tiểu luận giao dịch thương mại quốc tế report for the mid – term project

A. INTRODUCTION
Today globalization has initiated thousands of trade activities every day.
They are not simply the transactions between two people living in the same area,
but the buying and selling activities that are beyond a country’s border.
International trade gives countries and global consumers the opportunity to be
exposed to various markets and products at the reasonable prices. Professional
modern transactions help trade activities more accessible, still secured, while
ensuring benefits for buyers and sellers. Trading by commercial contract is one
of the most significant procedure.
International trade contract is a legally binding agreement between two or
more parties having the headquarters located from different countries, whereby
the exporter (the seller) has the obligation to transfer the title of a certain
property called as a good, the importer (the buyer) has the obligation to receive
that good and to fulfil payment. Thus, the most basic element in the contract is
the agreement between parties among a number of clauses under the transaction.
Executing by negotiation, an agreement can establish, adjust or terminate the
obligations of each party. Attached with international trade contracts are
considerable related documents to ensure a uniform legislation with the careful
balance between the interests of each involved party.
In this assignment, based on the knowledge learned from the International
Trade Transaction course, the group organizes an international trade transaction.
The import and export activities will be depicted between a Vietnamese
enterprise, NGUYEN MINH STEEL GROUP JOINT STOCK COMPANY and a
Chinese steel supplier, CHENGTONG INTERNATIONAL LIMITED. The
group will represent the former company to accomplish a transaction of
importing materials for production. After conducting a market research, the
group will collect and analyze related documents to, therefore, executing the
negotiation. By accomplishing the stage of signing the contract, the
implementation will be presented. This report will mainly focus on the part of
researching the market. While the group’s video clip of negotiation and
presentation will depict clearly how the sales contract is arranged and executed.

This is the great opportunity for the group members to understand and
practice knowledge learned into the actual work, specifically in forming and


implementing international contracts. There might be mistakes and
misunderstandings occur within the group assignment. Therefore, we would
appreciate any feedback from the lecturer and other classmates in order to
comprehend our work and build a solid foundation in International Trade
Transaction.


B. RESEARCH
I.
MARKET RESEARCH
1. Company Introduction

Nguyen Minh Steel Producing and Trading Co., LTD (NMI Steel) is
specialized in manufacturing and trading steel and iron products for construction
and consumer other uses. Established in 1999, the company now has two
factories located in Ho Chi Minh City and Long An Province.
The company offers a variety of steel products with annual production
capacity that can respond to and accommodate a wide range of demand:
•

Hot rolled and cold rolled pipes in shapes of customers’ preferences. Its
production lines are 300,000 ton/year.

•

Zinc-coated galvanized pipes (GI) with a purity ranging from Z60-Z275 and

the quantity product of 50,000 ton/year.

•

Cold rolled steel coils and strips have the production of 250,000 ton/year
with widths ranging from 450mm-650mm and thickness ranging from 0.4mm3.0mm.

•

Zinc-coated galvanized coils and strips ranging from 450mm-650mm in
width and 0.7mm-3.5mm in thickness. The company has produced 120,000 ton
of Zinc-coated galvanized coils & strips per year.

•

Stainless steel pipes – INOX has the production capacity of 15,000 ton per
year, while Cut-to-length steel plates have the production capacity of 50,000 ton
per year.
A national and international network of representatives and agencies, along
with the variety of product categories, NMI Steel continues to gain credibility
among its global customers. In order to sustain reputation and compete in the
industry, machinery and other advanced technology for production are
consistently upgraded. With the committed standard being experienced by
trusted customers, the company’s products have been supplied to many other
construction works and uses around the country and some regional. NMI Steel
maintains to be a dominant exporter to the United States, Australia, Thailand,
Malaysia, Bangladesh, Indonesia, Laos, and Cambodia.
2. Product Introduction

In order to maintain the annual production capacity mentioned above, the
company decided to import the commodity named Prime hot dip galvanized steel
sheet in coil, with the quantity of approximately 3500MT. In details, the grade of
steel needed is SGCC JIS G3302 regular spangle; the zinc coating is no less than
Z60 with the tolerance of +/-0.02MM.
Hot dip galvanized steel (HDG) is the product that combines the strength
and formability of steel and the corrosion resistance of zinc. The steel is
embedded in molten zinc to form a rust-resistant coating. Hot dip galvanized
steel has a unique crystal steel configuration on the surface. When exposed to air,
zinc reacts with oxygen, water, and carbon dioxide to form a relatively stable
zinc carbonate (ZnCO3) layer. The zinc surface will slow down the oxidation of
iron, which can protect steel for a long time.
Hot dip galvanized steel is commonly used in outdoor steel applications,
subjected to direct weather effects. HDG is used in a wide range of applications
such as structural steel girder, roofing, bolts, steel pipes, electric ladders, and
grates. Hot dip galvanized steel has a relatively long lifespan, over 50 years in
normal environmental conditions. However, in areas which are exposed to
seawater, mechanical abrasion agents, acids, or other extreme conditions, the hot
dip galvanized steel might easily lose its zinc coating.
The investment cost for hot dip galvanized steel is much lower than for
stainless steel. Therefore, it becomes one of the most sought-after household
appliances, interior construction materials.
3. The Domestic and International Steel Market
The steel supply is continuously increasing. In 2015, Vietnam’s production of
steel products rose by 21.54%.The total domestic consumption increased 28.02%

in comparison with 2014 (Vietnam Steel Association, 2016). The scene for steel
consumption in 2016 was forecasted to increase, with the rate of more than 20%.
The General Department of Customs stated that the volume of steel semifinished and finished products for export tended to decrease, but the speed was
small. In general, the circumstance was stable. The above statistics on the steel

industry is relatively beneficial to the company in order to maintain the current
production and business.


China is the major steel supplier for Vietnam. The price offered is often
lower than other suppliers around the world. According to statistics of the
General Department of Customs, by the end of December 2015, the amount of
iron and steel imported into Vietnam from China in 2015 was 9.6 million tons,
accounted for 61.3% of total imports of this country; with a value of 1.32 billion
USD (which was 28.57% higher than the same period last year). The figure
collected from the Center for Industry and Trade Information (Ministry of
Industry and Trade) has shown that, in the first two quarters of 2016, the total
quantity of steel imported from China was accounted for 55.1%. Japan, South
Korea, and Taiwan are the three other steel exporter with the supplied proportion
of 14.6%, 12.8% and 8.9% respectively (Ministry of Industry and Trade, 2016).
The main reason for the excess in low-price Chinese steel is that China has
applied steel export to other countries in the context of excess supply and weak
domestic consumption. The yuan devaluation policy is recently executed to
support exports. In addition, the European Union has imposed anti-dumping duty
on cold rolled stainless steel imported from China with tariffs at more than 24%
also resulted in the increase in export to Vietnam.
In addition, the geographical distance between Vietnam and China is
favorable for shipment. The time travel from any ports in China to Ho Chi Minh
City port varies from three to ten days, which is considerably shorter than that of
Korea or Japan. NMI Steel can have needed materials in short time and start the
further production straightaway. This will benefit both the company’s
manufacturing as well as the prompt accommodation with orders from
customers.
Vietnam regulations for importing goods as raw materials for the further
process should also be mentioned. Since manufacturing Prime hot dip galvanized

steel sheet in coils for export purpose, NMI Steel is free from an obligation to
disburse the anti-dumping tax and value-added tax. This regulation is stated in
the XN210. Moreover, the good is listed in the appendix of Circular
58/2015/TTLT-BCT-BKHCN, thus, it does not need a quality inspection during
customs clearance. This will help create a prompt procedure.
Above information are advantages for Vietnamese companies as NMI Steel
to import the needed Prime hot dip galvanized steel sheet in coils as raw
materials. By using the company’s current machinery and process, NMI Steel
assures to manufacture qualified products that are appropriate for export. Hence,


NMI Steel needs to find a reputed enterprise that has high-quality products with
competitive price among the Chinese enterprises to accomplish the purchase.
II.
PARTNER RESEARCH
1. China Chengtong Holding Group Ltd

China Chengtong Holdings Group Ltd. (China Chengtong) is a large
enterprise group under the supervision of the State-owned Assets Supervision
and Administration Commission (SASAC) of the State Council, with total assets
of RMB 55 billion. It was a board-of-directors pilot for wholly state-owned
companies founded and completed by the State-owned Assets Supervision and
Administration Commission in the first batch. It also was a pilot for the
companies operating state-owned assets.
The main businesses of China Chengtong are assets management, integrated
logistics service, capital goods trade as well as production, development, and
exploitation concerning forestry, pulp and paper. The group's business also
covers prompt goods wholesale market, tourism, cultural and packaging
industries.
At present, China Chengtong owns more than one hundred subsidiary

companies all over China, among which, are listed companies such as Chentong
International Limited, Zhong Chu Development Stock Co., Ltd., Foshan Huaxin
Packaging Co., Ltd, China Chengtong Development Co., Ltd., Guangdong
Guanhao High-Tech Co., Ltd., and Yueyang Forest & Paper Co., Ltd.. Besides, it
also has set up overseas business platforms in Russia and other areas. Now, it is
focused on developing advantageous businesses and further expanding the
capital market.
In recent years, China Chengtong, as an important platform for the Stateowned Assets Supervision and Administration Commission to advance the
layout, restructuring and strategic reshuffling of central enterprises, has made
remarkable achievements in terms of enterprise restructuring, business
integration, and asset disposal. It is involved in industry consolidation, nonperforming assets disposal, corporate restructuring, corporate trusteeship, etc.
and has played a positive role in the reshuffling and integration of central
enterprises and won the high praise from all circles of the society.
2. Chentong International Limited
• Type: Private company limited by shares


• Address: Room 2105, HZ2486, Trend Center, 29 – 31 Cheung Lee Street,

Chai Wan, Hong Kong
• Incorporation date: 24 January 2014
• Register capital: 100 million RMB
• Business sectors
No.
1

Business sectors
Import and export

2

Steel products

3

Chemical products

4

5

Main products
As a professional steel distributor, Chengtong
International Co, Ltd follows the customerfocused principle and pay attention to the
development of the overseas market network.
Products are mainly sold to Korea, Vietnam,
Brazil, Africa and Central & South America
market.
Hot rolled, Cold rolled, Beams, Galvanized
sheets, Plates, Cold rolled coil, Hot rolled coil,
Wire rod, Rebar, Strip steel, Stainless steel, and
Billets.

Petrochemical Products
PET Products: Polyester raw materials polyester
yarn
Rubber Products: natural rubber, compound
rubber, synthetic rubber, latex and mixed alcohol
products.
Non

–
ferrous Copper, Aluminum, Zinc, Silvers.
products
(Focusing on end customers' needs, providing
non-ferrous products distribution service and
engage in finished products export.)
Rubber products
Natural rubber, Compound rubber, Synthetic
rubber, Latex and mixed alcohol products

• The reputation
- As a subsidiary of state-owned China Chengtong Holding Group Ltd,

China Chengtong International Co.,Ltd is a large circulation enterprise in
bulk commodity import & export.
- Chengtong International Ltd has established a long-term partnership with
famous domestic production, logistics and trade enterprises to set up
rational marketing network and logistics system.


 Conclusion: Chengtong International Limited is a reputable company with

the high-quality products, and important long-term partnership.
III. VIETNAMESE REGULATIONS IN CUSTOMS FORMALITY
1. Importing License

Imported steel is categorized under the license and subject to the specialized
management of the Ministry of Industry and Trade. Placed as good which is
applying automatic import licensing.
The Import and Export Bureau of the Ministry of Industry and Trade shall

grant automatic import licenses in the form of certification of import registration
applications for each goods lot. The validation of the certification is 30 days.
Nguyen Minh Steel Producing and Trading Co., LTD, which has been
operating since 2011, has the business license number 1101359647 for iron and
steel production. The company has registered for a trader profile.
After registering online at and being
approved, the company will have to come to the licensing office to present
relevant documents. The needed documents to obtain the license are the printed
application form, sales contract, commercial invoice, letter of credit, and bill of
lading. The licensing office in this instance is Ho Chi Minh City office of the
Import and Export Bureau of the Ministry of Industry and Trade.
2. Information needed for the declaration of imported goods (Customs

clearance).
Customs clearance for commodity HS: 72104912, which are flat-rolled
products of iron or non-alloy steel, with a width of 600 mm or more, coated,
galvanized or zinc coated of a thickness not exceeding 1.2 mm. Imported under
clause 12, Decree 134/2016 / ND/CP (valid from 01 September 2016).
As well, the good that NMI Steel planned to import is categorized as followed:
-

The commodity is categorized under Type E31 (Imported raw materials
for export).
The number of the representative goods in the declaration is 7210.
Refer to the Commodity under Section XVI.
Refer to Chapter 72 on Iron and steel.
Group categorized 7210.
Having a separate management code for goods processed for export.

From September 2016, galvanized steel including steel code HS
7210.49.12 is subject to the anti-dumping tariff in accordance with Decision No.
3584/QD-BCT. However, the company imports the commodity as raw material
for further process to export, NMI Steel is exempted from anti-dumping tax and
value added tax according to XN210. In addition, the goods are not subject to
have a quality inspection during customs clearance because they are categorized
in the appendix of Circular 58/2015/TTLT-BCT-BKHCN.
After transmitting the declaration form, the e-customs shall return the lot to
the red line (3C). The customs official checks the related documents and
examines the actual 5% of the consignment at the port while executing the
customs clearance.


C. CONCLUSION

In conclusion, through the project of the international contract for the sale
of goods, the team collected and analyzed related documents to, therefore,
executing the negotiation. Keeping track of the content of the International
Business Transactions course and adding additional knowledge of the subject.
As we all know, in the increasingly competitive economic climate, every
contract needs to be carefully considered for each condition as well as the
relevance of the documents. In-depth knowledge of contracts is essential,
especially for import-export staff and related industries as well as for importexport companies. Because it affects the protection of your rights.
The research team would like to thank Mrs. Tran Hong Ngan - lecturer in
International Business, Faculty of Economics and International Business, who
has guided the group in the research. The process of analysis is inevitable, so the
team is looking forward to receiving comments from the teacher to improve our
performance.
We sincerely thank you!
D.

D. TASK EVALUTION


E. REFERENCES
International Trade Transaction Textbook, Foreign Trade University, Editor:
Assoc. Pham Duy Lien
The Uniform Customs and Practice for Documentary Credits UCP600- 2011
Circular No. 22/2014 / TT-BTC Stipulating e-customs procedures for
commercial import and export goods
Decree No. 187/2013 / ND-CP Guiding the Commercial Law on international
commodity purchase and sale
Decision No. 3584 / QD-BCT on the decision to apply provisional anti-dumping
measures
Decree No. 134/2016 / ND-CP guiding the Law on Export Tax and Import Tax
Vietnam Steel Association, January 2017, 2016: Thép Trung Quốc chiếm hơn
50% thị phần nhập khẩu của Việt Nam. [online] available at:
/>VLXD.org, March 2016. Tổng quan thị trường thép Việt Nam năm 2015, dự báo cho
năm 2016 - Vật liệu xây dựng Việt Nam. [online] available at:
/>Cctgm.com. China

chengtong

international

co.,ltd.

[online]

available

at:

/>Cctgroup.com.cn. China,
ChengTong.
[online]
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available

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CONTRACT AND RELATED DOCUMENTS