INTRODUCTION TO

IMPORT - EXPORT
Lecturer: Ngo Thi Thao Uyen
Email: [email protected]
1 Room: O2.602 (Mon – Thurs)
Note: arrange the meeting beforehand via email.
TA contact:

***Import – Export Management*** Ms. Uyen Ngo – IEM HCMIU

  Textbook:
2
Seyoum, B. (2013). Export-import theory, practices, and
procedures. Routledge.
Krugman, P., Melitz, M., & Obstfeld, M. (2012). International
Economics: Theory and Policy, Global Edition. Pearson.
 Course assessment:
Assessment component Percentage %
Quiz + Homework 15%
Group project 15%
Midterm Exam 30%
Final Exam 40%

Rule: Plagiarism is STRICTLY prohibited.

***Import – Export Management*** Ms. Uyen Ngo – IEM HCMIU

 Course content
3

Week Content
01 Lecture 1: Course Overview: Introduction to Import/Export
02 Lecture 2: One – factor economy: Ricardian model
03 Lecture 3: Two – factor economy: Heckscher – Ohlin model
04 Lecture 4: Trade term (Incoterms 2020) & Local charges
05 Lecture 5:
CISG (1): Overview. Content: Name of goods, Quality, Quantity, Tare,
Delivery
06 Lecture 6: CISG (2): Price, Payment
07 Review
08+09 Midterm Exam

***Import – Export Management*** Ms. Uyen Ngo – IEM HCMIU

 Course content (cont)
4

Week Content
10 Lecture 7: Trade policy: Tariff
11 Lecture 8: Trade policy: Non - tariff
12 Lecture 9: Import Export Insurance & Freight cost
13 Lecture 10: Cost control & Shipping method selection
14 Group project presentation + Import – Export procedure & Documents
15 Group presentation and revision for final exam
Final Exam

***Import – Export Management*** Ms. Uyen Ngo – IEM HCMIU

 5 LEARNING EXPECTATIONS
 1. Basics of Export & Import
 2. Export: classification & relating concepts
 3. Import: relating concepts
 4. Determine trade volume
 5. Parties involved & factors affected

***Import – Export Management*** Ms. Uyen Ngo – IEM HCMIU

 6
1. Import and Export basics
 Exports: goods and services flowing out of a country
 Exporting: the sale and delivery of goods and services by a firm based in one
country to customers residing in a different country
• results in receipts from the customers
• affords less control over the marketing function
 Imports: goods and services flowing into a country
 Importing: the purchase of goods and services by a firm based in one country from
sellers that reside in a different country
• results in payments to the sellers
• affords less control over the production function

***Import – Export Management*** Ms. Uyen Ngo – IEM HCMIU

 7
1. Import and Export basics

 Import- Export Management: all activities of a company which aim at:

• Strategic planning
• Organizing, Implementing
• Supervising and Controlling
of all import/export activities from the beginning until the end of a busines operation cycle.

***Import – Export Management*** Ms. Uyen Ngo – IEM HCMIU

 8
1. Import and Export basics

10,000,000 100,000 10,000,000 30,000

• The USA has comparative

advantage in producing…….
• Columbia has comparative
advantage in producing…….

***Import – Export Management*** Ms. Uyen Ngo – IEM HCMIU

 9 2. Export
 Why export?
Profitability
Economies of scale in production and research
Alleviate excess capacity in domestic operations
Minimize risk (as compared to licensing and foreign direct investment)
Diversify markets
 Types of export:
Direct exporting
Indirect exporting

***Import – Export Management*** Ms. Uyen Ngo – IEM HCMIU

 10 2. Export
Exporting directly/through sales agents to distributors, foreign
retailers, or final end users
Direct
Export Advantages:
Greater control, Higher earnings, Closer relationship with the overseas
Types buyer and marketplace
of
export Goods and services sold to or via an intermediary in the domestic
Indirect market  selling them to a foreign customer
Export
Advantages:
Concentrates on resources towards production, Transfer risks to
intermediary, Little or no financial commitment/marketing effort

***Import – Export Management*** Ms. Uyen Ngo – IEM HCMIU

 11 2. Export
 Third-party intermediaries: independent, unrelated, firms that facilitate
international trade transactions by assisting both importers and exporters

 Export intermediaries may perform any or all of the following functions:

• stimulate sales, obtain orders, and conduct market research
• perform credit investigations and payment-collection activities
• handle foreign traffic arrangements and shipping details
• provide support for a client’s sales, distribution, and promotion staff

***Import – Export Management*** Ms. Uyen Ngo – IEM HCMIU

12 2. Export

***Import – Export Management*** Ms. Uyen Ngo – IEM HCMIU

 13 3. Import
 Why import?
Decrease costs & increase competitiveness and profitability
Secure essential inputs and products
Secure higher quality products, supplies, materials, and/or components
Minimize risk and investment
Diversify suppliers
 Trade balance = country export – country import
Trade balance > 0  trade surplus
Trade balance < 0  trade deficit

***Import – Export Management*** Ms. Uyen Ngo – IEM HCMIU

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 Trade balance of
Vietnam in 5-year
period

 VN Import & Export

value by sections in
2019

***Import – Export Management*** Ms. Uyen Ngo – IEM HCMIU

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***Import – Export Management*** Ms. Uyen Ngo – IEM HCMIU

 16 4. Trade volume
 Geography (Distance) and Economy Size (GDP) are the most important
determinants of bilateral trade flows.
 Larger economies produce more goods and services  export capability
 Larger economies have higher buying power due to higher income  import
capability
This is why trade is very concentrated among developed countries:
 50% of current world trade is between developed economies (countries in OECD
& EU 25)
 12% of current world trade is between developing economies

***Import – Export Management*** Ms. Uyen Ngo – IEM HCMIU

17 4. Trade volume
- US trades more heavily with
he three largest European
economies.

- Have the highest values of

gross domestic product
(GDP)

***Import – Export Management*** Ms. Uyen Ngo – IEM HCMIU

 18 4. The Gravity Model for Bilateral Trade
 Empirically, one can predict bilateral volume of trade using the following ‘gravity’
equation:

 Tij is bilateral trade between countries i and j , Dij is the distance separating them,
and Y is country GDP
 A is constant term, parameters a, b, and c are estimated from the regression
 Note: this is called a ‘gravity’ equation due to the similarity with Newton’s law of
gravitational force and mass)

***Import – Export Management*** Ms. Uyen Ngo – IEM HCMIU

 19 4. The Gravity Model for Bilateral Trade
 Using bilateral trade data for all countries in the world, the best fit of the gravity
equation

yields coefficients a, b, and c that are very close to 1

 Trade is roughly proportional to country size (just like gravity)
 On average doubling the distance between two countries of similar size will halve
their bilateral trade
 Surprisingly, even with substantial reductions in transportation costs, the effect of
distance has not changed much over the last 50 years!

***Import – Export Management*** Ms. Uyen Ngo – IEM HCMIU

 20 4. The Gravity Model for Bilateral Trade
Economy size (1000 Distance to Bilateral trade
USD) Vietnam
VIETNAM 223,779,865
US 19,485,394,000 6,218
Japan 4,872,415,104 3865
Korea 1,530,750,923 3,111
Australia 1,323,421,072 5,173
China 12,237,700,479 2,458
India 2,650,725,335 3,190
 Calculate the bilateral trade between Vietnam and other countries.

***Import – Export Management*** Ms. Uyen Ngo – IEM HCMIU

 21 4. The Gravity Model for Bilateral Trade
 Other factors affecting bilateral trade:
• Sharing a common border (beyond the effect of distance)
• Sharing a common language
• Former colonial ties
• Being part of a free-trade agreement
• Immigration flows
• Other cultural ties

***Import – Export Management*** Ms. Uyen Ngo – IEM HCMIU

 22 5. Parties involved in Im-Ex procedure
 Freight forwarder: person or company that organizes shipments for individuals or
corporations to get goods from the manufacturer or producer to a market, customer
or final point of distribution. A forwarder does not move the goods but acts as an
expert in the logistics network. (EX: Expeditor, Unifreight Vietnam, Damco
Vietnam..)
 Carrier: Transport the goods using variety of shipping modes, including ships,
airplanes, trucks, and railroads, and often use multiple modes for a single shipment
(EX: Maersk,VietnamAirlines, Evergreen...)
 Third-party (3-PL) logistics: use of third-party businesses to outsource elements
of its distribution, warehousing, and fulfillment services (EX: DHL, Nippon
Express, Schenker)

***Import – Export Management*** Ms. Uyen Ngo – IEM HCMIU

 23 5. Parties involved in Im-Ex procedure
 Customs agent: law enforcement office working on behalf of the government to
carry out inspections on goods and people moving in and out of a country.
 Customs broker: clear shipments of imported goods, prepare required
documentation for export shipments and collect duties and taxes. They act as an
intermediary between importers and the government, helping companies deal with
legislation.

***Import – Export Management*** Ms. Uyen Ngo – IEM HCMIU

24 5. Factors affecting Im-Ex practice
Controllable Uncontrollable
• Availability of capital • Economic and socioeconomic conditions
• Finances (exchange rates, inflation, interest rates,
• Raw materials GDP per capita, unemployment..,)
• Personnel • Physical conditions (Geographical
• Production and Marketing location, natural resources, market size,
capabilities climate…,)
• Technology • Political and legal conditions
• Cultural conditions

***Import – Export Management*** Ms. Uyen Ngo – IEM HCMIU

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***Import – Export Management*** Ms. Uyen Ngo – IEM HCMIU