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Theoretical and Practical Basis of the Research Problem


PART 2: RESEARCH CONTENT AND RESULTS


CHAPTER 1: THEORETICAL AND PRACTICAL BASIS OF THE RESEARCH PROBLEM


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1.1. General theoretical basis for goods export activities


Theoretical and Practical Basis of the Research Problem

1.1.1. Export concept


According to Article 28 of the 2005 Commercial Law: “Export of goods is the act of taking goods out of the territory of Vietnam or into a special area located in the territory of Vietnam that is considered a separate customs area according to the provisions of law.”

Export is an international business activity, it is not an individual sale but a system of sales organized internally and externally with the aim of profit, promoting the development of commodity production, transforming the economic structure, and gradually improving people's living standards. Export is a business activity that can easily bring about breakthrough results. Expanding exports to increase foreign currency revenue, creating conditions for imports and promoting economic sectors towards export, encouraging economic sectors to expand export activities to solve employment and increase foreign currency revenue. (According to Tran Chi Thanh (2000))

Export activities are the basic activities of foreign trade that have existed for a long time and are increasingly developing. Their initial form was only the exchange of goods, but up to now it has developed very strongly and is expressed in many forms.

Export activities take place in all fields, under all economic conditions, from exporting consumer goods, production materials, machinery, high-tech equipment. All of these activities aim to bring benefits to the country in general and participating enterprises in particular [4].


1.1.2. The role of export activities


1.1.2.1. For businesses


Through exporting, domestic enterprises have the opportunity to participate in the competition in the world market in terms of price and product quality, factors that require enterprises to form a production structure suitable for the market. Exporting requires enterprises to constantly innovate and improve business administration, and at the same time have foreign currency to reinvest in the production process not only in breadth but also in depth.

Export also helps businesses quickly access modern technical equipment from advanced countries and creates conditions for businesses to diversify their product consumption markets, helping businesses implement expansion plans, increase sales and profits. Attract and expand the participation of all economic sectors and foreign trade activities and bring revenue as well as a large source of profit for businesses.

Export activities create motivation for businesses to constantly improve the quality of their products and services, enabling businesses to expand their markets, exploit surplus domestic resources, create a stable source of income for employees, reduce operating costs by expanding production scale, and disperse risks of not having to do business in a certain market.

Exporting highly promotes the dynamism and creativity of import-export officers as well as participating units such as: actively exploring and expanding markets, negotiating ability to bring many benefits to businesses, developing aspects of export capabilities that businesses are able to penetrate.

1.1.2.2. For the economy


In the current era of economic integration, to survive and develop, each country cannot isolate itself but needs to open up trade exchanges with many countries in the world.


In that context, the import-export industry has been holding a very important role in the economy.

Export activities are a necessary condition to promote economic development because it is the first link in the global supply chain. It is necessary to export goods to foreign countries to meet the global supply and demand relationship. This is a method to solve the surplus of goods in one territory as well as the shortage of goods in another territory. That is the particularly important role of goods export activities.

Through export activities, we can increase foreign currency earnings, increase the value ratio in a country's GDP, improve the balance of payments, increase revenue for the state budget, stimulate technological innovation, and access new forms of business. Create competition between domestic and imported goods. In addition, this is an activity that can create jobs for workers, help reduce unemployment, and improve people's living standards.

Besides, export is the main source of capital for import, serving the industrialization and modernization of the country.

1.1.3. Forms of export


According to "Import-export business techniques" by Professor Vo Thanh Thu (2011), export forms include: [1]

1.1.3.1. Direct export


Direct exporting is a form of exporting in which (the producer, supplier) and the buyer have direct relations with each other (by meeting or through means of communication such as letters, telegrams, emails, etc.) to discuss and agree on goods, prices, payment methods and other transaction conditions.

In case the enterprise participating in export is a commercial enterprise that does not produce the product itself, the export includes 2 stages:


+ Purchasing export goods from domestic units and localities;


+ Negotiate and sign contracts with foreign businesses, deliver goods and pay for goods.

Advantages of direct trading:


Reduce intermediary costs

Improve the efficiency of transactions and negotiations.

Best satisfy market needs.

Help businesses establish and expand relationships with customers quickly and conveniently.

However, besides the advantages, this method also has disadvantages:

Big risks for businesses in new markets and new products;

The trading volume needs to be large;

High cost of foreign market marketing;

Requires good import-export business staff.

1.1.3.2. Transactions through intermediaries


Intermediary transactions in international trade are a method of transaction in which all the establishment of relationships between buyers and sellers and the regulation of transaction conditions must go through a third party. This third party is called the intermediary and receives a certain amount of money.

Article 3, Clause 11 of the 2005 Law on Commerce of Vietnam stipulates: “Trade intermediary activities are activities of traders to carry out trade transactions for one or several identified traders, including activities of representing traders, trade brokerage, goods purchase and sale entrustment and trade agency.”

Entrustment of purchase and sale of goods: According to Article 155 of the Commercial Law: “Entrustment of purchase and sale of goods is a commercial activity, in which the entrusted party carries out the purchase and sale of goods.


goods in one's own name under the terms agreed with the principal

and receive commissions”. Advantages of this form:

Intermediaries often understand and master the market, laws and practices.

local restaurant

Take advantage of intermediary facilities to reduce investment costs.

Use intermediary services (classification, packaging, transportation, warranty, repair).

However, there are also limitations such as:


Import-export companies lose direct contact with the market;

Capital is often misappropriated by the agent;

Profit sharing;

Must meet the requirements of the intermediary.

1.1.3.3. Counter – Trade


Countertrade is a transaction method in which exports are closely associated with imports, the seller is also the buyer, and the quantity of goods exchanged has equivalent value.

Here the purpose of export is not to earn foreign currency, but to earn another commodity of equivalent value.

Participants must always pay attention to the balance in the exchange of goods, which is reflected in the following aspects:

+ Item balance: quarterly items exchanged for quarterly items, inventory items

hard to sell in exchange for hard to sell inventory.


+ Balance of trading conditions: for example, both FOB delivery at the port of departure and both

CIF at port of destination.


+ Price basis equilibrium: same higher or lower than international price.


+ Balance the total value of goods delivered to each other. Main forms of countertrade:

+ Barter


+ Counter - Purchase


+ Product Buyback


+ Compensation


+ Debt transfer form (Switch)


+ Offset transaction form


1.1.3.4. Export of goods under the protocol


This is a form of exporting goods, often taking place between countries with close relations. The two governments will sign a decree (also known as debt assignment). Domestic enterprises will rely on the signed document with specific instructions and instructions to export goods. This form helps enterprises save costs in market research and there is no risk in payment.

1.1.3.5. On-spot Export

This is a new form of business that is developing widely due to the advantages it brings. This form of export is quite favorable and popular due to many outstanding advantages.

The buyer is still a foreign company, but the goods do not need to cross national borders but are exported directly within the territory of the selling unit. Therefore, the exporter does not need to penetrate foreign markets but customers come to the exporter themselves, nor does it need to carry out procedures such as customs procedures, purchase of goods insurance, etc., thereby reducing costs significantly.


1.1.3.6. International processing


International processing is a transaction method in which the person placing the order abroad provides: machinery, equipment, raw materials or semi-finished products according to predetermined models and standards.

The domestic processor organizes the production process according to the customer's request. The entire product made by the processor will be delivered to the customer to receive payment.

According to Article 178 of the Commercial Law: “Commercial processing is a commercial activity in which the processing party uses part or all of the raw materials and materials of the ordering party to perform one or more stages in the production process at the request of the ordering party in order to receive remuneration”.

+ For the outsourcing party: This method helps them take advantage of labor resources, low material and factory costs, receive tax incentives, and methods to penetrate new markets.

For the processing party: This method helps solve jobs for many workers, increase income, increase turnover for the country, and does not need to spend money on selling products because there is already a consumer market.

1.1.3.7. Temporary import for re-export


Re-export is the form of re-exporting to other countries, those

Goods purchased abroad but not processed in the re-export country.


This form of export can bring high profits without having to organize production, invest in facilities, machinery, factories and the ability to recover capital is also faster.


1.1.4. Content of export activities


1.1.4.1. Market research


According to "Import-export business techniques" by Professor Vo Thanh Thu (2011), export activities include [1]:

a. Research on world commodity market


Commodity market research must include the study of the entire production process of a particular industry.

Researching commodity markets aims to provide an understanding of their laws of motion. Each specific commodity market has its own laws of motion, which are expressed through changes in demand, supply and prices of goods on the market. Grasping the laws helps to solve a series of practical problems related to consumer attitudes, market requirements for goods, and forms and measures of market penetration.

To successfully do export business, we must determine the following issues:


+ What products does the market need?


+ How is the consumption situation of that item?


+ How is the production of that item?


+ What is the foreign exchange rate of that item?


1.1.4.1.2. Market capacity and influencing factors


Market capacity is the volume of goods traded in a certain market area. But it is not fixed but changes according to the aggregate factors in certain periods.

1.1.4.1.3. Choosing a wholesale partner


The purpose of this activity is to select partners for safe and profitable business, including:

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