GROUP ASSIGNMENT

VIETNAM EXPORTS CATFISH TO CHINA

Lecturer: Cung Thi Anh Ngoc

Class: IB1802
Semester: Summer 2024
Date: July 5, 2024
Group 3
Group member Student ID
1 Tran Thi Thu Hien HS173030
2 Duong Thi Thu Ha HS173317
3 Hoang Le Uyen HS173123
4 Hoang Manh Dung HS173309
5 Nguyen Dan Linh HS170340
6 Ha Ngo Khanh Linh HS170110
Group Assignment FPT University

Table of Content

I. The consumer demand for catfish in China ......................................................... 2

II. Sale Contract .............................................................................................................. 4
III. Bill of Lading..................................................................................................... 11
IV. Commercial Invoice ......................................................................................... 12
V. The risk of transportation by sea and solutions ........................................... 14
VI. Duties and Transferring risk under FOB Incoterms 2020 ............................. 16
VII. The risk of Documentary Credit and solutions ............................................. 19
VIII. Requirements of Vietnam in exporting and China in importing catfish ...... 23
IX. References ....................................................................................................... 26

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I. THE CONSUMER DEMAND FOR CATFISH IN CHINA

China is one of the world’s

major producers and consumers of
industrial and consumer products. The
frozen seafood market has been
expanding rapidly over the past two
decades [1]. China remained the
world's largest seafood producer in
2023, with official production estimated
at 71 million metric tons (MMT), up 3.5 percent from 2022. Production growth continues
to be driven by aquaculture, which, according to official data, increased 4.4 percent
year-on-year to 58.1 MMT in 2023 [2].

Seafood imports surged in 2023 to 4.6 MMT, valued at $18.8 billion, led by
increased volumes of fresh and frozen fish, crustaceans, and mollusks. Demand for
high-value products, including salmon and lobster remains strong [2].

China’s seafood imports expanded in 2023, mainly due to increased domestic

consumption and gradual recovery of overseas demand for processed seafood. In
2023, China’s seafood imports reached 4.6 MMT, valued at $18.8 billion. This
represents a 12 percent increase in volume and a 0.5 percent increase in value
compared to the previous year. Growth was led by higher volume imports of frozen fish
and crustaceans, which rose 15.5 percent and 13.6 percent, respectively, from the
previous year, strong consumer demand for high-value products, an economic
rebound following the end of PRC zeroCOVID policies, and competitive prices for
imported products. Total seafood imports exceeded the record 4.37 MMT reached in
2019, pre-COVID. In 2023, frozen fish accounted for 51.7 percent of imports at nearly
2.38 MMT [2].

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The frozen seafood industry in China has gradually shifted its focus to the
domestic market in recent years, driven by advanced and widely available freezing
technologies that meet consumers' high demands for food quality and safety. As
people's living standards improve and they pursue healthier diets, the demand for high-
quality, convenient, and nutritious frozen seafood is increasing. This presents a
significant opportunity for the industry, and competition and technological
advancements are ensuring even better quality and safety [3].

According to data from Huajing Industry Research Institute, the market size of
China's frozen seafood industry has shown an upward trend year after year, and the
compound annual growth rate (CAGR) has also been relatively stable. This indicates
that the demand for frozen seafood among Chinese consumers is increasing, and the
frozen seafood industry is also developing steadily. At the same time, it can be seen
that the market size and growth rate of this industry are affected by many factors such
as the macro-economic environment, consumer demand, and technological progress.
In the future, as consumers pursue healthier diets and the demand for fast, convenient,
and high-quality food continues to rise, China's frozen seafood industry is expected to
continue to maintain a stable growth trend [3].

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II. SALES CONTRACT

SALES CONTRACT
No: 20150305
This Contract is made in Vietnam on 1st June 2024

THE SELLER:
Name of company : VIETNAM CATFISH CO., LTD
Legal address : Hoa Lac High-Tech Park, Km29 Thang Long Avenue, Thach
Hoa, Thach That, Hanoi, Vietnam
Telephone : +84 9 2333 3456
Facsimile : +84 8 2703 1997
Email : [email protected]
Represented by : Mrs. Tran Thi Thu Hien
Title : Director

THE BUYER:
Name of company : CHINA FOOD PTE LTD
Legal address : No. 36 Guanghua Road, Chaoyang District, Jianguomen Wai,
Beijing, P.R. China
Telephone : +86 10 7673 2890
Facsimile : +86 10 7673 2890
Email : [email protected]
Represented by : Mr. Jackson Wang
Title : Director

This contract is made by and between the Buyer and the Seller, whereby the
Buyer agree to buy and the seller agree to sell the agree to buy and the seller agree
to sell the under-mentioned commodity according to -mentioned commodity according
to the terms and conditions as the terms and conditions as below:

ARTICLE 1. COMMODITY – QUANTITY - PRICE

1.1. Commodity: Vietnamese frozen yellowtail catfish fillet (-18 degree C)

1.2. Specification:

• Country of origin: Vietnam

• Product type: Yellowtail catfish fillet
• Style: Frozen, size 400- 450 gram/piece
• Freezing Process: IQF
• Tape Plating: 0-10%
• Certification: BRC, EEC, FDA, HACCP
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1.2. Quantity and Price: FOB Hai Phong Port, Vietnam

Quantity of Quantity per

Product Types of Quantity Unit Price Amount
Containers Container
containers (tons) (USD/tons) (USD)
(conts) (Tons/cont)

45’RH 356 28 9,968 3,500 34,888,000

Frozen yellowtail
catfish fillet
40’RH 1 27 27 3,500 94,500
(-18 degree C)

10’RF 1 5 5 3,500 17,500

10,000 USD
TOTAL 358 conts
tons 35,000,000

(Says: US Dollar thirty-five million only)

This price shall be understood to be FOB Hai Phong Port, Incoterms 2020, packing
charges included (loading charge)
1.3. Tolerance: plus/minus 10 percent on the total quantity.
1.4. Shelf life: 12 months

ARTICLE 2: QUALITY
2.1. Sensory criteria

No Criteria Request
1 Color Has the natural color of catfish - pinkish red color
Has the natural characteristic smell of catfish, without
2 Smell
grass or mud smell
3 Taste Has characteristic of catfish, no strange taste

The meat is firm and the cuts are smooth; no bones, skin,
4 Status or fat; there are no blood spots or veins on the meat; after
boiling, the meat is firm and the broth is clear.

2.2. Physical and chemical criteria

No Criteria Levels
1 Water content, expressed in % mass 83

Content of total volatile basic nitrogen (TVB-N),

2 55
mg/100g product

Phosphorus content, calculated as P2O5,

3 5
g/1kg product
4 Impurities Do not allow

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2.3. Heavy metal content

No Criteria Maximum Levels

1 Arsenic (inorganic), mg/1kg product 2.0
2 Lead, mg/1kg product 0.2
3 Cadmium, mg/1kg product 0.05
4 Mercury, mg/1kg product 0.5

2.4. Microbiological criteria

No Criteria Maximum Levels

1 Total aerobic microorganisms, CFU/g 1 x 106
2 E.coli, CFU/g 1 x 102
3 Staphylococcus aureus, CFU/g 1 x 102
4 Salmonella, CFU/25g Must not have
5 Vibrio cholera, CFU/25g Must not have

ARTICLE 3. PACKAGING
3.1. Packing: Catfish products are packaged in clean, dry, intact cartons.
3.2. Packaging: IQF – 10kg/carton (depending on customer requirements).
3.3 Label products printed on coupons, label on packaging with content including:
• Product name
• Name and address of production facility
• Product volume
• Material
• User manual
• Production date, expiration date
• Others

ARTICLE 4: SHIPMENT AND DELIVERY

4.1. Means of transportation: By Vessel

4.2. Delivery term: FOB Hai Phong Port, Vietnam (as in INCOTERM 2020)
4.3. Time of shipment: no later than June 30 th, 2024, subject to seller’s receipt of
original L/C for whole value of contract on June 26 th, 2024 at latest. In case delay
opening L/C happens, the seller has the right to delay or cancel shipment accordingly.
4.4. Partial Shipment: allowed
4.5. Transshipment: not allowed.

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4.6. Loading port: Hai Phong Port, Vietnam

4.7. Discharging Port: Shanghai Port, China

ARTICLE 5: PAYMENT

5.1. By Irrevocable Letter of Credit at sight from B/L date for the full amount of the
contract value
5.2. L/C Currency: USD
5.3. Applicant:
CHINA FOOD PTE LTD
ADD: No. 36 Guanghua Road, Chaoyang District, Jianguomen Wai, Beijing,
P.R. China
5.4. Issuing bank:
JPMORGAN CHASE BANK, N.A – Beijing Branch
Add: 19 and 20F, Beijing Winland International Finance Center, No.7, Jinrong
Street, Xicheng District, Beijing, China
Fax: +86 10 5931 8000
SWIFT Code: CHASCN22TSD
5.4. Beneficiary:
VIETNAM CATFISH CO., LTD.
Add: Hoa Lac High-Tech Park, Km29 Thang Long Avenue, Thach Hoa, Thach
That, Hanoi, Vietnam
5.5. Negotiating bank:
Military Commercial Joint Stock Bank (MB) – Hanoi Branch – My Dinh T.O
Add: No.24, Nguyen Co Thach Street, My Dinh Ward, Nam Tu Liem District,
Hanoi, Vietnam
Fax: +84 24 3785 5410
Bank Account: 8321100492008 (USD)
SWIFT Code: MSCBVNVX
5.6. Time of Opening L/C: June 26 th, 2024 at latest
5.7. Payment Documents:
• Full set of Clean on Board Ocean Bills of Lading – in three (3) originals
• Commercial invoice in three (3) folds
• Packing List in three (3) folds
• Mill Test Certificate of the contracted goods issued by the manufacturer.
• Declaration of Catfish Packing Material issued by manufacturer

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• Health Certificate issued by The VINACONTROL in three (3) folds

• Certificates of origin issued by Vietnam Chamber of Commerce in six (6) folds.
• Inspection certificate issued by the VINACONTROL to be final at loading port in
six (6) folds.
• Bill of exchange in three (3) folds

ARTICLE 6. FORCE MAJEURE

Neither party shall held responsible for delay or failure of performance of

obligations provided for herein, when such delay is caused by strike, fire, flood, act of
god, earthquake or other conditions beyond its control which cannot be forecasted or
provided against and provided the party subject to such obligation shall have
exhausted alternative means of performance of the obligation in question. However,
Buyer can not declare force majeure for payment of the commodity loaded on board of
the vessel.

The party wishing to claim relief by reason of any said circumstances shall notify
the other party in writing of the interventions and cessation within seven (7) working
days and then deliver a certificate issued by the Chamber of Commerce and Industry
where the accident occurred as evidence thereof. In the event of delay by such force
majeure exceeds 30 days, each party shall have the right to cancel this contract unless
otherwise agreed. In which case, neither party shall have the right to claim eventually
the damages.

ARTICLE 7. CLAIM

The two parties mutually agree to fulfill at the terms and conditions specified in
the contract, party who violates the specified terms and conditions must be responsible
for and compensate the loss caused to the other directly by his violation.

• The Buyer has the right to refuse the goods if the quality of the goods is not
suitable to the stipulations in Article 1 and 2 of this contract.
• Upon receiving the goods the buyer shall have the good inspected. If their
quality, and specifications are not in conformity with those mentioned in the
Contract, the buyer shall have the right to make claim to the Seller. All claim by
the Buyer shall be made within 30 days after airmail together with particulars of
Survey Report of: “VINACONTROL” of the Socialist Republic of Vietnam which
should be regarded as final.

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• Claiming documents:
- Notice of claim
- A copy of contract
- A copy of B/L
- Shipment documents (C/Q, packing list,…)
- Inspection documents

ARTICLE 8. ARBITRATION

All disputes related to this Contract or the execution thereof shall be settled by
amicable negotiation. If no settlement can be reached, the disputes shall then be
submitted for arbitration to the Singapore International Arbitration Center at the
Chamber of Commerce and Industry of Vietnam. The arbitration will be final and biding
upon both parties, all of charges will be borne by the losing party, unless otherwise
agreed.

ARTICLE 9. PENALTY

• The seller hereby confirms to follow all laws and rules pertaining to ACFTA for
issuing C/O form E.
• In case payment can not be paid on time as stipulated in this contract, the Seller
shall have the option to cancel the Contract and the Buyer has to pay penalty
of 2% contract value to the Seller's account
• In case delay delivery happens (if any) and the seller has a breach of the
contract, the buyer has the right to cancel the contract and impose on the seller
a penalty of 2% contract value.

ARTICLE 10. ADDITIONAL CONDITIONS

• This contract comes into effect from the date of signing, whereas all previous
correspondence shall become null and void.
• Any change or amendment to this contract shall be made in writing and subject
to prior approval from both sides.
• Terms and conditions of INCOTERMS 2020 Edition Applicable.
• L/C conditions must be followed to this contract.
• This contract is made by English in 6 originals, 3 of which retained by each party.
• Signing via fax is acceptable.

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FOR AND ON BEHALF FOR AND ON BEHALF

OF THE SELLER OF THE BUYER

MRS. TRAN THI THU HIEN MR. JACKSON WANG

DIRECTOR DIRECTOR

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III. BILL OF LADING

SHIPPER (Complete name, address, and phone no.)

VIET NAM CATFISH CO., LTD
ADD: Hoa Lac High-Tech Park, Km29 Thang Long Avenue,
Bill of LADING
Thach Hoa, Thach That, Hanoi For Combined Transport or Port to Port
Tel: 092 3333 4567 Fax: 0084 027031997
Represented by: Mrs. Tran Thi Thu Hien - Director
Shipment

CONSIGNEE (Complete name, address, and phone no.) B/L NO: 865058542
To ORDER OF JPMORGAN CHASE BANK, N.A – Beijing
Branch

NOTIFY PARTY
CHINA FOOD PTE LTD
ADD: No. 36 Guanghua Road, Chaoyang District,
Jianguomen Wai, Beijing, P.R. China
Tel: 0065-27031997 Fax: 006527031997
Represented by: Mr. Jackson Wang - Director
PRE CARRIAGE BY PLACE OF RECEIPT
Hai Phong Logistic Hoa Lac High-Tech Park,
Km29 Thang Long Avenue,
Thach Hoa, Thach That, Hanoi
VESSEL PORT OF LOADING HAI PHONG LOGISTICS
TITANIC Hai Phong Port
PORT OF Place of Delivery
DISCHARGE:
Shanghai Port, China

MARKS & NO. OF DESCRIPTION OF GOODS GROSS MEASUREMENT

Nos. PACKAGE 10,000 tons of Vietnamese Frozen yellowtail catfish WEIGHT
CONTAINE S fillet (-18 degrees C) 10,000 tons
R Nos/SEALS 1,000,000 Container temperature to be set at Minus 18 Degrees
ABC1234568XY cartons Celsius”
To be packed in a carton box (10kgs/box) - Individual
Quickly Freezer
FOB Hai Phong port, Vietnam
Type of movement FCL/FCL; CY/CY Freight and charges As Agreed
356 containers 45’RH PLACE & DATE OF ISSUE
1 container 40’RH Hai Phong, JUNE 29, 2024
1 container 10’RF
Shipping marks N/M
DECLARED VALUE BY FREIGHT COLLECT SIGNED FOR THE CARRIER
SHIPPER BY: HAIPHONG LOGISTIC
USD 35,000,000

RELEASING AGENT NO OF ORIGINAL BL As the carrier

3

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IV. COMMERCIAL INVOICE

COMMERCIAL INVOICE
No: 89762365
Date: 20 JUNE, 2024

CONTRACT NUMBER : 20150305

BILL OF LADING NUMBER : 865058542
VESSEL’S NAME : TITANIC
PORT OF LOADING : HAIPHONG PORT, VIETNAM
PORT OF DISCHARGE : SHANGHAI PORT, CHINA

SELLER BUYER
VIETNAM CATFISH CO.,LTD CHINA FOOD PTE LTD
Legal address: Hoa Lac High-Tech, Legal address: No. 36 Guanghua Road,
Km29 Thang Long Avenue, Thach Hoa, Chaoyang District, Jianguomen Wai,
Thach That, Hanoi, Vietnam Beijing, P.R. China
Telephone: +84 9 2333 3456 Telephone: +86 10 7673 2890
Email: [email protected] Email: [email protected]

Quantity Unit Price Amount

No. Description of goods
(tons) (USD/tons) (USD)
VIETNAMESE FROZEN
YELLOWTAIL CATFISH FILLET
(-18 degree C)

1 THE ORIGIN OF GOODS: 10,000 3,500 35,000,000

VIETNAM

FOB HAIPHONG PORT –

INCOTERM 2020
10,000 USD
TOTAL
tons 35,000,000
In words: US Dollars Thirty-five million only

Terms of payment: Letter of Credit

Advising bank: Military Commercial Joint Stock Bank (MB) – Hanoi Branch –
My Dinh T.O
Bank Account: 8321100492008 (USD)
SWIFT Code: MSCBVNVX

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Issuing bank: JPMORGAN CHASE BANK, N.A – Beijing Branch

SWIFT Code: CHASCN22TSD

I declare all the information in this invoice to be true and correct.

FOR AND ON BEHALF

OF THE SELLER

MRS. TRAN THI THU HIEN

DIRECTOR

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V. THE RISK OF TRANSPORTATION BY SEA AND SOLUTIONS

1. Choosing an unreliable carrier

a. Problems
• Failure to meet commitments: The carrier does not comply with its commitments
on time and quality of service.
• Lack of responsibility: Handling incidents poorly or not compensating when
there is damage to goods.
• Example: A shipment of frozen food is damaged due to a damaged ship's
refrigeration system, but the carrier is not responsible and refuses to
compensate.
b. Solutions
• Research and reviews: Before signing a contract, companies should do
thorough research on the carrier, considering reviews and feedback from other
customers.
• Check for certificates and reputation: Choose carriers that have international
certifications for quality management and maritime safety, as well as have a
good reputation in the market.
• Clear contract: Make sure that the shipping contract has clear terms of liability
and compensation in the event of an incident.
2. Hidden costs
a. Problems
• Surprise surcharges: Ancillary costs incurred without prior notice such as port
fees, fuel charges, container storage fees, overload charges, or insurance
charges.
b. Solutions
• Detailed contract: Make sure that the shipping contract clearly lists all charges
and terms for surcharges.
• Cost Monitoring: Track and thoroughly examine invoices and documents related
to shipping costs for early detection of abnormal expenses.
3. Delivery time
a. Problems
• Delivery delays: Due to factors such as bad weather, complicated customs
procedures, or technical problems of the ship.

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b. Solutions:
• Safe Route Selection: Choose transportation routes that are less risky in terms
of weather and security.
• Make a contingency plan: Estimate the time and have contingency plans for
delay situations.
• Route Tracking: Ask carriers to provide monitoring and route tracking systems
to update the shipping situation and handle incidents in a timely manner.
4. Cargo Damage
a. Problems
• Goods damaged by impact, seawater, or improper storage conditions.
b. Solutions
• Choose a reputable carrier: Choose reputable carriers for safe storage and
handling of goods.
• Properly Packaged: Make sure the goods are properly packaged and use the
right protective materials.
• Cargo insurance: Purchase cargo insurance for financial protection in the event
of damage or loss.
5. Security
a. Problems
• Goods can be stolen by pirates when passing through unsecured waters
• Goods can be damaged when passing through the waters of countries at war.
b. Solutions
• Choose safe routes: Choose routes that are less likely to be pirated and
protected by the navy.
• Cooperation with the Guard: Cooperate with naval forces and international
security agencies to protect ships and cargo.
• Security equipment: Ask the carrier to use security measures such as
surveillance cameras, alarm systems, and have a professional security team on
board.
6. Legal and Regulatory
a. Problems
• Changes in legal regulations: Legal regulations on the transportation of goods
can change, making the transportation process difficult.

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b. Solutions
• Stay informed: Keep track and regularly updated with legal regulations on
international shipping.
• Legal advice: Cooperate with legal consulting firms or logistics experts to ensure
proper compliance with regulations.
• Prepare adequate paperwork: Ensure that all customs paperwork and
procedures are fully prepared and accurate.

VI. DUTIES AND TRANSFERRING RISK UNDER FOB

INCOTERMS 2020

1. Duties each company has to do

1.1. Duties of Seller (VIETNAM CATFISH CO., LTD)
a. Delivery to Hai Phong Port, Vietnam:
The seller is responsible for loading the goods on board the vessel owned
by the buyer at Hai Phong Port, Vietnam on the date or within the agreed period
in the contract.
b. Packaging and Marking:
• The seller must package the goods appropriately for the method of sea
transport.
• The seller must mark the goods appropriately to identify them for transport
and customs purposes.

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c. Notification:
The seller must give the buyer sufficient notice that the goods have been
delivered (meaning loaded on board).
d. Documentation
The seller must prepare and provide all documents as required in the
contract:

• Full set of Clean on Board Ocean Bills of Lading – in three (3) originals
• Commercial invoice in three (3) folds
• Packing List in three (3) folds
• Mill Test Certificate of the contracted goods issued by the manufacturer
• Declaration of Catfish Packing Material issued by manufacturer
• Health Certificate issued by The VINACONTROL in three (3) folds
• Certificates of origin issued by Vietnam Chamber of Commerce in six (6)
folds
• Inspection certificate issued by the VINACONTROL to be final at loading
port in six (6) folds
• Bill of exchange in three (3) folds
e. Export clearance:
The seller is responsible for export clearance:
• The seller must obtain all necessary export licenses and handle all export
customs formalities
• The seller must comply with all security clearance requirements for export
f. Costs:
The seller bears all costs until the goods are loaded on board the vessel,
including:
• Packaging, marking, and inspection costs in Vietnam
• The document costs
• Shipping costs from the seller's place of business to Hai Phong Port,
Vietnam
• Loading the goods cost on board the vessel in Hai Phong Port, Vietnam
• Costs related to export taxes and export clearance

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1.2. Duties of Buyer (CHINA FOOD PTE LTD)

a. Nomination of Vessel and Port:
The buyer must choose and contract with the carrier from Hai Phong Port,
Viet Nam to Shanghai Port, China.
b. Notification
The buyer must give sufficient notice to the seller of:
• any transport-related security requirements
• the vessel’s name and loading point within Hai Phong Port, Vietnam
c. Import Clearance:
The buyer is responsible for Import clearance:
• The buyer must obtain all necessary import licenses and handle all import
customs formalities.
• The buyer must comply with all security clearance requirements for import.
d. Cost:
The buyer bears all costs after the moment the goods are loaded on board
the vessel:
• Shipping costs by vessel from Hai Phong Port, Vietnam to Shanghai Port,
China
• Shipping costs from Shanghai Port, China to the buyer's place of business
• Unloading costs in Shanghai Port
• Costs related to import taxes and import clearance
2. The point of transferring risk
According to Incoterms 2020, with FOB terms, the exporter will transfer risk to
the importer when the exporter loads the goods onto the vessel assigned by the
importer in Hai Phong port.
• VIETNAM CATFISH CO., LTD bears all risks until the goods are loaded on
board the vessel, including:
o Risk in issuing documents
o Risks in delivering from the seller's place of business to Hai Phong Port,
Vietnam
o Risk in loading the goods process on board the vessel in Hai Phong Port,
Vietnam
o Risk in export clearance

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• CHINA FOOD PTE LTD bears all risks after the moment the goods are loaded
on board the vessel, including:
o Risk in delivering by sea transportation from Hai Phong Port to Shanghai Port,
China
o Risk in delivering from Shanghai Port, China to the buyer's place of business
o Risk in import clearance
o Risk in unloading the goods process in Shanghai Port, Vietnam

VII. THE RISK OF DOCUMENTARY CREDIT AND SOLUTIONS

1. Document discrepancies

The risk is documents do not comply with the requirements in the letter of credit.
The bank will only release payment if all the terms and conditions stipulated in the letter
of credit are met. Even minor discrepancies in the documentation can result in delayed
payment or non-payment.
The solution to this risk is ensure meticulous preparation and checking of all
documents before submission. Work with experienced staff or hire professional
document preparation services. Consider using pre-shipment inspection services to
verify that all documents comply with the letter of credit terms.
2. Issuing bank risk
a. The issuing bank may face financial difficulties or fail to honor the
letter of credit

Banks encountering financial difficulties may result in insufficient finances to

pay for beneficiary. When the issuing bank does not respect the letter of credit or fail
to honor the letter of credit, the exporter will receive money more slowly and may not
receive money from this bank, not according to regulations in the letter of credit.

b. A issuing bank is a credit company, not a real bank

Credit companies may not have the same level of financial stability and
credibility as traditional banks. This increases the risk of non-payment or delays. Credit
companies may not be subject to the same stringent regulatory oversight as banks,
leading to potential issues with compliance and reliability. Credit companies might face
liquidity issues, making it difficult for them to honor the letter of credit in a timely
manner. Due to less rigorous operational processes, credit companies might have
longer processing times, leading to payment delays. Credit company can take the

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documents to receive the goods, leading to the beneficiary losing the documents of the
export shipment and losing the shipment.
c. Solution

Choose an issuing bank with a strong reputation and high credit rating.
Additionally, consider confirming the letter of credit with a reputable and reliable bank
in Vietnam, which guarantees payment even if the issuing bank defaults. Conduct
thorough due diligence on the issuing bank, including its financial health, credit rating,
and reputation in the market. Obtain references from other businesses that have dealt
with the same this issuing bank. Verify the regulatory framework governing the issuing
bank in its home country. Ensure that it is subject to adequate regulatory oversight and
has a track record of compliance. Request financial statements or reports to assess
the liquidity position of the issuing bank. Consider setting up escrow accounts or other
mechanisms to ensure funds are available. Clearly define and agree upon payment
timelines in the letter of credit. Include penalties for delays to incentivize timely
processing.
3. Risks related to the political situation between the two countries
Vietnam and China
a. Risks

Political instability, changes in government, political unrest, or policy shifts in the

buyer's country (China) can disrupt the financial system and impact the ability of the
issuing bank or the buyer to fulfill their obligations. Economic instability like economic
downturns, currency devaluation, inflation, or other economic crises can affect the
buyer’s ability to make payments. Legal and regulatory changes like changes in laws
or regulations, such as import restrictions, tariffs, or banking regulations, could
complicate the transaction and delay or prevent payment.
b. Solution
• Monitor the political and economic situation in China regularly. Consider
purchasing export credit insurance to cover the risk of non-payment due to
political or economic events.
• Purchase export credit insurance to protect against non-payment due to political
or economic events in the buyer's country. This insurance typically covers risks
such as expropriation, currency inconvertibility, and contract frustration due to
political events. If the buyer fails to pay due to covered political or economic

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events, the insurance company compensates seller for the loss, usually up to a
specified percentage of the invoice value.
• Conduct a thorough analysis of the political and economic environment in the
buyer’s country. This involves monitoring current events, economic indicators,
and political developments. By staying informed about potential risks, seller can
make more informed decisions about whether to proceed with the transaction
or take additional precautions. Consider subscribing to country risk assessment
services that provide regular updates and risk ratings.
4. Currency risk

Fluctuations in exchange rates, the value of the payment could be significantly

affected by changes in exchange rates between the time the letter of credit is issued
and the actual payment is made. This could result in receiving less money than
expected if the foreign currency depreciates against local currency.
The solution to this risk are enter into a forward contract with advising bank to
lock in the exchange rate at the time the letter of credit is issued. This ensures seller
receive a fixed rate, regardless of future currency fluctuations. Purchase currency
options that give seller the right, but not the obligation, to exchange currency at a
predetermined rate. This provides flexibility and protection against adverse movements
in exchange rates. Negotiate with the buyer to invoice in a stable and widely accepted
currency, such as the US Dollar or Euro, to reduce the risk of significant currency
fluctuations.
5. Letter of credit is fake
a. Risks
• Non-payment: The primary risk of a fake letter of credit is that seller will not
receive payment for the goods shipped. Since the letter of credit is not valid,
there is no guarantee of payment from a legitimate financial institution.
• Reputation damage: If the transaction fails due to a fake letter of credit, it can
harm export company’s reputation with other clients and financial institutions.
• Legal and financial consequences: Dealing with fake letter of credit can lead to
legal disputes, additional costs, and financial losses, including shipping costs,
production costs, and potential legal fees.
b. Solutions
• Due diligence on the buyer and issuing bank: Verify buyer credibility, conduct
thorough background checks on the buyer to ensure they are a legitimate and

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reputable company. Request references from other businesses that have dealt
with them. Check bank credentials, verify the legitimacy of the issuing bank or
credit company. This can be done by checking with advising own bank or
through official banking channels and databases.
• Use confirming banks: Confirming bank’s role, use a reputable confirming
bank in export country. The confirming bank will independently verify the
authenticity of the letter of credit and add its guarantee to it. This ensures that
even if the letter of credit is fake, the confirming bank will honor the payment.
Have the confirming bank review the letter of credit before seller proceed with
shipping the goods. If the letter of credit is confirmed, the risk of dealing with a
fake letter of credit is transferred to the confirming bank.
• Third-party verification services: Utilize specialized services that verify the
authenticity of letter of credit. These companies have the expertise and
resources to detect fraudulent letter of credit. Engage with services such as
SWIFT’s Trade Services Utility (TSU) or other trade finance verification
services that offer detailed analysis and verification of trade documents.
• Legal safeguards: Include clauses in export company’s sales contract that
specify the consequences and penalties if the letter of credit is found to be
fake. This can provide a legal basis for recourse. Beside that are jurisdiction
and arbitration, clearly define the legal jurisdiction and arbitration mechanisms
in case of disputes. This ensures a clear legal pathway if issues arise.
• Regular monitoring and training: Regularly train company's staff on identifying
red flags and signs of fraudulent letter of credit. This includes understanding
common tactics used in letter of credit fraud. Implement internal systems and
processes to regularly monitor and detect potential fraud in trade transactions.
• Insurance and risk mitigation products: Purchase trade credit insurance that
covers the risk of fraud, including fake letter of credit. This can provide
compensation if seller suffer losses due to fraudulent activities.
• Bank guarantees: Obtain a bank guarantee from the buyer, which acts as a
secondary assurance of payment. This can be particularly useful if the letter of
credit is found to be fake.

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VIII. REQUIREMENTS OF VIETNAM IN EXPORTING AND

CHINA IN IMPORTING CATFISH

1. Vietnam's requirements for exporting catfish [4]:

• Article 7 - Decree 36/2014/ND-CP: Conditions for exporting catfish products:
Organizations and individuals (hereinafter referred to as traders) exporting
Catfish products must meet the following conditions:
1. Have a catfish processing facility that meets the conditions specified in Article 5 of
this Decree. In case the trader does not have a catfish processing facility, there must
be a processing contract or a contract to purchase catfish products at a catfish
processing facility that meets the conditions specified in Article 5 of this Decree.
2. Register the contract to export Pangasius products with the Vietnam Pangasius
Association according to the provisions of Article 8 of this Decree. Customs authorities
only accept customs clearance for shipments of Pangasius product export contracts
that have been confirmed by the Vietnam Pangasius Association.
• Article 8 - Decree 36/2014/ND-CP: Register a contract to export catfish
products
1. Organization assigned to implement: Vietnam Pangasius Association.
2. Subjects of implementation: Traders exporting Pangasius products
3. Documents: One (1) set
a. Certificate of contract registration for exporting Pangasius products;
b. A legal copy of the commercial Pangasius farming registration certificate
confirmed by the local aquaculture management agency (applies to cases
where traders use commercial Pangasius fish from commercial Pangasius
farming facilities). products under their ownership and management);
c. A legal copy of the raw material Pangasius purchase contract with an
organization or individual with a commercial Pangasius farming facility that
meets the conditions specified in Article 4 of this Decree (applies to cases where
traders use Commercial Pangasius purchased from commercial Pangasius
farming facilities that are not under their ownership or management);
d. Legal copy of Certificate of seafood processing facility meeting food safety
conditions (including cases where traders buy commercial Pangasius or
process commercial Pangasius at the processing facility). other);

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e. Legal copy of the commercial Pangasius purchase contract or the Pangasius

product processing contract with a Pangasius processing facility that meets the
conditions specified in Article 5 of this Decree (applicable to traders). The
individual does not have a facility to process Pangasius products).
4. Implementation method and deadline:
a. Within no more than 01 working day, if the dossier to register a contract to export
pangasius products is incomplete as prescribed in Clause 3 of this Article, the
Vietnam Pangasius Association will send a written response, requesting
Recommend traders to supplement their dossiers;
b. Within no more than 03 working days from the date of receiving complete
documents to register a contract to export Pangasius products if the documents
meet the regulations in Clause 3 of this Article and have a higher purchase price
of raw Pangasius fish. or equal to the floor price of raw Pangasius announced
by the Vietnam Pangasius Association at the time of receiving the application
(applicable to traders using commercial Pangasius purchased from commercial
Pangasius farming facilities that are not under their ownership). owned or
managed by traders), the Vietnam Pangasius Association will appraise and
confirm the contract to export Pangasius products.
In case the dossier does not meet the above regulations, the Vietnam
Pangasius Association will not confirm the registration of the Pangasius product export
contract and will issue a written response, clearly stating the reason.
5. Fee for appraisal of pangasius commercial business conditions: Follow the
regulations and instructions of the Ministry of Finance.
2. China's requirements for import catfish [5]:
a. Determining the import category of goods: China sets regulations on types of
goods banned from import, import restrictions or specific control regulations for certain
goods. Therefore, before importing goods into the Chinese market, importers need to
carefully consider:
• Goods that are prohibited from import
• Goods must apply for an import license
• Are the goods subject to specific control/specialized inspection
b. Types of imported goods that need to be inspected when imported into China
are electrical equipment, products originating from animals and plants, etc. Therefore,
frozen catfish products are also products that must be registered. Sign an inspection

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with the relevant authorities to be inspected upon arrival at the port and need to be
granted a standard certificate before circulating in the Chinese market.
c. Goods classification: Determining the classification (HS) for a good is a very
important step in determining the tariff applicable to that good. From August 1, 2019,
China converted from a 10-digit HS system to apply a detailed 13-digit HS system.
Meanwhile, Vietnam is currently applying the 8-digit HS system according to the
ASEAN Harmonized Tariff System (AHTN). Vietnam is currently applying the 8-digit
HS system according to the ASEAN Harmonized Tariff System (AHTN), different from
the HS code used by China. Therefore, to import goods into China, businesses need
to pay attention to determining HS codes according to China's HS system (not
Vietnam's HS system). Accurately determining the goods classification code is very
important, not only for the purpose of customs declaration when importing, but also for
declaration on the certificate of origin (if any) in case of import. Goods that want to
enjoy preferential tariffs under FTAs between Vietnam and China (ACFTA or RCEP).
d. Determine the types of taxes and fees:
• Import tariffs: For Vietnamese goods imported into China, businesses currently
have 3 tariff options, each option corresponds to a tax rate and conditions for
enjoying a certain tax rate. Importers will base on the specific conditions of the
goods to choose the most appropriate and beneficial tariff for themselves.
Specifically, MFN tax, ACFTA tax and RCEP tax.
• Other taxes: In addition to tariffs, goods imported into China may be subject to
other taxes such as: value added tax (VAT), consumption tax, anti-dumping tax,
anti-subsidy and self-defense tax.
e. Import declaration, tax payment and customs clearance: All goods imported into
China will have to be notified to the Chinese Customs authorities. Importers must
prepare Customs Declarations (according to the Chinese customs form) and submit
them to Chinese Customs with the necessary documents.
After the importer submits all required documents and taxes, China Customs
will clear the shipment and release the goods. After customs clearance and release,
imported goods will circulate freely in the Chinese market.

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IX. REFERENCES

1. https://www.researchandmarkets.com/reports/3984898/frozen-seafood-
market-trends-in-china
2. https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName
?fileName=2024%20China%20Fishery%20Products%20Report_Beijing_Chin
a%20-%20People%27s%20Republic%20of_CH2024-0044.pdf
3. https://www.zhiyanzhan.cn/analyst/15069.html
4. https://datafiles.chinhphu.vn/cpp/files/vbpq/2014/05/36-nd.signed.pdf
5. https://trungtamwto.vn/thi-truong-rcep/25491-tong-quan-ve-quy-trinh-va-thu-
tuc-nhap-khau-hang-hoa-vao-trung-quoc

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