Export – Import

Management

Chapter 1: Modes of transaction in

international market

Targets
 Distinguish different modes of transaction in
international market
 Acknowledge advantages and disadvantages of
each mode of transaction
 Understand procedures for implementing each
transaction

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Modes of transaction in
international market
 Direct/Indirect Export/Import
 Countertrade
 International processing and re-exportation
 Bidding, auctioning and trading in international
exchange market

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 Direct/Indirect Export/Import

A popular mode of transaction which could take

place anywhere, anytime based on voluntary
relations.

Direct/Indirect Export/Import

 How to determine a transaction international?

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 Direct/Indirect Export/Import

 How to determine a transaction international?

 Location of Seller and Buyer
 Currency
 Goods

Direct/Indirect Export/Import

What is the difference between direct and

indirect transaction?

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Direct Export/Import
 Definition
Seller and Buyer directly contact each other,
negotiate, sign contract and implement sales
contract based on money-goods relations.
 Characteristics: direct, anywhere anytime, no
ties attached
 Rules: voluntary, equal, win-win

Direct Export/Import
When should we apply direct transaction?

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Direct Export/Import
 When to apply direct transaction
 Companies with capability and experience
 No limitation to the goods in transaction in both
Seller and Buyer’ countries

Direct Export/Import

 When is Seller responsible for delivering

goods, and Buyer responsible for receiving
goods and making payment?

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Direct Export/Import

 Stages in direct transactions

 Inquiry
 Offer
 Order
 Counter-offer
 Acceptance
 Confirmation

Direct Export/Import
Inquiry
 Definition
Request from Buyer for information to start a
transaction
 Characteristics
 No ties attached
 Buyer could ask for inquiry from various
Sellers
 Purpose: to grasp information and select most
appropriate Seller

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Direct Export/Import
Inquiry
 Content information rgd. price, quality, delivery
terms, payment terms
 Notice
 Do not ask for inquiry from too many Sellers
 Clearly state expected terms and conditions

Direct Export/Import
Offer
 Definition Seller provides information and
requests to sign contract
 Categorization
 Firm offer

 Free offer

 How to tell the difference

 Title

 Validity

 Content of quotation

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Direct Export/Import
Order
 Definition Buyer requests to Seller to supply
goods or services and requests to sign contracts
 Characteristics
 Obligations of Buyer arise

 Contract is considered signed in case Seller

accepts the order
 Application
 Buyer is in real need of goods
 Buyer is aware of goods’ origin or goods are
customized according to Buyer’s requirements

Direct Export/Import
Counter-offer
 Definition Buyer or Seller bargains, rejects
transaction terms and conditions in previous offer
or order
 Characteristics
 Change one or several issues in content
 Previous offer is considered canceled
 Application Buyer/Seller does not accept one or
several terms and conditions in the previous offer

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 Direct transaction
Acceptance
 Definition Buyer or Seller agree on signing contract
according to offer, order or counter-offer
 Validity
 Receiver accepts each and every term
 Receiver accepts within validity date
 Acceptance is sent to the other party
 Legal validity
 Signing a contract
 Contract signing date

Direct Export/Import
Confirmation
 Definition: re-affirm agreed terms and
conditions
 Categorization
 Confirm to sell goods
 Confirm to buy goods

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Direct Export/Import
Confirmation

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Indirect Export/Import

 Definition: Relation establishment and terms and

conditions are conducted by a third party
(intermediary)
 Why use intermediaries?

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Indirect export/import

Indirect export/import

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 Indirect export/import

Indirect export/import

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Indirect export/import

Indirect export/import -
Disadvantages

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 Indirect Export/Import

 Advantages
 Reduce risks
 Reduce costs
 Receive support services
 Disadvantages
 Share profit
 Lose direct contact with market
 Be dependent on intermediary

Indirect Export/Import

 When use intermediaries?

 Buyer/Seller’s limited capability
 Products
 Market requirements, new market entry
 Political reasons

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Indirect Export/Import

Indirect Export/Import

 Two types of
intermediaries
 Agent
 Broker
 What are the differences
between agent and
broker?

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 Indirect Export/Import
Comparison between Agent and Broker
Parameter AGENT BROKER

Definition Commissioned by Seller/Buyer to do Commissioned by Seller/Buyer to look

one or several tasks for Buyer/Seller, converse w/
Buyer/Seller on behalf of Seller/Buyer
rgd. terms and conditions
Relation w/ Agency agreement Commissioning agreement
commissioner
Characteristics • Act on its own name or Principal’s • Act on Principal’s name
name
• Possess goods in most cases • Do not possess goods
• Participate in business, be • Do not participate in contract
responsible for business results and implementation, except when
efficiency commissioned, not responsible for
Buyer violating contract and
inefficiency

• Receive remuneration from • Receive remuneration from Buyer

Principal and Seller

Indirect Export/Import
Agency’s commission
 Commission is calculated based on
 Agent’s workload
 Market condition
 Popular practices of market and industry
 Methods of calculating commission
 Based on a fixed amount
 Percentage of revenue or task value
 Discrepancy between selling and buying price

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 Indirect Export/Import
Categorization of agents
AGENT
Based on

NAME AND FIELD OF

RIGHTS QUANTITY
COST EXPERTISE

Mandatory
Universal agent Distributor Export agent
agent

Commission Exclusive
General agent Import agent
Agent agent

Transportation
Specialized Semi-exclusive
Merchant agent and delivery
agent agent
agent

Insurance
agent

Indirect Transaction
Categorization based on agent’s rights

Types of agent Rights of agent Characteristics and

application scope
Universal Agent Perform all tasks of Principal on Agent has good reputation
behalf of Principal

General Agent Perform part of tasks of Principal or  Agent owns a widespread and
in charge of distribution efficient distribution network
 Agent has full rights to perform
tasks in the designated market

Specialized Agent Perform only certain tasks Agent has expertise, experience
or relations in need

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Indirect Export/Import
Categorization based on Principal-Agent relation

Types of agent Agent’s Transaction Agent fee Characteristics and

name cost application

Đại lý thụ uỷ Principal Principal A fixed  New products, services

(Mandatory Agent) amount or a  Agent do not bear much risk
certain pct  Principal proposes
commercial terms for Agent to
perform
Đại lý hoa hồng Agent Principal A certain pct Principal does not have many
(Commission Agent) responsibilities

Đại lý kinh tiêu Agent Agent Discrepancy  Branded products

(Merchant Agent) btw selling  Agent has a say in price
and buying  Principal receives payment
prices when Agent receives shipment

Indirect Export/Import
Categorization based on number of Agents

Type of Rights and duties of Agents Characteristics and

Agent application

Distributor Be commissioned as Agent together

with many other Distributors

Sole agent  Only 1 Agent in a territory Agent has capability to make

 Not much competition pressure business plans and strategies.
from similar products in the market

Semi-sole Only 1 Agent in a territory, but Large contracts, special

agent Principal reserves its right to find customers, etc.
customers and sign contracts directly
in certain circumstances

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Indirect Export/Import
Criteria for selecting intermediaries

 Selecting agents
 Resourceful
 Knowledgeable
 Skillful
 Reputable
 Selecting brokers
 Widespread network
 Good reputation

Indirect transaction
Agent/Broker Contract
 Article 1: Parties involved in contract
 Article 2: Rights of Agent
 Article 3: Goods of the contract
 Article 4: Geographic area
 Article 5: Pricing
 Article 6: Commission and agent’s cost
 Article 7: Duties of parties involved
 Article 8: Payment
 Article 9: Cancellation

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Countertrade

Trade is carried out wholly or partially in goods

rather than money

Countertrade
 Characteristics
 Purpose
 Export & Import
 Equality
 Money

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Countertrade
 Why use counter trade?

Countertrade

 Advantages

 Macro-economy: reduce foreign exchange

spending, reduce impact of foreign exchange
rate fluctuation, maintain positive trade balance

 Micro-economy: gain advantage over other

competitors, a solution for market penetration

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 Countertrade
 Disadvantages
 Complicated implementation
 Limited in variety of goods
 Vulnerable to conflicts

Countertrade
 Types of counter trade
 Barter
 Compensation
 Counter purchase
 Switch trading
 Offset
 Buyback

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Countertrade
Counter purchase

Countertrade
Switch trading

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Countertrade
Offset

Countertrade
Buyback

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Countertrade
In which circumstances are countertrade
applicable?

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Countertrade
 Application
 Relation between parties involved
 Goods
 Expertise

Countertrade
 Deposit
 Penalty
 Bank account control
 Goods or documents
controlled
 Revocable L/C

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 Countertrade
Contracts
 Types of countertrade contracts
 One document
 Two separate contracts
 A framework

Export processing

Final products

Principal Processor
Materials and accessories
Manufacturing fee

Why use export processing?

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Export processing

What are advantages and disadvantages of

export processing?

Export processing

 Export of goods???
 Characteristics
 Value creation
 Trademarks

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Export processing
Categorization
 Based on processing fee
 Cost plus pricing

 Target pricing

 Based on transferring possession rights of

materials
 Provide - Receive

 Sell - Buy

 Auxiliary materials - Main materials

 Based on parties involved

 Two parties

 Multiple parties

Re-export

Re-exporter

Exporter Importer

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Re-export
 Characteristics
 Number of parties involved
 Prices in export and import countries
 Goods
 Contracts

Re-export

Dubai has evolved as re-export center for the

entire Middle East region

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Re-export
 Why use re-export?
 For re-exporter
 For exporter & importer

Re-export
Pros and Cons
 Advantages
 Disadvantages
 Application

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Re-export
 Vietnamese regulations rgd. re-export
 Both export and import customs procedures must be
followed for re-export goods
 Re-export goods are not allowed to be retained in
Vietnam territory for more than 30 days
 Traders can request to prolong no more than 2 times
and no more than 30 days each time
 Import tax collected when temporarily imported and
refunded when re-exported.

Re-export
Categorization

Re-exporter

Exporter Importer

Goods

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Re-export
Categorization

Re-exporter
Border gates

Exporter Importer

Re-export
Categorization

Re-exporter
Bonded warehouse

Exporter Importer

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Re-export
 Application
 Not for domestic consumption
 Exclusive of
 Goods used in international processing
 Non-commercial goods
 Imported secondhand goods

International auction

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International auction

International auction
 Characteristics
 Number of parties involved
 Time, place, rules
 Complaint after auctions

 Application

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International auction
 Eligibility to participate in auctions
 Auction organizers
 Participants
 Auction venue
 At the Seller’s store
 At the Company’s location
 At Auctioning company’s location

International auction

Types of
auctionCăn cứ phân loại

Price
Targets Methods Confidentiality
announcement

Commercial English Public bid

Organizer
auction auction auction

Non-
Sealed bid
commercial Dutch auction Buyer
auction
auction

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International auction
 Advantages
 Seller
 Buyer
 Disadvantages
 Seller
 Buyer
 Application

International auction
Procedures
 Preparation
 Display
 Auction
 English auction

 Dutch auction

 Contract signing
 The winner signs contract and makes a
deposit
 Contract implementation
 Buyer makes payment and receives goods

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 International Tendering

International bidding
 Rules in international bidding
 Why use international bidding?

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International bidding
Pros and Cons

International Bidding

When use Tendering?

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International bidding
Types of
bidding

Goods and
Scope Procedure Organization
services

Construction One dossier One stage

Open bidding
bidding bag bidding

Procurement Restrictive Two dossier Two stage

bidding bidding bag bidding

Consulting Appointment
bidding of contractors

International Bidding
Procedures
 Preparation
 Pre-qualification
 Receipt of bidding documents

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International Bidding
Procedures

 Bid opening
 Contract signing

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