Requirements Set for Import Work to Serve Production Technology at Vietnam Paper Corporation

Bidding such as: completing the construction package of Chau Loc Commune People's Committee, organizing the opening of bidding packages for the supply of equipment and technical services, however, because the contractors set prices too high compared to the estimate, the project has not been able to be implemented yet.

- Investing in a deinking line at Song Duong Tissue Paper Company : Currently, the Corporation is still implementing this project. Investment purpose: to utilize used paper, deink and process it into white pulp (DIP pulp) with a capacity of 20,000 tons/year. Investment cost is 101 billion VND.

- Investment project to expand Bai Bang Paper Factory phase 2 :

On January 4, 2007, the Prime Minister officially approved the investment in the Phase II expansion project of Bai Bang Paper, with a capacity of 250,000 tons of pulp/year, and assigned the Ministry of Industry to direct the investment; assigned the Ministry of Finance to consider and guarantee the foreign loan capital to import equipment, materials and other technical services . Thus, following the effective operation of the Phase I renovation and upgrading investment project, the approved Phase II of the expansion project is a great effort of the Ministry of Industry; of the Vietnam Paper Corporation and with the consensus and support of the central ministries and branches of all levels of government, which will promote the strong development of the Paper industry. The Corporation is trying to focus on implementing the investment in the Phase II expansion project to build a new factory to produce bleached pulp, with a capacity of 250,000 tons/year to supply pulp for domestic production as well as export; investment to upgrade to increase the output of 2 Bai Bang paper machines to 125,000 tons/year. The second project is to continue to invest in developing phase 2 in Bai Bang, a pulp factory with a capacity of 250,000 tons/year with advanced, modern and environmentally friendly pulp cooking technology . The total investment is expected to be up to

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8,000 billion VND, of which 2,500 billion VND is spent on planning and developing 160,000 hectares of paper raw material trees . Phu Tho province alone will invest in developing over 60,000 hectares, the rest are in the provinces of Tuyen Quang, Ha Giang, Yen Bai, Son La, Vinh Phuc. The investment amount for environmental protection is 228 billion VND.

Currently, the project is being actively implemented by the Corporation. Some construction items such as completing documents, procedures, land allocation, site clearance plan, selecting negotiators, signing domestic consulting contracts, preparing bidding documents to select foreign consultants, designing access roads to the raw material area, etc. have been implemented. Signing a credit contract with the Vietnam Development Bank to borrow State credit capital for the construction and installation part.

In the coming period, Vietnam Paper Corporation will not only focus on investing in expanding paper production to increase paper output to 1 million tons per year, but also expand investment in pulp production to supply production, sharply reducing the rate of imported pulp. Along with the above investment programs, the Corporation is planning a strategy to build raw material areas for each production area. In particular, in the Bai Bang Paper Factory area, in the near future, when phase II ends, pulp output at Bai Bang will be increased to about 320,000 tons/year, meeting enough pulp for domestic paper production and export. At that time, the raw materials needed for production will also be increased to about 1,500,000 tons/year, the volume of fiber materials supplied for production will be from 1.5 million to 2 million tons per year. Thus, the planned raw material area will be up to hundreds of thousands of hectares and Phu Tho province alone will have about 60,000 hectares of concentrated forest for paper raw material trees. In the coming years, the forest planting speed will be increased from 4,500 hectares to 8,000 hectares per year to meet the plan for planting paper raw material trees.

After the project is completed (expected in 2010), all existing environmental problems will be completely solved, helping the Corporation continue to develop production, increase paper and pulp output. This is also a decisive condition for sustainable development, contributing to improving the quality and reputation of the Bai Bang paper brand, thereby helping the Vietnam Paper Corporation become a key unit of the paper industry, sustainably solving environmental problems, meeting the requirements of world economic integration .

In summary, the development strategy of the Corporation in the coming period is to focus on investing in large-capacity pulp production facilities and industrial packaging paper factories to supply other economic sectors, prioritize investment in developing concentrated raw material areas, and mobilize all domestic and foreign economic sectors to invest in developing the paper industry. The goal by 2010 is for the Corporation to strive to increase the production rate at a faster pace, with better quality, more sustainably, and closely linked to the human development strategy.

IV. Assessment of import-export and investment activities at Vietnam Paper Corporation in recent times

1. Achievements

In recent years, the Paper industry has undergone many changes and has always been considered a weak industry in both production capacity and business ability. In this general context, Vietnam Paper Corporation also faces many difficulties such as: policies

Protection in the Paper industry is gradually being removed, Vietnam has joined the common playing field of WTO, causing the Paper industry to face fierce competition from imported paper products, etc. Being aware of this, in recent years, the Corporation has tried to overcome difficulties. Based on its long-standing reputation, on its deep expertise in import and export, on the right planning in investment work and the efforts of all officers and employees in the Corporation, in the past few years, the Corporation has made clear progress in consolidation and development, it can be said that the Corporation has grown remarkably, its capital has been preserved and continuously grown. The Corporation has reinvested in expanding production and is the largest enterprise in the entire Paper industry. To achieve the achievements it has today, the Corporation has had to solve the following difficult problems: Specifically:

1.1. About import activities

It can be said that the specific nature of the work of importing and purchasing technical materials, spare parts and chemicals used in paper production technology is both technical labor and economic activity.

1.1.1.Nature of technical labor

Each detail, each spare part or a cluster of machinery equipment has its own unique characteristics, its own technical requirements, requiring that when purchasing goods for replacement, the goods must be completely compatible with the previously used product, so it requires no errors. If the goods have just a small error, the Corporation will have to discard a product of great value, sometimes hundreds of millions of dong, causing great damage.

1.1.2.Nature of economic activities

When negotiating and signing import-export contracts, we must achieve the most economic and effective goals and choose the best solution. However, we are also subject to the regulation of legal regulations such as civil law, commercial law, foreign trade law, decrees and resolutions of the Government, regulations of the Ministry of Industry, the industry as well as the General Department.

From the above two characteristics, the Board of Directors of the Corporation and the Board of Directors of the Import-Export and Equipment Department regularly and closely direct the Department to excellently complete the assigned tasks. At the same time, each staff member of the Department must be a technical officer with solid expertise, having experienced practical production, and clearly understanding each type of machinery and equipment within the scope of their responsibility.

At the same time, they must be knowledgeable about laws such as: Civil law, commercial law, foreign trade law, bidding law... At the same time, they are required to have a proactive and creative spirit, be willing to research and study, and have a high sense of responsibility in their work to ensure that: when performing their work, each task must meet the correct technical requirements, have the highest efficiency but must be in accordance with the law. Each person must raise their sense of responsibility to contribute their small part to improving the efficiency of import work in the context of international economic integration, making Vietnam Paper Corporation's products the most competitive in the market.

1.1.3.Requirements set forth in import work to serve production technology at Vietnam Paper Corporation

From the analyzed characteristics of the production equipment line mentioned above, it can be seen that in order for the import activities at the Corporation to be effective, the following requirements must be met: purchasing the right type, appropriate quantity, ensuring quality, with the fastest time and the most competitive price. Specifically:

a. Buy the right type of product:

This is the most important requirement because: the list of technical materials, spare parts and chemicals that the Corporation is using must be up to hundreds of thousands. Therefore, it requires technical purchasing staff to have a good grasp of technical documents, codes, drawings, etc. to accurately identify each item so that when ordering, it can be accurate, avoiding confusion of goods, causing economic loss and negatively affecting the production process.

b. Purchase appropriate quantity

This is a very difficult requirement to implement because: the demand for spare parts and equipment mostly changes from stage to stage depending on the condition of the equipment at each time. Determining the appropriate order quantity is very difficult because if the order is too small compared to the demand, it sometimes leads to a situation where the demand cannot be met, causing difficulties and passivity for production. On the contrary, if the quantity of goods ordered exceeds the demand for use, it will cause the inventory to be too high, causing capital congestion and reducing economic efficiency.

c. Purchase goods with guaranteed quality

In the context of our country opening up for integration, goods on the market come from many different countries and territories and of course have different quality and prices.

Therefore, purchasing goods with guaranteed quality is a very important requirement, requiring technical purchasing staff to research carefully before placing an order, to ensure that we only buy goods with the best quality, suitable for the requirements of the TCT's equipment line.

d. Purchase with the fastest time

If this requirement is well implemented, the economic efficiency will be very large because if the ordering time is reduced, the Corporation will reduce the amount of spare goods in the warehouse, while still meeting the usage requirements, which will bring great economic efficiency.

e. Buy at the most competitive prices

In a market economy, international integration, technical staff are required to be diligent, make efforts to take advantage of all conditions to grasp as much information about market prices on mass media (on the Internet, advertising information, price market...) to find suppliers with the most competitive prices to buy goods. Especially, exploit to the maximum all possibilities to order domestic manufacturing, because domestically manufactured goods have the greatest price competitiveness due to low labor wages, transportation costs are also reduced to the lowest level...

1.1.4. Achievements in import work

From the above criteria, we can draw out the achievements in import activities at Vietnam Paper Corporation in the past time:

- In NK, the Corporation has correctly identified its tasks, thereby trying to promptly implement the policies and plans set forth by the Board of Directors and the General Director.

- Currently, when the Corporation has switched to operating under the model of Parent Company - Subsidiary Company, the previous form of entrusted import of the Corporation Office no longer exists. This creates much more favorable conditions for the import work of member units. Previously, when member units such as Bai Bang Paper Company wanted to import goods, because they could not directly sign the contract, they had to entrust the Corporation to sign the contract. Thus, the import procedures were very cumbersome. Currently, when this office has merged with Bai Bang Paper Company to become Vietnam Paper Corporation, this form no longer exists, the Corporation is allowed to import directly, so the procedures are much more convenient.

- The Corporation has also focused on investing in modernizing equipment to serve the work.

NK actively trains staff proficient in foreign trade, computers, marketing, foreign languages, etc. to create stability for NK activities. Therefore, the qualifications of staff are gradually improved and easily complete assigned tasks.

- The Corporation has coordinated and created timely coordination between member units and functional units to promptly and reasonably arrange human resources, well organize contract negotiations, and quickly resolve procedures so that contracts can be quickly implemented. Know how to build and strengthen relationships with state management agencies, ministries, branches... to seek support and help to complete its work.

- Every year, the number of purchasing and import requests that need to be resolved is very large, the number of types of goods that need to be supplied is very large and diverse, of which a large proportion are urgent requests, the time needed to receive goods is very short. However, with the efforts of the staff of the Import-Export & Equipment Department, the work is carried out urgently, in accordance with the purchasing procedures, according to the law, always meeting the import and purchase requests from the using units, contributing to ensuring that the chain operates according to the Corporation's plan.

- Import officers have researched and proposed solutions to convert many items that previously had to be imported from suppliers in Europe to closer and more competitive markets such as China, Asian countries and the region. At the same time, they have actively surveyed the domestic market, especially domestic manufacturing facilities (including military facilities), and have gradually transferred a significant number of spare parts to domestic manufacturing. This has brought about considerable economic efficiency, saving and reducing costs by billions of dong annually.

- Solve well the import-export and goods reception operations. Ensure the import-export and goods reception are convenient and quick, minimizing the phenomenon of goods having to be stored in warehouses and yards for a long time, causing waste for businesses.

1.2. Regarding export activities

1.2.1.Choosing export method

When conducting its activities in foreign markets, business companies need to have appropriate strategies to penetrate foreign markets. In fact, market penetration strategies are the selection of export methods. In the recent past, Vietnam Paper Corporation has chosen two export methods: direct export and on-site export.

For the direct export method, the advantage of this method is that it brings the Corporation a higher profit than the indirect export method because it does not have to share profits with intermediaries. Using this export method, the Corporation will achieve more effective sales and promotion efforts and allow the Company to maintain a large level of control over all the conditions under which the products are sold in the international market. On the other hand, direct export also allows the Corporation to have direct contact with the market, grasp the market's reactions to find new opportunities and new market trends, manage activities, grasp the understanding of competitors to adjust adaptive plans. Moreover, it also brings prestige to the Corporation in the international market.

For the on-site export method , the advantage of this method is that the goods do not have to cross the national border to reach the customer, thus reducing costs and risks in the process of transporting and preserving goods. The procedures in this form are also simpler, in many cases it is not necessary to have ancillary contracts such as: transportation contracts, cargo insurance, customs procedures. In addition, the risk is less than other methods for the following reasons: in the payment terms in the contract, payment is by L/C under D/P or D/A conditions. While waiting for payment from the bank, if the TCT side has any doubts about the payment ability of the above companies, we have the right to request that they be banned from re-exporting the goods. Because the goods are delivered in Vietnam, we have the right to proactively request the competent authorities in Vietnam such as the Customs agency to intervene to protect our interests. Thus, this method can prevent payment risks or in other words, payment risks in this method are less than in other export methods.

Furthermore, regarding the value added tax rate for goods, on-site import and export goods are subject to a 0% value added tax rate. This is much more convenient than other export methods.

1.2.2.Export price policy for paper products

Besides product policy, price policy is also very important for TCT in particular and for all enterprises operating in the export sector. Because price is related to the volume of export products of the enterprise, it has a strong impact on the income and profit of TCT, at the same time, selling price is also a factor affecting the purchasing decision of consumers.

Vietnam Paper Corporation calculates prices based on:

- Product manufacturing cost

- Costs incurred during the transaction and contract signing process

- Market price, competitor price

- Level of market demand

Normally, TCT applies two delivery methods to determine two corresponding export prices: FOB price and CIF price.

+ FOB price is determined when delivering goods at a Vietnamese port, which can be Hai Phong port or Hanoi port.

FOB price = purchase price + bank loan interest (if any) + management costs + import tax + circulation costs + estimated profit.

+ CIF price is determined when the customer requires the goods to be transported to their warehouse.

In this case the price is calculated as follows:

CIF price = FOB price + shipping cost + cargo insurance fee.

Based on such pricing, the Corporation has a correct policy and is suitable for current business conditions, which is to allow exports on the principle of using revenue to cover expenses, loading and unloading, preserving goods, loss, advertising, business expenses... and other reasonable expenses. When dealing with customers, if they buy regularly, the Corporation often has preferential policies with discounts for them with the aim of creating trust for customers and encouraging them to buy again next time. Currently, the Corporation is trying its best to minimize all expenses, increase profits, and ignore the factor of price competition.

1.2.3. Identify export markets

To build an export business policy as well as measures to promote the export of paper products, the Corporation must segment the market accurately and meticulously, thereby evaluating and selecting markets, which markets are more promising, which markets need to develop in depth? Width? In recent years, the Corporation has made efforts to determine its export policy, which is to determine the target market and position the market, position the product. For each type of product, the Corporation determines different target markets accordingly.

- US market : this is a rather demanding market in product quality.

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