graduation report Thesis On ImportExport procedure

Table of content
Page
• Internship organization’s remark
• Supervisor’s remark
• Table of contents
• List of abbreviations
• List of tables, charts and figures
• Preface

1
Chapter One: INTRODUCTION OF THE SMC TRADING INVESTMENT
JOINT STOCK COMPANY
1 Brief history
3
2 General information
4
3 Organization structure
1.3.1 Organizational hierarchy chart

4
1.3.2 Functions of main Departments

7
4 Business outcomes from 2011-2013
8
5 Roles of conducting contract of steel import in SMC Trading Investment JSC.
11
Chapter Two: CURRENT SITUATION OF CONDUCTING STEEL
IMPORT CONTRACT
2.1 Describe and analyze the current situation of the import contract conducting
steel import contract at SMC

12
2.2 Summary of strengths and weaknesses
2.2.1 Strengths

19
2.2.2 Weaknesses

20
Chapter Three: THE OUTLOOK, ORIENTED DEVELOPMENT AND
RECOMMENDATION FOR IMPROVEMENT OF THE CONDUCTING
IMPORT CONTRACT AT SMC
3.1 The outlook of the conducting import contract at SMC in the future
21
3.2 The company’s oriented development of the conducting import contract in
the future
22
3.3 Recommendations for promoting the conducting import contract
23
3.3.1 Remedies for suppliers

23
3.3.2 Human resources solution

26
3.3.3 Suggestion for Cooperation between Deps

30
3.3.4 Information system development

30

3.3.5 Inventory management

31
CONCLUSION
32
ANNEXES
REFRENCES
LIST OF ABBREVIATIONS
Abbreviations English
J.S.C
JOINT STOCK COMPANY
CSGT.Corp
China Steel Global Trading Corporation
VIETINBANK
Vietnam Industry and Commercial Bank
BTKB
Bank of Taiwan Kaohsiung Branch
SMC
Steel Material Company
SC
Supply Chain
L/C
Letter of Credit
Dep
Department (Deps for Departments)
HCMC
Ho Chi Minh city
LIST OF TABLES, CHARTS AND FIGURES
N
o

Name of Tables and Fingures Pag
e
1 Chart 1.1 Hierarchy chart of SMC 6
2 Figure 2.1 General process of import/export at SMC 12
3 Table 1.1 SMC outcome report period 2011 – 2013 8
4 Table 3.1 Balanced scorecard for internal progress 30
4
PREFACE
From the moment our pen shaped signatures onto World Trade Organization’s
declaration, Vietnam has been put on the map of Trade and prepared ourselves for a
bright era of world integration where the economic connection among countries is
becoming stronger and stronger. Never before has foreign trade played such crucial
and strategic role in domestic economy. The development of foreign trade performs
as an economic dynamics that leads to several benefits such as technology
enhancement, domestic industry restructure, jobs creation, income increase, labor’s
living standard improvement.
That Vietnam has joined the WTO, however, proves itself a big challenge for us.
Along with the barriers that have been cut down came the bigger playground in
which we have to deal with harder competition and need to take our best advantage
if we want to attract foreign investment.
Rapidly as foreign contracts have developed in the last 5 years, Vietnam
entrepreneurs find themselves at risk in transactions since they are newbie with little
experience in conducting foreign contract. This results in the fact that we stand in at
a lower position compared to foreign competitors, which bears huge potential threat
of loss, inefficiency and defraud.
Anyone with updated knowledge understands that Supply Chain is now no longer a
theory for only developed industry, but already a worldwide trend for those who
desire success. It comes naturally to my mind that if we exploit this merely brand
new knowledge in Vietnam, the above-mentioned risk could be avoided
significantly.

Account of 5% of national market share and 15% of the Southern one, Ltd T.J.S
SMC prides on being a professional enterprise that has long-year experience in
importing steel from many markets in the world. Coming from my noticing, SMC is
an ideal place for such theory to research. Over three-month internship in
Import/Export Dep of the company, I decide to choose the project: “Conjuncture of
conducting import contract at Ltd, T.J.S SMC” as my report internship. With
5
objective as applying Supply Chain theory into practical and focus onto the Risk
Management, I am looking forward to experiencing business import activity from
practical in particular Dep of conducting import contract, which may help to
improve and maybe bravely suggest some solutions to improve.
- The report includes following content:
Chapter 1: INTRODUCTION OF THE SMC TRADING INVESTMENT
JOINT STOCK COMPANY
Chapter 2: CURRENT SITUATION OF CONDUCTING STEEL
IMPORT CONTRACT
Chapter 3: THE OUTLOOK, ORIENTED DEVELOPMENT AND
RECOMMENDATION FOR PROMOTION OF THE CONDUCTING
IMPORT CONTRACT AT SMC
- Time and place:
+ Place: Import/export Dep of Ltd, SMC T.J.S
+ Time: from January 6
th
2014 to 6
th
April 2014
Through the report, I would like to send my sincere thanks to Mr. Tran Thanh Tam
and all personnel in Import/Export Dep of T.J.S SMC to whom I have been given
big help to accomplish this project. In completion the project, on account of limited
knowledge as well as page required, the existence of shortcomings are unavoidable.

I would be grateful on acceptance of constructive ideas or any contributory
comment from you to better my work.
Le Vu Thanh Thanh
6
CHAPTER 1: INTRODUCTION OF SMC TRADING INVESTMENT JOINT
STOCK COMPANY
1.1 Brief history
In 1996, Manufacturing and Trading Factory of constructive material no.1, directly
under Building and Settling Trading Company no.2 – Trade Ministry, was founded
based on its forerunner as constructive material store no.15, which opened in 1988.
The brand named SMC officially came into public 10 years later in 1998, which
stands for “Steel Materials Company”. Then in 2002, SMC was honored the Third
Labor Medal and also in this year came out the birth of the company’s official logo
with symbol of two sharp and flexible steel slat connected together.
In 2003, the brand name SMC successfully became registered trademark and
officially earned its recognition under the Designation 4704/QD-DK issued by
Office of industrial property Ministry of Science Technology and Environment on
June 20th 2003.
On August 19th 2004, SMC was equitized and officially changed the name into
‘SMC TRADING INVESTMENT JOINT STOCK COMPANY’ with the capital of
25 billion VND. Two years afterward, 2006, SMC officially put their first foot on
the floor of Stock Exchange and posted at HMC Stock exchange with the stock
code: SMC and the international trading name: SMC TRADING INVESTMENT
JOINT STOCK COMPANY.
2010 was a big year for SMC since SMC achieved its five year strategic plan 2006 -
2010, reaching 558 thousand metric tons in total volume, in which 540 thousand
metric tons of steel and 18 thousand metric tons cement. NI reached 82 billions
VND, confirming its leading position in the business of steel distribution. Following
the success of 2010. On 10th of June, 2011, the factory of SMC Steel Mechanical
Ltd, Co, went into operation with two processing lines to be able of slitting steel

with the thickness up to 16mm and cutting up to 20mm.

7
1.2 General information
SMC TRADING INVESTMENT JOINT STOCK COMPANY
Business official name: CÔNG TY CỔ PHẦN ĐẦU TƯ THƯƠNG MẠI SMC
Foreign name: SMC TRADING INVESTMENT JOINT STOCK
COMPANY
Abbreviation: SMC J.S.C
Address: 396 Ung Van Khiem, ward 25, Binh Thanh District,
HCMC
Tel: (08) 3899 2299
Website:
Email:
Foundation date: 19th August 2004
Registration license number: 0303522206
Charter Capital: 295.183.610.000 Vietnam dong
Slogan: “SMC The professional steel distribution”
Logo:
Located at a strategic position which is opposite Saigon Bridge, the Eastern
entrance of HCMC, the head quarter of SMC was designed as an environment-
friendly eight-floor building with modern architecture. It plays the leading role of
operating steel professional distribution of SMC’s whole system.
CEO
Director of business
Steel business Dep
Strorage Dep
Import-expor Dep
Purchase division
Director of #nance

Finance Dep
Accoun&ng Dep
Director of administra&on
Personel division
Administra&ve division
Project divison
Marke&ng division
Diector of produc&on
8
SMC is committing to act as a “professional distributor” and focusing on
continuous improvement to embrace the quality of our products and services.
Main business lines
• Trading and importing various types of steel, metal goods, construction
materials, interior design materials and construction equipment of all kinds,
mechanical equipment, frame warehouses, factories with aluminum
structures, steel and stainless steel.
• Construction and installation of civil, industrial projects, transportation,
irrigation, housing repair and interior decorating in accordance with the law.
• Set up construction project, consulting, design and trading properties as
prescribed by law.
• Trading of appliances, groceries, consumer goods, food.
• Providing logistic services, warehousing for domestic as well as import and
export goods.
• Trading real estate, rights for land-use, owning or renting properties.
1.3 Organizational structure
1.3.1 Organizational Hierarchy chart
Source: by writer, simplified from origin at />9
According to the mechanism of SMC, we can be aware that Great meeting of
Shareholders is on the top of the hierarchy structure that holds in hand the most
powerful. Therefore, SMC has been applying directly functional structure

organization, which means the options of functional Dep are professional
consultancy, Deps take direct order from Board of Directors; the decision would
indeed depend on Board of Directors after they consider options from functional
Dep. The strength of such mechanism is promoting the company’s operation since it
takes advantage of professional skills of functional Dep. Of course, the drawback
can be information overloaded, which confuses the Board of Directors. This,
however, lead to many meetings that takes time and obstacle for making decision.
Employee having graduated from college, university and higher education accounts
for a major part of the whole and this ratio has sustainably increased over the past
few years. SMC has attracted a source of higher-education employee to apply for
manager position in Deps. In 2012, SMC has raised Income Fund 15% higher than
that of 2011 and the number of employees as well.
1.3.2 Functional Departments
• Sales Dep is in charge of operating business activity, distributing goods,
develop and expand domestic markets.
• Accounting Dep works on performing economic accounting, synthetizing
revenue, profit, sales and giving out the accounting statistical report
• Administration Dep saves files and documents, manages labor, keep track of
performing ISO.
• Project Development Dep or Sales Dep operates business activity, expand
the markets, gets more partner and investors, contractors that abroad financial flow.
• Import/Export Dep undertakes the responsibility of taking the last look of the
contract signed by Board of Director and Sales Dep. After ensuring that the contract
is ready to take into effect, Import/Export Dep performs their part as particular
profession.
10
1.4 Business outcome from 2011-2013
Table 1.1 SMC outcome report period 2011 – 2013
Target Unit 2011 2012 2013
Net sales billion VND 8.939,8 8.961,5 9651

Combined profit billion VND 313,8 242,7 273,1
Pre-tax profit billion VND 86,8 75,1 33,7
After-tax profit billion VND 73,1 59,5 26,1
Short-term asset billion VND 2.047,2 1.709,9 562,0
Long-term asset billion VND 328,1 415,1 2.495,5
Total asset billion VND 2.375,3 2.125 3.057,5
Short-term debt billion VND 1.756,2 1.401 1.094,4
Long-term debt billion VND 43,8 145,1 1.401,1
Total debt to pay billion VND 1.800 1.545,7 2.495,5
Financial expense/Gross
revenue
% 1.6 0.9 1.0
Sales expense/Gross
revenue
% 0.9 0.9 1.2
Administrative
expense/Gross revenue
% 0.7 0.8 0.7
(Source: SMC Annual report in year 2013)
2013 was not a big year for SMC. According to the above indicators, the profits
drew a significant drop. Explaining this, The Chairman of Shareholders mentioned
both Marco effects and internal obstacles that might be the cause for it.
Macro effects included decreasing buying power, slow consumption, frozen estate
market, burden of large inventory, increasing bad debt. Much as the other
businesses was suffering, due to slow consumption, steel trading business was
forced reduce the price to stipulate demand, which obviously did harm the profit,
even led to loss and bankrupt in internality of steel business.
After two continuous year of negative growth, the final total asset in 2013 reached
3.068 billion, a dramatic increase of 43,3% compared to the previous year. This
results from 2 factors: short term asset which increased 45,4% and long term asset

which increased 34,7%.
11
With the trading business as the company’s particularity of trading, processing,
manufacturing and distributing steel, the short term asset account for 81,7% over
the total most of which are inventory and money-to-lend.
However, that the inventory made an extinct rise when it triple the amount
compared to the obvious years was the key factor pushing hard to short term asset.
Coil Center factory came into operation in December 2013, which foster import-
export activities, hence, enhance inventory ready for FDI project. This led to the big
amount of inventory at the end of 2012.
At the end of 2013, 65,7% long term asset reached 562 billions VND. In correlation
of the asset’s growth, the total debt to pay had a sharp rise from nearly 1000 billion
to over 2.496 billion VND, 60,9% higher than that of 2013. Both short term and
long term debt from the bank had the respective increase of 57,1% and 107% more
than year 2012. Short term debt of 2013 was 1.094 billions VND and the long term
debt was 153 billions VND, due to the investment of SMC Tan Tao and increasing
inventory.
Changing in the structure of consumption, along with the noticeable improvement
in quality and quantity of flat steel has brought an obvious development in the ratio
of combined profit in 2013. Much as SMC suffered from the macro factor of steel
market, the ratio of combined profit remains slight increase from 0,1% to 2,8%. The
flexibility in trading and selling helps to foster the consumption and overtake share
market, as well as increase the cost of sales.
On the other hand, though the general of loan interest was justified considerably,
the financial cost still rose to 17% compared to 2012 due to the demand of
investment and the higher working capital for all system. Hence, while the ratio of
cost of enterprise management has been maintained quite well over the years, the
ratio of sales cost and financial cost increased, this had negative effect on the final
result of profit. The year 2013 ended with SMC’s only harvesting 26,1 billions
VND of after tax profit, 62% far behind from the previous year. The ratio of after

tax profit had the same consequence when it was only 0,3%
12
The shift in consumption structure, along with the strong growth of bot quatity and
quality of flat steel, has brought about obivious improvement in combined profit of
2013. Therefore, much as SMC was affected negatively by strong fluctuation of
input price, production cost, electricity cost and so on, the ratio of combined profit
in 2013 showed a slight increase of 0,1% compared to the previous year, making the
number 2,8%. The fact that SMC has had more flexibility in business activities,
which aims to raise market share, led to the significant increase in sales expense. On
the other hand, although the general interest rate in 2013 has been much adjusted
compared with previous years, the financial costs 17% more than 2012 due to high
investment capital and working capital. Hence, while the administrative cost
relatively remained stable over the years, the ratio of financial cost and sales
expense has negative impact on the final profit result.
1.5 Roles of the conducting import contract in SMC
For SMC, importing is correlated with the growth of company. It plays the decisive
role, merely the most important activities of the company’s business. At the position
of a professional distributor, SMC consequently undertakes the role of steel supplier
for constructive entrepreneur working on domestic construction.
The total consumed amount of export and import steel in 2013 reached 482.411 tons
of all kinds, a dramatic increase of 71,3% in comparison with year 2012 and
exceeded 155,6% the expectation of the year, of which over 80% is made up by the
import. Taking well the advantage of relationship with big foreign partner, SMC has
made good use of the imported which was the main source for domestic demand
and manufacture.
The amount of imported steel in 2013 rocketed 87,5% more than last year in which
wide rod and hot rolled steel accounted for the most. In a word, import activities
play the main role in company’s business.
Since our industry remain unable to produce the steel rough draft, the import
contract holds simultaneously provides the ‘output’ for the export contract and

domestic construction’s contract. The input for manufactures and demand for steel
depend on this.
First of all, having a smooth and efficiency contract conduction means a huge profit
for the company, saving a lot of time and avoiding unwanted damages. Secondly,
13
meeting the demands of market timely and fully consolidates SMC’s rank in both
domestic and foreign market. SMC can also guarantee the product to sell and the
material to manufacture.
On the contrary, provided that the conducting import contract faces up with
weaknesses and challenges, the whole business results of the company will be
negatively affected. Loss is inevitable since Goods is under the risk of defraud,
which leads to delay of delivery for the export (if the consignment is re-exported),
unqualified products, failure to meet the demand of market… Profit is not the only
thing that will be damaged. Credit will suffer the same as consequence.
Therefore, where all the contracts are processed favorably, not only will the
company reach ultimate profit but it also develops the quality of all products and
maintain the company’s credit. Needless to say, conducting import contract
efficiently shall push SMC nearer to become the biggest steel enterprise in market
of Vietnam.
Contract nego&a&on
L/C payment procedure
Purchase insurance
Custom clearance
Goods receipt
14
Chapter 2: CURRENT SITUATION OF CONDUCTING STEEL IMPORT
CONTRACT
2.1 Describe and analyze the current situation of the import contract
conducting
Figure 2.1 General process of conducting steel importing contract at SMC

Source: by writer
There are generally 5 phases in conducting import contract process.
Phase 1 is contract negotiation which is conducted mostly by Sales Dep, consulted by
Import/Export Dep and signed by the Board of Director
Phase 2, L/C payment procedure, and phase 3, purchasing insurance, are taken care by
Accounting Dep and sometimes, Finance Dep
Phase 4 is custom clearance and the last phase, phase 5, Goods receipt, is carried out
by Import-Export Dep. The detail process is demonstrated in Annexes 2.
Accounting Dep
Sales Dep
Board of Director
Import/Export
Dep
15
It is easy to notice that conducting import contract at SMC involves mostly 2-3 Deps
and the board of director. By this way, the company can make sure every phase is at
high amiability and conducted professionally. Particularly, the cooperation between
the Sales Dep and the Import/Export Dep is essential at the first three phases while the
rest depends on the cooperation of Import/Export Dep and the Accounting/Finance
Dep. In a word, Import/Export Dep plays the key role throughout the process.
Contract 102E735A was signed on 28
th
October 2013, between SMC and China Steel
Global Trading Corporation, shall be used to demonstrate these following steps, which
is attached in Annexes 1. Contract 102E735A hereunder shall be understood simply as
‘The Contract’.
The Contract performance lasts in 2 months with the shipment date of November,
2013 and payment finishing in December, 2013.
The first phase would be transaction negotiation and signing contract.
Based on the report from market research, the Sales Dep brought forward imported

goods business project. The purchasing business project of The Contract is signed on
October 4
th
2013 by Head of the Sales Dep.
After the business project had been passed, Board of Director planned to negotiate and
sign The Contract. The final signed Contract is attached at Annexes 1.
Goods were to be shipped partially under CFR term of Incoterm 2000 and not earlier
than October 30
th
2013. The loading port was any port any Taiwan and the port of
discharge was Phu My Port, Vietnam. The commodity was hot rolled steel sheet in
coils (leeway) with description about quality, quantity, origin, package, the tolerance
amount and other terms.
Payment was made by irrevocable L/C
At present, SMC regularly uses method of negotiation through telefax in combination
with telephone and email. The direct approach can also apply for new partners who
have their first contract with SMC. In this case, The Seller has been The Company’s
16
partner in a long time, so duration and method of contract negotiation is lessened
significantly.
Secondly, after The Contract was signed, L/C was opened without delay by
employee from Import-Export Dep.
As The Contract value reaches a number 1.008.800 USD in detail, that SMC applied
L/C method for payment is very reasonable.
All import contracts are applied not confirmed, irrevocable L/C.
L/C payment procedure in SMC has 7 steps
Step 1: SMC send requirement to open L/C and necessary document, pay the security
at VIETINBANK. The Notice of fee charged on insurance was marked
SG.05.MCA.AD.13/01306/1301 – DN1/1 and attached in Annexes 1 with the
premium of 598.39USD. This is the guarantee for the L/C. The L/C was opened by

Import-Export Dep while this guarantee is taken care of by Finance Dep.
The Contract’s L/C was under the form of fax, which is attached in Annexes 1. It was
opened on 31
st
October 2013. Content of such form is decided base on content of The
Contract which requires strict accuracy and compliance in information about:
commodity, name and exact address of the issuer and the beneficiary, shipment
condition, loading port, latest delivery date…
In contract no. 10E735A, SMC chose VIETINBANK to open L/C.
The set of files consist of:
(1) Borrowing Application: 1 original (issued by Finance Dep)
(2) Business Plan: 1 original
(3) Foreign currency contract: 2 duplicates
(4) Foreign Trade: 1 copy
(5) L/C application form: 2 duplicates
17
The Import/Export Dep sent the L/C opening application form to VIETINBANK by
mail. (Since the bank guarantee 70% of the contract value, represented as L/C on
behalf of SMC, the company has to make Borrowing Application that states the duty
of the bank to pay for CSGT Corp)
Step 2: VIETINBANK notified content and send the L/C original to the exporter
through BTKB. This document remains between the bank and the exporter.
Step 3: BTKB transferred the L/C original for the exporter (CSGT Corp).
Step 4: Discrepancy fee USD100.00 would be automatically deducted from the
proceeds when payment effected for discrepant documents drawn this L/C Since the
L/C was accepted without any amendments, Goods was to be delivered, otherwise,
requirement for L/C amendment would have gone on until the L/C was accepted.
Step 5: The CSGT Corp presented the document for payment to the BTKB to notify
VIETINBANK
Step 6: BTKB inspected on the payment document and the L/C payment was made.

Otherwise, BTKB would have been bond to notify such discrepancies for both parties;
if SMC does not accept such document, the bank shall refuse to pay and return the
document for the exporter. In reality, however, SMC has other solutions depending on
which the case is.
If discrepancies are acceptable, SMC shall either notify the bank to pass the document
and make payment, or force the exporter to satisfy conditions that may allow Goods
acceptance.
If discrepancies are unacceptable, the exporter shall be bound to amend and pay
damages (regulated in Contract)
Step 7: VIETINBANK sent letter of payment to SMC for the rest of the security,
stating some supplementary amendment. The supplementary amendment is attached in
Annexes 1 with the final date of payment was December 25
th
2013. It has 3 copies kept
by Insurance Company and 1 copy hold by SMC.
18
Far as we have gone, the progress is done by Import-Export Dep. However, the last
phase was complete only with SMC Finance Dep’s paying off the rest for
VIETINBANK.
As long as we can see, when opening L/C, employees of Import/Export Dep need to
pay most attention for step 1.
The date of opening L/C has to be in strict compliance with that stated in foreign trade
contract. Regularly, such period is within 7 working day counting from the date of
signature and the grace period is 5 days; therefore, L/C must be opened within 12 days
(Saturday and Sunday are excluded) from the date of signature. However, as soon as
The Contract is signed, SMC shall, without delay, set up a file to hand in the bank in
case of delaying in bank’s passing file procedure (usually last for 3-4 days) which may
lead to delay in L/C opening. This could bring out the cancelation from the Seller since
they may suffer from variable prices in market.
After the L/C is opened, third phase of purchasing insurance comes.

Contract No.102E735A was signed under the agreement between SMC and CSGT
Corp with CFR shipment terms. Therefore, it is duty of SMC to purchase insurance for
its own Goods. In this case, the insurance is made by VIETINBANK Insurance
Company.
According to regulation, bank insurance takes into effect only from signature of
insurance contract to the arrival of Goods at last loading port. At present, SMC has
signed once-in-a-year insurance contract. When it comes to have demand for insurance
contract, the company needs to draft “Purchase Contract Application form” attached
with foreign trade contract without so many repeated signature. The purchase contracts
are drafted in 4 copies with equivalently legal value; SMC and the bank hold 2 copies
for each to count for insurance premium, the object of insurance and terms relating to
claims and damages. Currently, the company shall buy insurance type A or C
depending on types of Goods. In particular, contract no. 102E735A has been
purchased under A type.
19
A soon as receiving “Purchase Contract Application form” from SMC, the bank shall
issue 3 copies of ‘Insurance certificate’ (1 original, 1 duplicate, 1 copy)
Insurance certificate no. SG.05.MCA.AD.13/01306 of consignment imported under
contract no.102E735A singed on October 30
th
2013 is attached at Annexes 1. The
value of this certificate was 1.109.680 USD.
When receiving notice of shipment from the exporter (in contract no. 102E735A the
date was Nov 13
th
2013, 5 days after the B/L date and attached at annexes 1). Shipment
advice indicating full shipping particulars including contract no, date, name of
commodity, gross and net weight, invoice no. and date, shipment date, EDT, ETA,
discharging port, port of loading, name, nationality and the age of the vessel, B/L
number and date, L/C number and date, shipping agent in Hochiminh city, Vietnam.

This notice of shipment was faxed to the applicant within 3 working days after the
shipment date (11
th
November 2013).
It required original B/L or bank’s letter of guarantee, company’s recommendation
letter, D/O fee to receive Delivery Order.
Fourthly, when the ship arrived, custom declaration was carried on.
The first step of custom declaration is to set up and fill in the electric declaration form,
through Electric Custom System (ECUS) version K4 (this version is suitable for
enterprise trading the same commodity in a long time) and version K2 (older).
ECUS_K4 and ECUS_K2 have been applied for most enterprises. In SMC, software
ECUS_K4 was bought to declare custom with the account and sample form HQ/2012
– NK. After finishing the form, the company sends it to custom center and receives
number of form as well as the result.
The form is attached at Annexes 1.
To consignment having more than 3 commodities, detailed declaration was made at
the annexes. After the consignment had been decided which sort they belonged, the
number of form is notified and the company shall prepare document to present custom
at the port, which includes:
20
Company’s letter of introduction and identification, Custom declaration form (2
originals), Foreign Trade contract (copy), Commercial invoice (original), B/L copy,
Packing list, Delivery order (D/O), Copy of insurance certificate, import license (if
any, Related document.
The set of document was classified as Red, which means that the dossier and Goods
need practical inspection. SMC must carry the dossier to Custom Office for detailed
inspection, duty fee inspection, registered number, tax policy and whole collation. If
suitable, the result shall be noted in ‘Paper document inspection certificate”. Next,
SMC employee must keep eyes on electronic board to contact with custom officer for
condition of package, then seal off Goods under the instruction of inspection level.

After the goods has been inspected, if the practical result match with the declaration
form, custom officer shall mark ‘Clearance confirmed’ on square 38 at the form and
add the result to computer system.
In this case, contract no.102E735A has been confirmed custom cleared on square 38 of
declaration form no. 2620 (attached at annexes 1)
The next thing is reviewing the dossier. The dossier is sent to particular Dep to get
issue and custom fee. Importing employee shall be given back the form declaration
after paying every charge. Reviewing the dossier must stick to the process issued by
the Custom Officer. When the dossier is in progress, any discrepancies found, the
company bound to make timely announcement to the Head of Custom office to amend.
Lastly, after the custom declaration, Goods receipt was going on.
On receiving notice of arrival (attached in the annexes 1), the Export/Import Dep sends
employee to present D/O (delivery order), letter of introduction, invoice (attached in
annexes 1) an detail packing list (attached at annexes 1) to the port office to confirm in
the D/O, locate the consignment and bring the signed set of documents to bonded ware
house for warehousing permission. This office holds 1 copy of D/O and sends
warehousing permission and custom declaration that is sealed to port dealer. The
dealers will conduct procedure to liquidate the form, charge the fee of document,
storage fee, loading charges… and take the bill.
21
After completing the procedure, Goods can be brought to the company warehouse.
When receiving Goods information, Custom Office bases on the information analysis
and regulated custom norm to carry out the inspection, then decide to accept or refuse
with clear reasons.
In case of acceptance on custom clearance, the clearance form is issued and classified
which group the Goods belong.
+ Acceptance based on Custom Clearance form only (Green)
+ Custom document represented before Clearance (Yellow)
+ Custom Document represented and practical inspection before clearance (Red)
Usually, Custom Office sends Instruction of ECUS for the enterprise and SMC’s

Goods was clarified as Red.
2.2 Summary of strengths and weakness
2.2.1 Strengths
SMC has strong credit in business of its field. SMC established a wide and deep
relationship with enterprise, government office, especially the bank, custom at
Hochiminh port are advantages that help to shorten the procedure and give the
company preferential treatment (lower security ratio, more borrowed capital)
Secondly, having 4 factories that manufacture hot rolled and cold rolled steel, well
equipped and synchronized with the capacity of 200.000 tons per year of all types,
SMC obviously created differences from competitors. Not only do they improve the
quality, diversify the lines in domestic but they also expand to Asian market. There is
no doubt that the birth of these factories has change the basic appearance of SMC,
from the pure trading constructive steel business to the combination of both trading
and manufacturing all types of steel, satisfying many demands from over 500 fixed
customers.
The next point to mention is that the process of importing contract in SMC is nearly
completed with high professional. The process is divided into small steps and clearly
assigned. For example, there are 2 market and partner research employees, 2
employees working on L/C and insurance, 2 employees working on with the custom
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and 1 employee in charge of Goods receipt. In detail, they keep track of shipment and
relevant documents; draft L/C, issue set of L/C application and open official L/C, as
well as purchase insurance for the Goods.
When vessel arrives, Import/Export Dep sends employee to take custom procedure and
receive the Goods, sends bill to the Accounting Dep and work with them to complete
the payment process. In such process, Import/Export Dep shall supplement voucher
custom debt (30 days for C/O counting from the date of registration of custom
procedure), goods inspection and insurance claim (if any). The process is divided into
several steps and clearly assigned. The import-export Dep has high qualified, skilled
staffs with experience and enthusiasm.

Along with this big improvement was the constant update of the internal system, for
example, the latest version of IECUS K4, and solution SAP ERP (enterprise resource
planning) in order to manage better the information.
SAP ERP or SAP ECC is SAP AG's Enterprise Resource Planning, an integrated
software solution that incorporates the key business functions of the organization. SAP
ERP is, in the SAP Business Suite software, the name for the modules comprising the
former SAP R/3
(more information about ERP is attached in Annexes 4 )
2.2.2 Weakness
The supplier is the company’s first and most considerable concern.
Most of SMC suppliers are from China and Singapore markets which contain latent
risk resulting from complex fluctuation of steel market. To steel import contract, the
time from negotiation to Goods Arrival is about 1-2 months, which allows risk of
unstable price and exchange rate to bring difficulties to SMC. On the other hand,
partners from China usually take SMC a long time to have faith in since they always
breach the Contract. Unfortunately, they are our main suppliers because of many
reasons: we cannot produce rough steel, their price offers the cheapest, we are unable
to find equivalent suppliers…
Young work force is lack of experience is the second weakness to mention.
In process of contracting, the company needs to be equipped with professional
negotiation skill so as to protect their rights and interests in a clever way to build up
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the good relationship with their partner. Some important terms in every import
contracts that SMC has always paid careful attention are terms about Goods, Shipment
method, Document presentation, especially Terms of Payment, arising terms, trade
custom and legal issue to solve dispute (if any). Most of employees have graduated
from university, fresh or 1-2 experience years, whose competencies are hard to deal
with risks and arising problem.
Not to mention this Contract, the company has two cases late in year 2013.
To partner named Tansshan Fengrun, the case was that the consignment had not

reached the port until December 23rd 2013 while on December 12th 2013, the bank
sent notice of arrival of L/C, asking for payment. Despite the fact that the L/C appears
on due day, SMC faced with the risk of holding no Goods in hand but still had to make
payment.
Bearing the fear of fake document of L/C, SMC had to take advantage of our good
relationship with the bank (VIETINBANK is our habitual bank), we were advised to
take down a special application form demonstrating our condition and having the bank
to stating our condition to the seller and simultaneously delay the payment to wait for
the arrival of goods. Eventually, the company is fortunate to be accepted and the
consignment arrived before payment.
The other case is about the quality risk with partner named Zhejiang. The delivered
Goods was not in compliance to the specification in The Contract. When receiving at
the port, SMC has carelessly ignored this, which turned out big mistakes when this
consignment was imported to sell for domestic contractor. The Contractor refused to
accept the Goods only when we compensated The Contract for them, which we did not
bound the Seller to do. Finally, we SMC ended up making compensation for their
buyer, which obviously cut off part of revenue.
Thirdly, the cooperation between Deps during conducting a contract is lack of
efficiency. The Contract’s Planning project is supposed to drafted by Sales Dep and
signed before the date of drafting The Contract. However, the Import-Export Dep
usually has to urged the Sale Deps to have one signed for opening the L/C on time and
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ended up either having Contract’s Planning project drafted by themselves or getting
such document signed after The Contract has been signed, which was opposed to the
official process.
Fourthly, I also notice very well that the smooth workflow of conducting import
contract is under constant pressure of being interrupted. The misinformation among
Deps, as well as between Deps and the factory, always plays a part in this weakness
which causes stagnation and sometimes, loss. The usual misinformation occurs
between Import-Export Dep and Sales Dep about the name of the vessel, date of

arrival, name of commodity and the contact to their partners. Stagnation also means
the delay and untimely solution in case of arising problems like the above mentioned
ones.
Last but not least, the inventory needs good management so that the profit might be
guaranteed. 2013’s profit sharply decreased because new factories having built,
causing big inventory and slow consumption. The appearance of factories is barely
new to the company so they needs time to figure out the way to adapt and take
advantage of it.
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Chapter 3: THE OUTLOOK, ORIENTED DEVELOPMENT AND
RECOMMENDATION FOR PROMOTION OF THE CONDUCTING IMPORT
CONTRACT AT SMC
3.1 The outlook of the import contract conducting
Even though the domestic economy carries unsolved obstacles into year 2014 with
frozen estate market and low rate of GDP growth, SMC still has its faith in the new
record consumption at 750.000 tons and a million will be the number in a couple
years.
SMC will fight hard to increase market shares for hot rolled coin and secondary HRC
product to meet the operation requirement of new hot rolled processing factory, which
will be built in Tan Tao Industrial Zone. With the regards to the vision by 2016, when
Formosa produces their hot rolled steel products, SMC should be one of its key
distributors having large volume consumption and close relations.
SMC will fight hard to increase market shares for hot rolled coin and secondary HRC
product to meet the operation requirement of new hot rolled processing factory, which
will be built in Tan Tao Industrial Zone. With the regards to the vision by 2016, when
Formosa produces their hot rolled steel products, SMC should be one of its key
distributors having large volume consumption and close relations.
Promote import and export activities to meet increasing business demands with a focus
on import of hot laminating steel ad wide rod. Along with export promotion activities,
by 2015, the minimum ratio of export will be 10% (80,000 tons) of the total

consumption amount.
Promote import and export activities to meet increasing business demands with a focus
on import of hot laminating steel ad wide rod. In 2014, no new plan for investment is
proposed. The short term goal is to improve the manufacture and the steel quality
professionally and stably and to make sure that the Coil Center factory is in stable and
effective operation. This fact results in the increase of importing. Where the current