Slide Thương mại quốc tế đại cương English ver

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<b>Introduction to </b>

<b>International Trade and Finance</b>

FACULTY OF INTERNATIONAL BUSINESS

<i><b>Lecturer: Nguyen Thu HuongMobile: 0947877111</b></i>

<i><b>Email: </b></i>

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<i><b>Completed this subject, students will be able to:</b></i>

• Understand the key concepts and terminologies in international trade

• Understand the forces in international trade environment • Understand the roles and responsibilities of all parties

involved in international trade and finance

• Understand the process involved in international trade and sources of laws and convention applicable to such process • Understand and select the appropriate methods of

international payment

• Understand the current banking practices and forms of international trade finance

<b>• Take a Certificate of International Trade and Finance(CITF)</b>

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Course overview

Topic 1: Introduction

Topic 2: The international trade environment

Topic 3: Contracts and documents

Topic 4: Methods of payment

Topic 5: Trade Finance Management

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Course Assessment

• Class attendance: 10%

• 01 Case study (covering topic 1, 2, 3): 15% • 01 Mid-term test: (covering topic 4): 15% • Final exam: 60%

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Case study

Select a Vietnamese company which have already involved in exporting. Imagine that you are a trade consultant who needs to suggest a new country market for the company to make an entry. Write a report which covering the following contents:

- Introduction

- Company background

- Reasons for finding a new foreign market

- Select a potential country market and do PESTEL analysis to support your choice

- Select a method of entry and explain your choice - Conclusion

Writing language: English Word limit: 3000 Deadline: TBC

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• Finance of International trade - Eric Bishop (2004) • ICC publication: Incoterms 2010, UCP 600, ISBP 745

• UN Convention on Contracts for the International Sale of Goods (CISG)

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Student’s Responsibilities

• Attend class regularly

• At home: Read and prepare answers for questions of the next class

• In class: take notes and submit answer sheets on group basis • Work in groups for homework, in-class discussion and case

studies

• Raise your voice if you have any ideas or questions related to the lecturers

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Topic 1: Introduction

1. The concept of International Trade

2. Risks and risk mitigants in international trade

3. Parties involved in international trade

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1. The concept of International trade

International trade is the exchange of goods, services or

<i><b>performance and capital across international borders or territories </b></i>

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Borders or Territories ???

<b>Border: a line separating two political or </b>

geographical areas, especially countries.

<b>Territory: an area of land under the jurisdiction </b>

of a ruler or state

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Read the article on page 1, 2 & 5 and answer the question:

- What are motivations of international trade to Buyer/ Seller? - Who is the Buyer? Who is the Seller?

- What are the different names of Buyer/ Seller?

- When do we call Buyer/ Seller by its other names?

- Are the objects of international trade always things that can be seen?

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Comparative advantage

Table 1.1: Using Ricardo’s theory of comparative advantage:

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Total output produced 2 litres of

wine ^{4 rolls of}cloth Net output after exchange

of 2 rolls of cloth by England for 1 litre of wine from Net gain from comparative

advantage ^{1 roll of cloth 1 roll of cloth}

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2. Risks and Risk Mitigants

<b>Discussion: </b>

<b>Whether international trading is more difficult and risky than </b>

domestic one? Why?

<b>Hints: See page 9, 10, 22, 23, 24</b>

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2. Risks and Risk Mitigants

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2.1. Risks involved in international trade

<b>How do the following types of risk create adverse effects to the Buyer/ Seller?</b>

• Transport risk/ Transportation risk/ Risk of transporting • Fraud or risks related to financial crime

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2.2. Risk mitigants

<b>Read the articles on page 10 & 11 and explain how the following organizations can help reduce risks involved in international trade:</b>

• Local chambers of commerce

• Standard protocols and interpretations of legal issues

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3. Parties involved in international trade

<b>Seller/ Exporter_{Buyer/ Importer}</b>

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3.1. Business organization

A business involved in buying and selling goods and services with the aim of making profit

- Limited or Unlimited (What is limited/ unlimited? 🡪See page 6) - One owner or more than one owner

- Private or public (what is private/ public? See page 8 & page 9)

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3.2. Freight forwarder

<b>Organizations that manage the movement of goods </b>

internationally using the appropriate mode of transport

<b>Discussion: What does the phrase “manage the movement of </b>

goods” mean?

<b>Hints: See page 61</b>

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3.3. Insurance companies

- What to insure? - Why to insure?

- Who must buy insurance? The seller or the buyer? Phu thuoc vaof Incoterm

<b>Hints: See page 62</b>

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3.2. The World Trade Organization

• Formed in 1995

• General Agreement on Tariffs and Trade (GATT) • 164 members

<b>The WTO provides a forum for negotiating agreements aimed at reducing obstacles to international trade and ensuring a level playing field for all, thus contributing to economic growth and development. The WTO also provides a legal and institutional framework for the implementation and monitoring of these agreements, as well as for settling disputes arising from their interpretation and application. </b>

Hongkong: Khu tự trị

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3.2. The World Trade Organization

Watch a video about WTO and take notes as much as you can

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3.3. The International Chamber of Commerce

• Publications: Incoterms, UCP, ISBP

Watch a video about ICC and take notes as much as you can

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Topic 2: International Trade Environment

1. External factors affecting international trade

2. Marketing research before a foreign entry

3. Methods of entering an overseas market

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<b>1. External factors affecting international trade</b>

<b>What are the above factors called in Vietnamese?</b>

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<b>Case study: Imagine that you are managers of a Vietnamese </b>

seafood company which wants to export to German market. What should you include in your PESTEL analysis?

<b>Hints: See page 20 & 21</b>

<b>1. External factors affecting international trade</b>

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2. Marketing research

to research???

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Credit reference agencies Credit ranking agencies Credit Insurers

The Internet and the media Networking

Self-check

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3. Methods of entering an overseas market

The company must decide whether market factors

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3.1. Manufacture “at home”

• Sell direct to the foreign end users

• Engage the services of an intermediary that specializes in finding foreign markets and buyers

Indirect Exporting

<b>Vocabulary check</b>

What are the differences among:

A. Export B. Exporting C. Exportation

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1. What are the advantages/disadvantages of direct exporting ? 2. What are the advantages/disadvantages of indirect exporting? 3. When should a company adopt direct exporting/indirect

<b>Case study:</b>

Watch a video and list the reasons that force Vietnamese seafood companies select indirect exporting instead of direct exporting.

<b>Hints: See page 30 & 31</b>

3.1. Manufacture “at home”

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3.1.1. Direct exporting

SUMIMOTO is a company based in Japan specializing in auto parts. The company has built a manufacturing plant in Vietnam since 2015. Have SUMIMOTO adopted direct exporting ?

A. If SUMIMOTO has a subsidiary which has done business registration in Vietnam

B. If the manufacturing plant is within a special customs supervision area in Vietnam

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3.1.2. Indirect exporting

• Agents

• Distributors • Co-marketing

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3.1.2. Indirect exporting

Find and contact the foreign markets/ buyers

Employed by the principal on a

commission basis and retainer fee Take ownership of the goods

Assume higher risks

Purchase the goods outright and resell Set the price in overseas markets

Negotiate the sale on behalf of the principal

Negotiate the sale on behalf of itself Earn a profit

Provide after-sales support

See pages 32 & 33 and fill out the table

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3.1.2. Indirect exporting

Export management companies Export trading houses

Confirming houses Buying agents

<b>Discussion: The following intermediaries are agents or distributors?Hints: See page 31 & 32</b>

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3.1.2. Indirect exporting

List advantages and disadvantages of indirect exporting

<b>Hints: See page 31</b>

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A Finnish firm, a German firm and a Brazilian firm create a joint venture in Vietnam

German Firm

Brazilian Firm

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<small>An Italian firm creates a joint venture with a Vietnamese </small>

<small>partner to enter the Vietnamese market</small>

Vietnamese Firm

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3.2.1. Joint Venture

List advantages and disadvantages of Joint Venture

<b>Hints: See page 34</b>

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1. Who is the licensee/ licensor ?

2. What do the intellectual property rights include?

3. What are advantages/ disadvantages of international licensing ?

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<i><small>Intellectual Property Rights, Training, Business Advice, Marketing assistance, etc.</small></i>

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3.2.3. International Franchising

1. What do the intellectual property rights include?

2. What are advantages/ disadvantages of international franchising?

3. What are differences between franchising and licensing?

<b>Hints: See page 35 & 36</b>

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3.2.3. International Franchising

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Topic 3: Contract and Documents

1. The ordering process

2. The contract and contract management 3. UN Convention on CISG

4. Incoterms 2010 rules

5.Dispute handling and arbitration

6. Documents used in international trade

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1. The ordering process

Arrange the following tasks according to the ordering process and specify who will do in each step:

<b>A. Make an enquiry</b>

<b>B. Arrange for shipment of the goods</b>

<b>C. Consider the enquiry and make modifications if any</b>

<b>D. Ship the goods</b>

<b>E. Receive the goods and </b>

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1. The ordering process

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2. The contract and contract management

<b>2.1. Definition of “Contract”</b>

<b>An agreement between two or more persons or entities, which may or may not contain specific terms, in which there is a promise to do something in return for a consideration </b>

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• A firm offer + An acceptance of a firm offer • An intention to create a contract

• Consideration

• Capacity to contract • Consent

• Legal purpose

<b>2.2. Conditions for a valid contract to come into effect</b>

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<b>2.2. Conditions for a valid contract to come into effect</b>

Seller X send a firm offer to Buyer Y. Which reactions of Y will form a contract:

A. Give entire acceptance

B. Give acceptance but with reservations or conditions C. Reject the offer entirely

<b>Hints: See page 42 & 43</b>

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<b>2.3. Usual terms of a contract</b>

See page 43 and guess what information should be included in each term of a contract as belows:

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Prepare export documentation Decide method of settlement Fulfill the contract

Manage contract processing and check progress

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<b>2.5. Sources of laws governing the contract</b>

<b>3.1. Convention or agreements among/ between countries </b>

<b>3.2. Laws of a specific country</b>

<b>3.3. International practices and customs </b>

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<b>3. UN Convention on Contracts for the International Sale of Goods (CISG)</b>

<b>Read the article on page 46 & 47 and answer the question:</b>

1. What is the CISG about?

2. Who did develop the CISG? When? 3. When did the CISG come into effect?

4. How many countries have ratified the CISG? 5. Who will use the CISG?

6. What are benefits of the CISG?

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<b>3. UN Convention on Contracts for the International Sale of Goods (CISG)</b>

<b>Content of the CISG:</b>

• Sphere of application and

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<b>3. UN Convention on Contracts for the International Sale of Goods (CISG)</b>

- What are the downside of the CISG?

- If Vietnam has joined the CISG? We do not need pass through any laws and regulations about contract?

<b>Hints: See page 49</b>

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4. International Commercial Terms (Incoterms)

<b>See page 91 and answer the question:</b>

- What are Incoterms about?

- What are the benefits of using Incoterms?

- What are “Shipping terms” and “terms of delivery” about?

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<b><small>Allocations of costs buyer/seller according to Incoterms 2010</small></b>

<b><small>EXW</small></b> <small>BuyerBuyerBuyerBuyerBuyerBuyerBuyerBuyerBuyerBuyerBuyer</small>

<b><small>FCA</small></b> <small>SellerSellerBuyerBuyerBuyerBuyerBuyerBuyerBuyer Buyer Buyer</small>

<b><small>Sea only)</small></b> <small>SellerSellerSellerSellerSellerSellerSellerBuyerBuyerBuyerBuyer</small>

<b><small>CPT</small></b> <small>SellerSellerSellerSellerSellerSellerBuyerSellerSellerBuyerBuyer</small>

<b><small>CIP</small></b> <small>SellerSellerSellerSellerSellerSellerSellerSellerSellerBuyerBuyer</small>

<b><small>DAT</small></b> <small>SellerSellerSellerSellerSellerSellerSellerBuyerBuyerBuyerBuyer</small>

<b><small>DAP</small></b> <small>SellerSellerSellerSellerSellerSellerSellerSellerSellerBuyerBuyer</small>

<b><small>DDP</small></b> <small>SellerSellerSellerSellerSellerSellerSellerSellerSellerSellerSeller</small>

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4. International Commercial Terms (Incoterms)

Where is the risk transferred from the buyer to the seller?

How is the cost allocated between the buyer and the seller?

What are obligations of the buyer and the seller?

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4. International Commercial Terms (Incoterms)

<b><small>A. THE SELLER’S OBLIGATIONSB. THE BUYER’S OBLIGATIONS</small></b>

<small>A1. General obligations of the sellerB1. General obligations of the buyerA2. Licences, authorizations, security </small>

<small>clearances and other formalities</small>

<small>B2. Licences, authorizations, security clearances and other formalities</small>

<small>A3. Contracts of carriage and insuranceB3. Contracts of carriage and insuranceA4. DeliveryB4. Taking delivery</small>

<b><small>A5. Transfer of risksB5. Transfer of risksA6. Allocation of costsB6. Allocation of costs</small></b>

<small>A7. Notices to the buyerB7. Notices to the sellerA8. Delivery documentB8. Proof of deliveryA9. Checking – packaging – markingB9. Inspection of goodsA10. Assistance with information and </small>

<small>related costs</small> ^{B10. Assistance with information and}<small>related costs</small>

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5. Dispute handling and arbitration

<b>Three basic means of resolving a dispute:</b>

- Reaching a mutually satisfactory compromise - Arbitration

- Presenting to courts

<i>See page 50 and list the advantages and disadvantages of each method above</i>

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What are documents used in international trade? Why do need them?

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6. Documents used in international

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How many kinds of financial documents can you think of?

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6.1. Financial documents

• Bill of Exchange• Promissory Note

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2. By which law Bill of exchange is governed?

3. How many parties involved in a Bill of exchange transaction?

4. What are the characteristics of a Bill of exchange?5. How many types of Bill of exchange?

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6.1.1. Bill of exchange

According to the UK Bills of Exchange Act 1882:

<i>“A bill of exchange is an unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to or to the order of a specified person or to bearer”</i>

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6.1.1. Bill of exchange

<b>Sample 1:</b>

<b>Bill of exchange(1)</b>

No123a.b(2) (4)Ha noi, 27, Sep, 2008(5) For 1400US dollars(3)

<b>(6)At sight of this first Bill of exchange (second of the same tenor and date being unpaid) pay to the order of MrX(7) </b>

the sum of (3)American United State one thousand four hundred.

(8)To MITSUMI.comp (10) TOCONTAP. comp (9) Japan Signed

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Which of the following payment time is considered as “determinable future time”?

<i>1. 90 days after B/L’s date2. 90 days after invoice date</i>

<i>3. 90 days after the arrival of the ship4. 90 days after sight</i>

<i>5. 90 days after date </i>

<i>6. 90 days after date sight</i>

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6.1.1. Bill of exchange

<b>Sample 2: Explain the meaning of notes from (1) to (10)</b>

Bill of exchange(1)

No123a.b(2) (4)Ha noi, 27, Sep, 2008(5) For 1400US dollars(3)

<b>(6)At D/A 60 days after date sight of this first Bill of exchange (second of the same tenor and date being unpaid) pay to </b>

the order of …. the sum of (3)American United State one thousand four hundred.

(8)To MITSUMI.comp (10) TOCONTAP. comp (9) Japan Signed

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