008, the momentum of bilateral trade had increasedsteadily except for the year of 1998 due to the Asian financial crisis It is also worthy tonote that Korea has maintained trade surplus over Vietnam over the past 20 years Thescale of the bilateral trade relations further deepened in 2007 when the Korea-ASEANFree Trade Agreement was put into effect In October 2009, the two countries agreed

to upgrade their bilateral relations from a comprehensive relationship to a strategicpartnership Korea and Vietnam also agreed to begin a joint feasibility study for a freetrade agreement between the two countries

Trade relationship between Korea and Vietnam in the period 2010-2014 developedquickly at an average (annual) rate of 20.38% In 2010, trade between the two countrieswas valued at US$2.082 million; in 2014 US$8.850 million, which was equivalent to afourfold increase in four years Korea was consistently one of the five biggest tradingpartners of Vietnam during this period

The value of imports from South Korea to Vietnam increased significantly in theperiod 2010-2014 In 2010, the import was US$1,730 million and US$7,066 million in

2014, or an increase of 4.08 times In 2014 alone, import value from Korea rose toUS$2 billion It is assumed that a significant increase in Korea direct investment inVietnam accounted for the hefty rise in import value during the 2010-2014 period.Korea import materials, for instance, comprised machinery for investment projects,

resulting in increased import value The average annual growth rate of import valuefrom Korea was 19%.

South Korea's textile industry has been facing increased competition in the globaltextile market, resulting from factors including the end of the global textile quotasystem in 2005 and recent changes in the global economic environment characterized

by escalating raw material prices and the appreciation of its currency, the won, as well

as the global proliferation of FTAs Also, textile industries in developing countrieswith low labor and production costs are growing rapidly and offering goods at morecompetitive prices

Minister of Knowledge Economy Choi Joong-Kyung has announced the 2011 PolicyPackage to Boost the Textile & Fashion Industry, which is intended to promote theindustry through joint private-government initiatives The plan includes strengtheningresearch and development; increasing manpower; promoting South Korean brands;establishing regional business infrastructures; and taking advantage of FTAopportunities

KOFOTI Chairman Ro Hee Chan has implemented similar strategic projects for 2011,which include employing new technologies to create value-added textiles for anexpanded range of markets; raising publicity of the textile industry domestically; andincreasing exports by strengthening international cooperation and trade KOFOTIanticipates these projects will help the textile industry achieve its 2011 goal ofUS$15.3 billion in textile exports South Korea is aiming to become the fourth-largesttextile exporter and seventh-largest apparel exporter globally by 2015

production and 18 percent of industrial employment, and adds 15 percent to India'sgross export earnings and 4 percent to the national gross domestic product (GDP) Thegovernment of India's National Manufacturing Competitiveness Council hasrecognized textiles and apparel as a priority sector that has high potential for growthand even greater multiplier effects for job creation More than 35 million peoplecurrently are employed directly in the Indian textiles sector, which is the second-largestemployment provider behind agriculture

Per the latest available World Trade Organization data on global textile and appareltrade, India ranks seventh in textiles and fifth in apparel The Indian textile industryboasts impressive statistics: According to the Ministry of Textiles, it not only was thesecond-largest producer of cotton in the world during 2006-07 - with its 4.76 millionmetric tons comprising 18.45 percent of global production - but globally also is thelargest producer and second-largest exporter of jute goods, as well as the second-largest producer of silk, accounting for 18 percent of total raw silk production

The Indian textile industry covers a wide spectrum of activities, with the decentralizedpowerlooms/hosiery and knitting sectors constituting the largest section Thepowerlooms sector in India accounts for about 62 percent of the country's total fabricproduction, and more than 60 percent of fabric for export The major textile industrysub-sectors include organized cotton/man-made fiber textile mills, man-madefiber/filament yarn, wool and woolen textiles, sericulture and silk textiles, jute and jutetextiles, handloom textiles, handicrafts, and textile exports

India, which supplies 27 per cent of the inputs used by the Vietnamese textile andgarment industry, wants to increase it to 45 per cent in the next five years, according tothe Cotton Textiles Export Promotion Council of India (TEXPROCIL) Bui Thi Thanh

An, deputy director general of the Viet Nam Trade Promotion Agency, said tradebetween Viet Nam and India sharply increased in recent years, reaching US$5.2 billionlast year, of which VietNam's exports accounted for $2.3 billion Garment and textiletrade also saw considerable growth in recent years, she said

The event was organised by Vietrade, the Indian embassy in Ha Noi and consulate inHCM City, and e-commerce portal Vietrade.com together with TEXPROCIL and theViet Nam Textile and Apparel Association in HCM City The Indian delegation, whichvisited Viet Nam from August 4 to 8 to explore business opportunities, comprisedexecutives from 12 leading textile and garment companies.

At a press conference in July, Vaghela said the Indian textile industry more and more isimplementing modern technology and work processes, becoming more competitive,establishing strong product brand equity, and consistently growing at ever-highergrowth rates He also said that funding for the textile sector is anticipated to climb to1,50,600 crore rupees by 2012, creating 17.37 million new jobs in the sector

Vaghela recently reported that 40 integrated textile parks have been approved under theScheme for Integrated Textile Parks (SITP), which is being continued in the 11th FiveYear Plan because of the growth opportunities it affords He said that once the parksbegin operations, the government will invest 21,502 crore rupees, and these parks willprovide 5.75 lakh jobs and textile products worth 38,115 crore rupees annually

Strong domestic and export market demand, as well as good potential in technicaltextiles - combined with the conducive policy environment the government hasprovided - will allow for India's textile industry to continue its upward growth and play

a major role in the world of textiles and apparel

Fabric 2.635.625.00

0Warehousing

 Freight forwarder cost (VND)

Importing tax = 10% => Importing tax = 10%* 2.635.625.000= 263.562.500

Container (40’) loading fee 800.000Container (40’) handling fee 600.000

263.562.500800.000

Total 273.812.50

0

Table 2 Freight forwarder cost (VND)

 Delivery cost (from CY to warehouse in Hanoi city ): 4.750.000

 Payment (VND) (Vietin bank)

Cost of opening L/C is 50 USD = 1.054.250 VND

Table 3 Payment cost (VND)

 Management cost (2 months) (VND):

Salary (7.000.000/employee):

 7.000.000*10*2= 140.000.000 (VND)