FOREIGN TRADE OPERATION

TOPIC: IMPORT ELECTRIC CAR FROM GERMANY

(CIF, D/P)

TEAM MEMBERS:
Phạm Hồng Phúc
Đỗ Nguyễn Bảo Trường
Hào Anh
Thanh Danh

CONTRACT SIDES:
SALER: (BAYERISCHE MOTOREN WERKE AG) BMW GROUP
ADDRESS: NO. 80788 MUNICH, GERMANY
TEL: +49 89 1250-16010 FAX: +49 89 1250-16011
REPRESENTED BY: MRS. RODERMUND – DIRECTOR
BUYER: (CÔNG TY CỔ PHẦN TẬP ĐOÀN TRƯỜNG HẢI) TRUONG HAI
GROUP CORPORATION
ADDRESS: NO. 19, BIEN HOA INDUSTRIAL PARK, STREET 2A, AN BINH
WARD, BIEN HOA CITY, DONG NAI PROVINCE
TEL: +84 25 1389 1726 FAX: +84 25 1383 6621
REPRESENTED BY: MR. TRAN BA DUONG – CHAIRMAN OF THE BOARD
THIRD PARTY: (BMW CHINA AUTOMOTIVE TRADING LTD.) BMW CHINA
ADDRESS: 18 XIAGUANGLI, EAST 3RD RING NORTH ROAD,
CHAOYANG, BEIJING, CHINA
TEL: +86 10 8455 8000 FAX: +86 10 8455 8029
REPRESENTED BY: MR. KARSTEN ENGEL - TOP MANAGEMENT

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ABOUT GOODS:
40 ( forty ) electric cars (BMW i3 120Ah version 2019) have origin in Germany and
are produced by BMW GROUP.

COMMERCIAL TERMS:

1) CIF: Carriage Insurance and Freight.

CIF [buyer’s Named place of delivery port ] Incoterms® 2020

In this case, it’s CIF Cat Lai port, Ho Chi Minh City, VietNam Incoterms® 2020

2) Import Journey:
BMW Group – Departure port (Germany) – Hub port (Hong Kong) (where the
goods are transshipment from ocean vessel to feeder vessel) – Destination port (Truong
Hai named place) – Truong Hai Group

3) Why use a transit port in this case?

In reality, ocean vessels only follow many fixed sea routes from one major port to
another major port. Then, from here, ocean vessels distribute the cargo to feeder vessels,
which transport the goods to the destination port. Popular major seaports in Asia are usually
Singapore, Hong Kong, Shanghai, Busan, and Tokyo ports,…
In case, besides this reason., BMW GROUP also has goodwill rather than TRUONG
HAI GROUP. So, they will choose the best way to cover their contract benefits. BMW
Group has a subsidiary in China (their biggest market in ASIA and near VietNam), and it’s
BMW China Automotive Trading (BMW China).
Therefore, they send the goods to be sold to Truong Hai in transshipment in China
port (Hong Kong port is closest from China to the destination port in Vietnam), and
from there, BMW China will be authorized to carry out the transshipment work on
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the feeder's vessel to the destination port in Vietnam. In case BMW Group does not have
a subsidiary in China, or a representative office in China, they can ask forwarders to
perform this transshipment through a service contract.

4) Main-carriage contract sides:

BOOKING SITE (SHIPPER): BMW Group
CARRIER:
First carrier: Hoegh Autoliners AS (Ocean vessel) Germany – HongKong
Ocean Network Express (feeder vessel) HongKong – VietNam
DEPARTURE PORT: Hamburg port, Hamburg, Germany
TRANSSHIPMENT PORT/ HUB PORT: HongKong port, HongKong, China
THIRD-PARTY BE AUTHORISED TRANSSHIPMENT – SUBSIDIARY OF
BMW IN CHINA: BMW China Automotive Trading Ltd
NOTIFY PARTY/ CONSIGNEE (in hub port): BMW China Automotive
Trading Ltd (no need To order of shipper)
DESTINATION PORT (as named place of Delivery port in Contract): Cat Lai
Port, Ho Chi Minh City, VietNam
NOTIFY PARTY/ CONSIGNEE (in destination port): To order of shipper

5) What are the opportunities for both sides in CIF using:

CIF method Seller Buyer
(BMW Group) (Truong Hai Group)
Obligation  Contract for the  Provide information for
carriage to buyer’s BMW on delivery,
named place port. insurance, and payment
(mentioned in the activity.
commercial  Buy foreign currency
contract). according to Vietnamese
 Complete law
documentary.  Pay for seller.
 Buy Insurance freight  Import declaration.
for cargo.  Receive goods at Vietnam
 Export declaration. port.

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  Transshipment
declaration
Risk  Until goods are on  Be transferred risks while
board the vessel goods are on board the
vessel (commonly the first
carrier) to their door.
 Bearing transshipment
risk in the hub port.
Cost  Pre-carriage cost  The cost of Transit
(Loaded fees, (enable to require seller)
customs fees,…)  Charges of unloading
from BMW door to (enable to require seller)
the departure port  The additional insurance
 Main-carriage (in case the buyer requests
Freights it)
 Cargo Insurance fee  On-carriage cost from
(dealt by others, named placed delivery to
common through Truong Hai door
main-carriage)  Transit and import
 Export clearance cost clearance cost
 Cost of assisting in  any additional costs
documents and incurred if it fails to give
information for the notice while identified as
buyer the contract goods.
The port named  Destination port which is the named place as precisely as
place in the possible in the CIF method.
commercial contract  Departure port (shipment port) which isn’t mentioned in
the contract based on the CIF method. However, it
should be specified in the contract, because of the
transferred risks from seller to buyer at this place.

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  Seller should specify it to start calculating the premium
payable.
 Buyer should specify it to ascertain that the freight or
insurance element of the price in the contract is possible.
Allow for multiple  Both sides deal to allow or disallow in the contract
carriers;
transshipment?
Insurance  Must buy type C  Notify the seller when a
Insurance or similar country requires
clauses for buyer insurance of goods to
cargo’s risks. be purchased
domestically. At that
time, the contract will
change from CIF to
CFR.
 Buyer is insured. In
case of wants to cover a
higher level for cargo,
dealing with the seller
in the contract.
Unloading cost  No obligation 
 If the seller bears it
without dealing in the
contract, this cost isn’t
recovered.
Export/ Import  Required to clear  In case the seller makes
clearance export. transit work easier than
 Assist buyer (if the the buyer, dealing with
buyer requests) in clear the seller makes it in
import. the contract.

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  No obligation to clear
import or transit
through third countries,
pay import duty, or
carry out import
customs formalities.
Checking/packaging/  Seller bears all unless  No obligation.
marking having any
requirements.
Notice  Notify the buyer when  Give the seller
the goods have been sufficient notice when
delivered. And give the the buyer is entitled to
buyer any notice determine when and
required to receive where receiving the
goods. goods.
In addition to the mandatory conditions in CIF Incoterms 2020, as mentioned, the parties
can also agree to increase or decrease those conditions and; or add other necessary terms
to the contract without affecting CIF principles.

6) Compulsory Insurance contract in CIF:

Insurer: AXA XL (BMW Decide or deal in the contract)
Insured: Truong Hai Group
Insurance buyer: BMW Group
Subject: 40 ( forty ) electric cars (BMW i3 120Ah version 2019) have origin in
Germany and are produced by BMW GROUP
Insured Value: Value of goods (40 electric cars), throughout the journey from the
departure port to the destination port ($$)
Range of Insurance: Cover provided by Clause C of the Insitute Cargo Clauses
(LMA/IUA) up to Clause A in Truong Hai demand.
Sum/Amount Insured: 110% of Insured value.
Premium: According to Insurer premium (type C is 0,06%, type A is 0,18%)

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 Franchise: According to the Insurer - 5% of Insured value (if loss or damage value
is less than 5%, The insurer does not have to pay compensation)

PAYMENT TERMS

1) D/P: Documents against Payment.

D/P payment method under UCP 600

In this case, it’s the D/P payment method under UCP 600.
Exporter/Principal: BMW Group
Remitting bank: Deutsche Bank Filiale (65428 Ruselsheim, Trebur, Munich,
Germany)
Importer/ Drawee: Truong Hai Group
Collecting Bank: Vietcombank (79 Hung Dao Vuong Street, Trung Dung, Bien
Hoa City, Dong Nai, VietNam)

2) D/P advantage
 D/P is easy to use and does not require a credit line from the bank.
 The costs and administration fees of D/P are lower than the Letter of Credit.

3) D/P risks
The buyer can refuse payment for any reason. If the goods are shipped over long
distances, the seller will incur the return shipping cost in case. This may force the seller to
sell the goods at a higher price in the original destination country or lost profits

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WHAT MUST EXPORTER AND IMPORTER DO WHEN
CHOOSING THE CIF METHOD FOR COMMERCIAL
CONTRACTS AND A D/P METHOD FOR PAYMENT?
Note: (Number) is a Step in Commercial activities between the parties. Example (2)
is Step 2.
(Number*) is non–fixed Step. Other parties do if necessary
Seller (BMW Group) Buyer (Truong Hai Group)
Pre – carriage
(2) Quote for goods (by any contact (1) Inquiry for goods (by any contact
method) method)
(4) make P/I (Proforma Invoice) (3) make P/O (Purchase Order)
(5) Commercial Contract (5) Commercial Contract
(6) Goods preparation (6*) Urging delivery (by any contact
[C/I (Commercial Invoice), (Packing list), method)
Goods Specification,…]
(7) Contract with the first carrier (CIF) to
deliver to Hong Kong Port
[Booking note, B/L]
(8) Buy Insurance (CIF)
[Insurance Certificate]
(9*) Apply for specialization goods
documentary (if necessary)
[…]
(9) Export customs clearance
(10) Apply for C/O and Delivery
[ C/O (Certìicate Origin)]
Main – carriage

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 (11) Authorized transshipment to BMW
China via Hong Kong Port to destination
Port.
(12) BMW China contracts with carrier to
deliver goods to the destination port and
send documents back to the BMW Group
[Letter of Authorised, Packing List,
C/I(Commercial Invoice), Transshipment
B/L, China’s import custom declaration,..]
(13*) Open a banking account (if not have (14) Choose the Collecting Bank (based
one at Remitting Bank) on the option of Remitting Bank) and
(13) Open the D/P (document against notice.
payment) requirement with the Remitting
Bank. and notice to the buyer

(15)Hand over the documents to the

R.Bank to send to the Collecting Bank.
[Documents include B/E, Commercial
docs]
On – Carriage
(16) Truong Hai Group receives an
Arrival Notice from the Carrier and sends
it to C.Bank
C.Bank sends the money to R.Bank. (17) Buy foreign currency from C.Bank
(19) Then, R.Bank transfers the money to (VietNam law require)
BMW Group’s account. (18) Pay for C.Bank and receive
documents
[]
(20*) Apply for specialization goods
documentary (if necessary)
(20) Import customs clearance
(21) Release goods, Inspection

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 (23*) Claims adjusting (22*) Claims (If the goods are lost,
damaged, or do not meet the requirements
of the contract)

WHAT ARE THE DOCUMENT REQUIREMENTS WHEN

IMPORTING ELECTRIC CARS IN CIF?
1. Sales Contract
2. Packing list
3. Commercial Invoice
4. Customs declaration :
Germany’s Export Customs Declaration
China’s Transit Declaration
Transhipment Certificate
VietNam’s Import Customs Declaration
5. B/L (Bill of Lading) includes B/L of Ocean vessel and transshipment B/L of
feeder vessel
6. Authorised evidence
LoA – Letter of Authorised
CDC list: Certificate Duty Exemption of Cargo list
7. CIF: SO must have Insurance Certificate
8. C/O (Certificate Origin)
9. Electric cars no need Phytosanitary Certificate
10. Technical documents of vehicle models to be imported:
Goods Specification
CQ - Certificate of Quality
CA - Certificate of analysis
MSDS - Material Safety Data Sheet

DOCUMENTS FOR PAYMENTS

The payment method is D/P no need L/C,

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OTHER DOCUMENTS
P/I: Proforma Invoice
P/O: Purchase Order
Booking note (for 2 B/L)
Arrival Notice

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RECORDED DOCUMENTS
File 1
File 2
File 3

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