Group 3 Seafood exportation PDF

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FOREIGN TRADE UNIVERSITYFACULTY OF INTERNATIONAL ECONOMICS AND BUSINESSMIDTERM REPORTREPORT OF EXPORT BUSINESS PROCESS ANALYSIS:CASE OF VIETNAM’S SEAFOOD EXPORTATIONLecturer: Phan Thi Thu Hien (Dr.)Course: International Trade TransactionsGroup: 3Class: TMAE302.Hanoi, 17 December 2021TEAM MEMBERNo St...

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FOREIGN TRADE UNIVERSITY FACULTY OF INTERNATIONAL ECONOMICS AND BUSINESS

MIDTERM REPORT REPORT OF EXPORT BUSINESS PROCESS ANALYSIS: CASE OF VIETNAM’S SEAFOOD EXPORTATION

Lecturer: Phan Thi Thu Hien (Dr.) Course: International Trade Transactions Group: 3 Class: TMAE302.2

Hanoi, 17 December 2021

TEAM MEMBER

No

Student ID

Name

Date of

Class

Birth 1

1911150013

Phạm Gia Tùng Chi

11/04/2001

K58-ANH 05-CLCKT

2

1911150015

Nguyễn Tuấn Cường

19/12/2001

K58-ANH 06-CLCKT

3

1911150018

Nguyễn Ngọc Diệp

30/01/2001

K58-ANH 04-CLCKT

4

1911150022

Nguyễn Ngọc Quang

21/04/2001

K58-ANH 05-CLCKT

Dũng 5

1911150715

Nguyễn Bá Thái Duy

26/10/2001

K58-ANH 02-CLCKT

6

1911150571

Nguyễn Thị Thùy Dương

05/11/2001

K58-ANH 01-CLCKT

7

1911150023

Nguyễn Tùng Dương

15/02/2001

K58-ANH 06-CLCKT

8

1911150519

Ngô Tiến Đạt

26/07/2001

K58-ANH 03-CLCKT

9

1911150016

Nguyễn Văn Đạt

21/11/2001

K58-ANH 05-CLCKT

2

INTRODUCTION

5

A. OVERVIEW OF VIETNAM SEAFOOD EXPORT

6

1. Overview

6

2. Key exported products and mainstream markets

6

2.1. Key exported products

6

2.2. Mainstream markets

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3. Opportunities and Threats

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4. Impact of the Covid-19 pandemic

8

5. Vietnamese regulations on exporting fishery products 5.1. Regulations on food safety for exported fishery products.

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5.2. Regulations on Siluriformes fish products exportation into the United States market 10 5.3. Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CTPPP) 11 B. SALES CONTRACT

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1. Commodity

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2. Specifications

12

3. Quantity

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4. Price - Delivery - Transfer of Ownership

13

4.1. Price

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4.2. Delivery

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5. Transfer of ownership

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6. Payment

13

7. Legal clauses

14

C. EXPORT PROCESS OF VIETNAMESE TRADERS

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1. Asking for an L/C opened

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2. Acquiring for export license

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3. Preparing the export goods

15 3

4. Packing, labeling and marking

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5. Pre-Shipment Inspection

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6. Booking for a shipping space

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7. Custom clearance for export

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8. Shipment of export

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9. Acquiring for cargo premium

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10. After shipment Payment

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11. Settle the claim (if any)

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D. ANALYSIS OF EXPORT PROCESS OF VIETNAMESE TRADERS

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1. Process information

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2. Systemization chart

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3. Time procedure chart

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4. Bottlenecks in the export process

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5. Corresponding recommendations to improve bottlenecks

19

CONCLUSION

20

REFERENCES

21

APPENDIX

22

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INTRODUCTION Asia is a leading provider of seafood products to the developed markets and many other regions in the world. The area is reported to provide 6 million tons of seafood to the global trade market annually with two staples: fish and shrimp. This figure is more than half of the world’s total seafood exports. In particular, Vietnam contributes significantly to the overall value of seafood supplied globally. These seafood exports play a major role in worldwide consumption and enhance domestic economic development. To carry hundreds of tons of seafood out of the Vietnam border, contracts are a prerequisite and paramount international transaction. For the purpose of better understanding the procedures and requirements involved in the formation of a trading contract, our team conducted research “Export business process analysis: Case of Vietnam’s seafood exportation”. Our report is under the instructions and supervision of Dr. Phan Thi Thu Hien. We are so grateful for her support and the precious knowledge she helped us to finish the course International Trade Transaction. However, because of time limitations, the group's report unavoidably contained flaws. We eagerly await readers' feedback to help us improve the content.

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A. OVERVIEW OF VIETNAM SEAFOOD EXPORT 1. Overview Fishery is identified as a key economic sector of the country. Seafood export value in 2020: 8.5 billion USD- accounted for 4-5% of GDP or 9-10% of total national exports. Seafood export ranks 5th place in terms of value exports (after: electronics, apparel, crude oil, footwear). From 1997-2020: Exports increased 11 times, growing at an average annual rate of 10%, from 758 million USD to 8.5 billion USD. (see appendix A) It is estimated that in the first eight months of 2021, Vietnam's seafood exports are 1,283 million tons, worth $5.578 billion, up 4.19% in volume and 7.14% in value over the same period in 2020. (appendix B) 2. Key exported products and mainstream markets 2.1. Key exported products Aquaculture for export is mainly shrimp and pangasius. Shrimp exports accounted for the highest proportion, the highest growth and the greatest stability. From 1998-2020: Export increased more than 8 times from 457 million USD to 3.73 billion USD per year; average annual growth rate of 10%. The proportion of total assets is increasing: from 36% to 50%. Pangasius exports increased 162 times from 9.3 million USD to 1.5 billion USD; average annual growth of 26%. Seafood exports account for 30-35% of total seafood exports. From 1998 to 2020: Turnover increased 10 times from 315 million USD to 3.2 billion USD; average annual growth of 11%. 2.2. Mainstream markets Vietnam exports seafood to over 160 countries and territories across the world. The top ten markets are the United States, the European Union, Japan, China, Korea, ASEAN, Australia, the United Kingdom, Canada, and Russia, which account for 92-93 percent of Vietnam's total seafood exports. (see appendix C) 6

In the top six major markets (the United States, the European Union, Japan, China, Korea, and ASEAN), exports to the EU have slowed in recent years, while exports to ASEAN and Korea have remained constant, and exports to China have surged. Exports to the United States and Japan had the most rapid rise. The recent COVID-19 pandemic, however, interrupted supply, hampered logistics, caused high freight costs, and impacted important markets, according to Ms. Le Hang, Deputy Director of VASEP Center. PRO, Vietnam Association of Exporters and Producers (VASEP). The country's seafood exports reached about 6.2 billion USD by the end of the third quarter of 2021, up 3% from the same time the previous year. Exports of seafood to the United States rose in September, up 3% over the previous month to US$159 million. Meanwhile, exports to other markets continued to fall, with China seeing the largest loss (almost 50%), followed by Japan, Canada, the United Kingdom, and Australia, all of which had 35-45 percent drops. While exports to the EU and Russia fell by more than 15%, exports to Korea fell by 5%. 3. Opportunities and Threats 1. The Government of Vietnam, the Seafoods industry and the Seafoods enterprises are increasingly interested in food safety, environmental and social responsibility. All processing plants apply HACCP. More and more farming areas and processing plants have obtained sustainability certifications such as ASC, GLOBAL GAP, MSC, VietGAP… 2. The Government, the Ministry of Agriculture, the Association of Seafoods exporters and producers and other agencies and sectors are increasingly interested in developing the Seafoods industry with large development goals and plans. (Decision No. 1445/QD-TTg dated August 16, 2013, approving the master plan for development of the Seafoods industry to 2020, vision to 2030)

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3. Being able to supply a large amount of safe and stable quality seafood thanks to the abundant supply with a potential of 28 coastal provinces, aquaculture land/water resources and a developed processing industry with more than 600 export enterprises. 4. All processing and exporting enterprises are private and can actively invest in the seafood industry. 5. Developed processing technology can create many diversified products with high added value. 6. Satisfy all needs of customers in other countries thanks to stable supply, and application of closed models, good chain links in industries. 7. Have a stable and skilled workforce 8. There are many FTAs with countries and territories that bring advantages in import and export taxes and opportunities to improve product quality. Up to now, Vietnam has joined 16 FTAs, with participating countries accounting for 73% of Vietnam's seafood exports, of which 13 FTAs have been signed (accounting for 71% of exports). 9. The EVFTA Agreement takes effect from August 2020 and the UKVFTA agreement will promote exports to the EU and UK (Vietnam Association of Seafoods Exporters and Producers, 2020) 4. Impact of the Covid-19 pandemic In 2021, Vietnam's economy will continue to be affected by the Covid-19 epidemic, especially the epidemic wave that broke out at the end of April with a new strain that has a rapid and dangerous spread. complicated in many localities, seriously affecting the socio-economic situation of the whole country, which creates the risk of breaking the seafood production - processing - export chain due to the impact of the Covid-19 epidemic.

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Firstly, the operating capacity of seafood processing businesses plummeted. Only 30% of seafood processing firms in the South operate with an average capacity cut to 30-35 percent, according to the Ministry of Agriculture and Rural Development. Case F0 forced the closure of the seafood processing plant. According to the General Statistics Office's IIP survey results, the production index of frozen shrimp increased by 16 percent in the first six months of the year, but only 95.7 percent in July compared to the same period, 78.8 percent in August, and an estimated 77.8 percent in September; the production index of frozen fillets only increased by 81.8 percent in the first nine months of the year. Second, purchasing raw materials is difficult for businesses and traders. Businesses find it difficult to obtain raw materials due to the strict and rigid control over people and modes of transportation. Procurement is behind schedule owing to complicated control systems and procedures; workers at the purchasing, harvesting, and transportation phases do not want to join the labor due to fear of illness or because they have not been vaccinated. Third, the consumption of fish processing businesses has dropped dramatically. According to the results of the IIP survey conducted by the General Statistics Office, the consumption index of "frozen shrimp" increased by 17.7% in the first six months of the year, but then decreased by 10% in July, 34% in August, and 34% in August. In September, it's expected to drop by 35%. Consumption fell substantially as manufacturers shut down or cut output, and export activities were hampered by a variety of factors. Fourth, pressure in ensuring wages for employees to retain employees. Workers in the seafood processing industry often have to undergo training. The seafood processing industry is inherently difficult to attract workers due to the specifics of the profession, but now it is even more difficult to maintain workers and ensure wages for workers to retain employees when businesses are unable to do so. Enterprises must stop operating or reduce capacity or move or reduce profits to incur more costs related to epidemic prevention and control, logistics, etc.

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5. Vietnamese regulations on exporting fishery products 5.1. Regulations on food safety for exported fishery products. On October 29, 2018, the Ministry of Agriculture and Rural Development promulgates the Circular No. 16/2018/TT-BNNPTNT on amending and supplementing a number of Articles of the Circular No. 48/2013/TT-BNNPTNT on inspection and validation of food safety for exported fishery products. This Circular regulate on progress on granting certificate for export consignment of establishments which is not in the list of priority as follow: ● Within 2 working days after a consignment is exported, the consignment owner must provide in written forms all necessary information as specified in the certificate at the request of competent agencies of the importing state or territory to the Evaluation authority for the issuance of certificates. ● Within 01 working day after receiving all valid information, the Evaluation authority shall conduct the evaluation to issue certificates for the exported consignment in accordance with the form of the respective importing country or territory if the evaluation result of such consignment is satisfactory. This Circular takes effect from December 13, 2018. 5.2. Regulations on Siluriformes fish products exportation into the United States market In accordance with the new provisions of the Fisheries Law 2017, Decree 26/2019 / ND-CP dated March 8, 2019 of the Government, the MARD has issued Decision No. 1802/QD- BNN-QLCL dated 22/5/2020 about the "Food Safety Control Program for Siluriformes fish and its products which are exported to the United States market”. Sub-departments of Fisheries, Agro-Forestry-Fishery Quality under the Provincial Departments of Agriculture and Rural Development directly under the Central Government are responsible for controlling the food safety conditions for the whole 10

industry from the stage of raising commercial Catfish to harvest and the transportation process. The Department of Agro-forestry-Fisheries Quality Assurance and its subordinate units are responsible for controlling food safety during transportation, processing, storage and export of Catfish as follows: (1)

Department

of

Agro-Forestry-Fisheries

Quality

Assurance

and

Sub-Departments in Central and Southern Vietnam appraise the conditions to ensure food safety for processing and preservation establishments for exporting to the United States; (2) Regional Agro-Forestry-Fishery Quality Centers carry out monitoring of food safety assurance conditions during transportation (in case of transportation are under processing facilities), slaughtering/processing, preserving at the establishments and appraised, certified for the catfish shipments to the US market. 5.3. Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CTPPP) The CPTPP includes 11 member countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The agreement was signed on March 8, 2018 in the city of Sanpo, Chile. The CPTPP provides for almost complete liberalisation of tariffs among the participants. Tariffs are retained in only a few highly sensitive areas – for example, Japan keeps tariffs on rice, while Canada’s dairy industry is also protected. It provides a single set of rules of origin, and allows content from all CPTPP countries to be ‘cumulated’. If a good has to have at least 70% ‘CPTPP content’ to qualify for preferential tariffs, for instance, that 70% can come from any combination of CPTPP countries. Right after taking office as US president, Joe Biden committed to rebuilding relations with allies, and this has sparked speculation about the US returning to the fold. If this comes true, more benefits are expected to be given to both the US and Vietnam. “Biden stated in 2019 that the US should renegotiate parts of the CPTPP and re-assemble a coalition to counterbalance China’s perceived expansionist policies,” said analysts Fitch Solutions. “The Trump administration withdrew from the TPP in 2017 11

under the pretext that it would harm US workers. If the US rejoins, the CPTPP would deliver substantial tailwinds to Vietnamese exports to the US from lower tariffs in major export categories.” B. SALES CONTRACT SELLER: ABM FOODS., Ltd 61/2 Binh Gia, Tan Binh District Ho Chi Minh City VIETNAM Tel: (+84) 856-652-345 BUYER: American Seafoods Co., LLC 2025 First Avenue, Suite 900 Washington DC State USA Tel: (+1) 206-448-0300 It has been mutually agreed to the sale and purchase of rice on the terms and conditions as follows: 1. Commodity ● Vietnam frozen Basa fish fillet ● HS code: 03043200 2. Specifications ● Style: Frozen – Freezing Process: IQF ● Part: Fillet ● Certification: BRC, EEC, FDA, HACCP ● Size (gram/pcs): 170 – 220

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● Packing in PE/PA bag 2kg/vacuum bag, 10kg/carton ● Shelf Life: 24 months ● Place of Origin: Vietnam 3. Quantity ● 50 MT (more or less 5% at buyer's option) 4. Price - Delivery - Transfer of Ownership 4.1. Price ● Currency: USD ● Total price: 230,450 +/- 5% ● Unit price: 4609/MT/FCA Cat Lai port, Vietnam Incoterms 2020 ● Amount in letters: Two hundred and thirty thousand, four hundred and fifty more or less five percent 4.2. Delivery ● Time of shipment: Within at least 45 days after L/C opening date ● Term of delivery: FCA Cat Lai port, Vietnam Incoterms 2020 ● Port of loading: Cat Lai port, Vietnam ● Port of unloading: San Diego port, U.S. ● Notice of shipment Within 24 hours after finishing the shipment, the Seller must inform the Buyer the details of shipment, including date of shipment, GW, NW, Vessel's name, ETA and ETD, which is sent by fax first and confirmed in written documents ● Other delivery terms

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Transshipment: Not allowed Partial shipment: Not allowed 5. Transfer of ownership Happens on board the first shipping vessel leaving Cat Lai Port 6. Payment Payment shall be made by an irrevocable, at sight L/C in US dollars for 100% total value of the Contract in favor of the Seller. L/C shall be issued through Bank of America, Los Angeles branch. L/C shall be issued at least 45 days before the shipment and 60 days in validity. Payment shall be made against presentation of the required documents as following by the beneficiary: ● Bill of exchange drawn on the issuing bank in favor of the beneficiary. ● Full set (3/3) of original clean shipped on board ocean bill of lading showing L/C number, consigned to the order of Bank of America, Los Angeles branch and notify the applicant with full address. ● Signed Commercial invoice in triplicate. ● Quality and quantity certificate issued by manufacturer in triplicate. ● Detailed packing list in triplicate. ● Certificate of origin issued by Vietnamese Chamber of Commerce in triplicate. ● Beneficiary’s certificate certifying that one set of non negotiable documents has been sent by fax to the applicant within 05 days after shipment date. ● One extra copy of N/N invoice and transport document required for issuing bank’s file. 7. Legal clauses GOVERNING LAW

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This Contract shall be governed by the Unidroit Principles 2004/ CISG 1980 FORCE MAJEURE The ICC Force majeure Clause 2003 is incorporated by reference into this contract. ARBITRATION All dispute arising out of or relating to this contract, including any question regarding its existence, validity or termination, shall be referred to finally resolved and deter...