VIETNAM GENERAL CONFEDERATION OF LABOUR TON DUC THANG UNIVERSITY FACULTY OF BUSINESS ADMINISTRATION SOME SOLUTIONS LIMITING THE RISK OF INTERNATIONAL PAYMENT FOR IMPORTED GOODS AT PRINTING MATERIAL EQUIPMENT IMPORT-EXPORT COMPANY – PRINTEXIM CO.,LTD Thesis submitted as a requirement for degree Bachelor of Business Administration Supervisor: MBA MAI NGUYEN TRUONG SON Student : LE THUY TRUC Student ID : 70900251 Class : 09070101 Intake : 13th HO CHI MINH CITY, 7 - 2013 ACKNOWLEDGEMENTS During the time studying in Ton Duc Thang University, I have given the enthusiastic teaching from lecturers of Business administration faculty. Throughout major trade subjects, I have a thorough grasp of professional knowledge and I am deeply aware of the importance and the usefulness of this field to the social development. Besides that, the time of practicing and studying in Printexim helps me implement the theory into practical as well as learning new more wealthy experiences. All of those will be my valuable luggage that helps me get strong steps onto forward society.
Moreover, I hope that I can use my energy and my knowledge as well to contribute to develop the country. I honestly give my profound thanks to senate of Ton Duc Thang University and Mr. Mai Nguyen Truong Son for his great guidelines for internship. I also would like to express my sincere gratitude to director of company and all of employees in export-import department – especially Mr.
Duc (export-import manager) and Mr.Hien (export-import deputy manager) who have helped me during that time. Once again, I would like to send sincere thanks and wishes for health and success to the company and teachers. Ho Chi Minh City, July 10th 2013 Student LE THUY TRUC THE PROJECT IS COMPLETED AT TON DUC THANG UNIVERSITY I hereby declare that this is my own research and is under the scientific guidance of MBA Mai Nguyen Truong Son. The content of the research and the result of this subject are truthful and not published on any form before.
The data in tables for analysis, comment and evaluation is collected by author from various sources which stated clearly in the references. In addition, the thesis also uses a number of comments as well as evaluation of data by other author, other agencies have cited and annotated sources. If you detect any fraud, I bear full responsibility for the content of my thesis. Ton Duc Thang University does not involve in the violation of copyright because I caused in the implementation process (if any).
Ho Chi Minh City, July 10th, 2013 LE THUY TRUC SUPERVISOR’S REMARK. Ho Chi Minh City, July , 2013 SUPERVISOR’S REMARK. Ho Chi Minh City, July , 2013 CRITIC’S REMARK. Ho Chi Minh City, July , 2013 ABSTRACT My study title is: "SOME SOLUTIONS LIMITING THE RISK OF INTERNATIONAL PAYMENT FOR IMPORTED GOODS AT PRINTING MATERIAL EQUIPMENT IMPORT-EXPORT COMPANY – PRINTEXIM CO.,LTD ” which comes from the status of imported payment operation of Printexim company which faced many risks although there are some limiting risk measures that the company has not applied.
The purpose of present study is that focusing systematic study of issues related to international payment operation for imported goods at the Printexim company. Basing on that giving out solutions limiting risks in international payment and helping company improve the imported payment operation. The research project is based on available theory combined with synthetic methods, comparison and analysis of secondary data provided by the company. Besides that, combining analysis of market status to realize existing risks in the payment activities of the company; then suggesting solutions to minimize them.
Two major research methodologies are statistical synthetic methods and comparative analysis method. Research subjects are issues related to the activities of international payments for imported goods at Printexim company. The result of present study after analysis and synthetic show that there still existence of risks in payment operation of company. Therefore, the present study has given out some solution helping company hedge those risks, they are: - Establish risk management process - Using derivative transaction to hedge exchange rate risk - Enhance the ability of negotiation in order to select the logical payment method - Diversify the imported resource - Building and strengthening relationships with banks CONTENTS Preamble.
Chapter 1: The literature review of risk in international payment operation for imported goods .1 The literature review of risk .2 Type of risk .2 International payment risk .2 Risk of payment .3 Some common risks exist in international payment method .1 Risks of remittance .2 Risks of collection .1Document against acceptance (D/A) .2Document against payment (D/P) .3 Risks of letter of credit.4 Some real lesson from risk payment in Vietnam .5 The meaning of limiting risks in payment operation .6 The overview of international payment operation for imported goods.2 The characteristics of international payment .3 The role of international payment in economic .1For commercial trade .2For finance-banking .3For society diplomacy.4 The role of imported payment operation in company .5 The condition of international payment of import .6 The means of international payment tools for imported goods .7 The factors influence on payment operation for imported goods in companies .7 The major payment procedures for imported goods in company .3 Letter of credit .8 The status of international payment in Vietnam. 22 Chapter 2: Status of payment operations for imports at Printing material equipment import-export company – Printexim Co.1 The general introduction of the establishment and development of company .1 The overview and process of establishment of company .1 The period of military administration (1975 – 1997) .2 The period of transition from Printing management organization into Printing material equipment company II .3 The period from 1990 to now .2 Functions and tasks of Printexim company .1 The organization chart .2 Functions and tasks of the board of directors.3 Functions of the financial accounting Department.4 Functions and tasks of the Administrative Organization .5 Functions and tasks of Business Department .4 The overview of human resource .5 The purpose and business scope of the company.6 Recent income statement of Printexim in 2009-2011 .2 The status of imported operation at company.2 The imported goods structure.3 The import situation .4 The import market .5 The characteristic of imported payment operation at company.6 The status of imported payment operation at company .1 The implementation of payment operation at company .2 The structure of international payment methods for imported goods at company .1 The situation of imported payment by remittance.2 The situation of imported payment by letter of credit .3 The situation of imported payment by collection method – Documentary against payment .7 The evaluation of payment operation for imported goods in Printexim company .8 The factors impact on imported payment operation o company. 65 Chapter 3: Some solutions limiting the risk of international payment for imported goods at Printing material equipment import-export company – Printexim Co.1 Development orientation of the company.2 Analyzing SWOT for those factors impacting on imported payment operation of company .3 Some solutions limiting the risk of international payment for imported goods at Printing material equipment import-export company – Printexim Co.1 Establish risk management process .2 Using derivative transaction to hedge exchange rate risk .3 Enhance the ability of negotiation in order to select the logical payment method .4 Diversify the imported resource .5 Building and strengthening relationships with banks. 84 CONCLUSION REFERENCE ABBREVIATION APEC.
Asian-Pacific Economic Cooperation B/E. Bill of exchange B/L. Bill of lading C/O. Certificate of Origin D/A.
Documentary against acceptance D/P. Documentary against payment L/C. Letter of credit T/T. Telex Transfer VN.
World Trade Organization TABLE Table 1.1: The advantage and disadvantage of the form of payment in international trade transactions .1: The income statement in 2009 – 2011 .2: The imported goods structure in 2009-2011.3: The export-import turnover in 2009-2011 .4: The import market from 2009-2011 .5: The structure of international payment methods for imported goods at company .6: The situation of imported payment by remittance payment in 2009-2011 .7: The situation of imported payment by letter of credit in 2009-2011 .8: The situation of imported payment by D/P in 2009-2011.9: Payment services served by banks .1: The risk management process .1: The revenue of international payment in 2009 – 2012 .2: The imported payment process .2: The comparison among revenue, net income before tax and net income after tax in 2009-2011 .3: Inbound material in 2009 – 2011 .4: The structure of international payment methods for imported goods at company (2009-2011) .5: The proportion of imported value by using T/T .6: Process payments for importing in form of T/T sight payment.7: Process payments for importing in form of T/T advanced payment .8: The proportion of imported value by using letter of credit method .9: The process of opening L/C .10: process payments for importing in the form of letter of credit 56 Chart 2.11: The proportion of imported value by using D/P .12: The process of payment by D/P. Reason of research: Our country is now in the process of industrialization and modernization and becomes the industrialized countries in 2020. Besides that, with an open door policy for integration and development, Vietnam's economy has achieved many great achievements. That result belongs to the significant contribution of import and export activities.
Along with export, import takes an important part on contributing in international trade. International payment is an important link in the chain of national economic activities. International payment is an important step in trading goods and services between individuals and organizations of different countries. This contributes to settling the relationship between commodity and currency, creating a continuous production process and hastening the circulation of goods process on an international scale.
If international payment activities are conducted fast and safe, the circulation of goods and monetary between buyers and sellers will be smooth and more secure. We all know that risks always exist in our life that we did not anticipate, such as: healthy risks, security risks or political law. all of these risks are affected directly or indirectly on the lives and ourselves. One of the risks we also need to consider is the risks of international payment operations because it causes several impacts to the property and the vitality of the firm.
We admit that risk is an objective reality, because it is independent thinking outside human awareness. Risks are always unexpected and unpredictable so that it cannot be absolutely resolved. We can only limit the risk and prevent risks from implicit danger in order to timely respond and correct in cases of force majeure. Payment issue seemed be simply that the seller gets payment from the buyer and release cargo.
In fact it still has so much import- export company get in trouble of making international payment. That leads payment delay, prolonged complaints, can be tricked and damage company. Therefore, how can companies prevent and limit the risk when the international payment is a big issue left open. Therefore, the review, analysis and evaluation of international payment operations are essential and necessary.
Practice-time at the company helps I realize that the international payments of imports of the company needs more interest and clearly understand. Be aware of that as long as the dedicated guidance of MBA Mai Nguyen Truong Son I chose the topic "SOME SOLUTIONS LIMITING THE RISK OF INTERNATIONAL PAYMENT FOR IMPORTED GOODS AT PRINTING MATERIAL EQUIPMENT IMPORT-EXPORT COMPANY – PRINTEXIM CO. The purpose of selecting topic: - Deeply analyzing payment process and the status of imported payment operation. - Seeking advantages and disadvantages of imported payment operation.
- Basing on that to suggest solution to limit risks. Research subject: Issues related to the activities of international payments for imported goods at Printexim company 4. Scope of research: Space: Printing material equipment import-export company – Printexim Co.,Ltd Time: period of 2009-2011 5. Research methodology: Statistical synthetic method Comparative analysis method 6.