ORAL EXAM – 4TH YEAR – 2007

K43B – A6

PART 1: INTERNATIONAL BUZ CONTRACTS

(EXPORTING & EXPORT CONTRACTS)
1. THE CONTRACT & THE LAW
* Two forms of law:
- Public law:
+ Regulate the relationship between the citizen and the state
+ Imposed by a government within a specific territory
+ Obligatory
+ Include Constitutional law, Administrative law and Criminal law
- Private law:
+ Regulate the relationship between private citizens (or companies)
+ Include Civil law, Labour law, Commercial law, Corporations law, Completion law
* A contract is an exchange of rights and duties within the framework of the private law
* Dispersive rights: any right that we can legally waive or free to dispose
* Freedom of contract is the idea that individuals should be free to bargain among themselves
the terms of their own contracts, without government interference.
* The 2 law systems: The law created by judges on a case by case basis
- Common law (Anglo American law): Created by a civil authority to be applied to all cases
(such as a statute or constitution)
- Civil law (Continental law)
* 6 Steps in negotiating the legal framework for the contract:
- Choosing the applicable law
- Settlement of disputes
- Contract or no contract
- The parties
- Status of the contract
- Entire agreement

2. THE BACKGROUND INFORMATION & THE ENTIRE AGREEMENT OF

A CONTRACT
a/ The conditions which make a contract become enforceable
- The parties achieve “meeting of mind". Duress, fraud and mistake all create no contract
situation.
- A contract must come through a process of Offer and Acceptance.
It comes into existence when one party (the offeror) makes an offer and another party (offeree)
accepts it.
- The parties must have power to make a contract. They can only sign the contract within their
power.
- The contract must have legal purpose. If the purpose of an agreement is illegal, then the
agreement is unenforceable.
For the Anglo-American law: the contract must give both sides rights and duties.
One sided contracts are no contract.
b+c/
* Offer and acceptance:
A contract comes into existence when:
 One party makes an offer
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  Another party accepts it

The rules of offer and accceptance:

INQUIRY OR
REQUEST FOR TENDER

THE COUNTEROFFER OFFER

become a New....

OFFER DIES Is there

YES REVOCATION
?

NO

Original Is there a
Offer Dies YES COUTEROFFER?

NO

Is there an
OFFER DIES NO ACCEPTANCE
?

CONTRACT YES

* Whereas Recital clause:

 The Ango - Amarican contract is, traditonally, the entire agrreement.

 To avoid confusion, most international contracts contain an "entire agreement" clause
stating this position.

Entire Agreement:

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 This contract comstitutes the entire agreement and understanding between the parties. There
are no agreements, understandings, conditions, reservations or representations, oral or written,
that are not embodied in this contract or that have not been superseded by this contract.

 The entire agreement clause means that all documents that predate the contract become
invalid when the contract is signed.
 Whereas recital clause is the background to the contract that are often needed by a
court to interpret the contract - is provided in the form of a whereas recital.
 It often contains the background information likes:
 Background of collaboration
 Expertises of the Parties
 Previous agreements
 Reference to a patent
 Mutual interest
 Goals of the parties
 Economic support available

WHEREAS the Supplier has wide experience in the supply of electronic products for use in
tropical conditions;
WHEREAS both parties are intererted in introducing this new technology into the East Asian
region.
The parties here by agreed ......

d/.
+ The aims of the “Definition" clause:
Definition clause is the best way of clarifying what exactly the two sides have agreed.
It aims to:
- Make the parties have sound understanding of terms which are discussed during negotiation.
- Avoid the disputes and misunderstanding.
+ The purpose of the “Entire Agreement" clause:
The entire agreement clause means that all documents that predate the contract become invalid
when the contract is signed.
Its purpose is clarity. Both sides know where they stand whatever law applies to the contract.
+ The specimen clause of "Entire Agreement and Contract Documents" in common sale and
purchase contract:
All contract documents and clauses of this contract shall be read, if possible, so as to be
consistent. In the event of conflict, the order of precedence for the provision and documents which
constitute this agreement as follows:
- Specifications
- The Buyer's Special Condition of Purchase.
- Statement of work
...
-

3. THE DISCHARGE OF A CONTRACT

Define the terms used in a contract:
I. Cancellation:
1. Definition: occurs when either party ends a contract for breach by the other. The canceling
party retains any remedy for breach of the whole contract or any unperformed balance.

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 When one party violates the terms and conditions of a contract, the other party has the right to
cancel. The entire contract may be rolled back, payments previously made may be refunded, and
any remaining obligations are immediately ended.
2. Types of cancellations:
a. Canceling for cause/breach of contract
An actual breach occurs because of the failure of one of the parties to perform at the time and
in the manner required by the terms and conditions of the contract.
b. Canceling for an anticipated breach
A situation may arise where there has not as yet been a failure of performance. However, there
is strong reason to believe that one of the parties to the contract will not be fulfilling their
obligations. The burden of proof is upon the party potentially being harmed who must show
convincing evidence of the anticipated breach and good reasons why they must go elsewhere to
seek performance or take some other course of action. If any damages are involved, usually they
are limited to the costs in excess of the contract price, when alternate procurement is necessary.
3. Examples of the type of violations that may cause a breach of contract include, but are not
limited to:
- Nondelivery or late delivery of a product or service. NOTE: Caution must be exercised
because if the failure to deliver or late delivery was caused by factors beyond the contractor’s
control (e.g., labor strike, fire, floods, act of God, etc.), the contractor usually is protected. Also, if
there is a history of acceptance of late deliveries, the buyer’s right to cancel may be challenged.
- Failure to supply a product or service meeting the agreed upon specification or in the
quantities ordered.
- Improper invoicing--charging prices or imposing terms different from those agreed upon.
- Seller unable to maintain or to provide parts and repair services, or to honor warranty on
equipment or products sold.
- Unwillingness of seller to submit an acceptable affirmative action plan.
- The disclosure of collusion or price-fixing involving the successful bidder, after the contract
has been awarded.
- Failure of the contractor to comply with insurance and/or surety requirements.
- Violation of state statutes (e.g., failure to supply information concerning hazardous materials
or substances).
- Federal debarment where federal funds are involved.

II. Termination:
1. Definition: Termination occurs when either party ends a contract other than for a breach.
Any parts of a contract that already have been completed will be left alone, but obligations for the
future, not yet performed, will cease.
2. Types of terminations:
a. Termination for convenience
- Some contracts allow either party to terminate for any reason (or for no reason), under certain
conditions or facts. Terms of the contract govern such terminations and usually specify that if
either party suffers any hardship because of actions of the other, they will be reimbursed with a
satisfactory, documented adjustment. If the amount of the compensation cannot be determined by
mutual agreement, it may be necessary to submit to the courts for a final decision.
- An example of a termination for the convenience of the state is found in a phrase usually
inserted into contracts extending over more than one biennium period; "the state may terminate
the contract without penalty if subsequent legislatures (or the funding agency) fail to appropriate
the funds necessary to carry on the contract."
b. Termination by mutual consent
- Termination is not necessarily a cause for legal action. There may be a mutual agreement for
termination with a satisfactory adjustment worked out between contracting parties.

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 - Change orders which are common purchasing practice technically constitute a termination of
a part of, or the whole original contract, and a substitution of a new contractual agreement. These
generally are accepted by the buyers and sellers as a natural condition of doing business, and carry
no implication of a breach of faith or contract.

III. Rescission:
Definition: Rescission is an equitable remedy that wipes out the existing contract and restores
the parties to their situation prior to entering into the contract. In general terms, rescission refers
to the cancellation of a contract. If money has been paid by one party to another, that money is
returned as part of the rescission process.

Rescission can occur as a result of innocent or fraudulent representation, mutual mistake, and lack
of legal capacity, an impossibility to perform a contract not contemplated by the parties, or duress
and undue influence. For example, assume you agreed to sell and the buyer agreed to buy two
acres of land that you thought you owned. Later, it turns out that you did not have title to the
property. Rescission would be the proper remedy.

IV. Impossibility of performance:

Performance means that each party to the contract has performed its obligations; the
exchange of promises has been completed and each side has received what it has bargained for.
Once the contract has been completed, neither party owes the other party any further obligation.
For example, if you make a contract to perform at a concert, and you appear, perform, and get
paid, ordinarily the obligations of the parties to the contract are over.
Impossibility of performance can terminate a contract if an unforeseen contingency prevents
the performance of the contract. For example, you contract with a famous painter to do your
portrait and the famous painter dies. The obligation to paint your portrait cannot be completed.
The contract to paint your portrait is terminated by impossibility of performance.

V. Frustration:
Frustration of a contract occurs only where after the conclusion of the contract a fundamentally
different situation has unexpectedly emerged. The emergence of some new set of circumstances
may make the performance of the contract more difficult, onerous or costly than was envisaged by
the parties when entering into the contract, for example, a sudden, even abnormal, rise or fall in
prices or the failure of a particular source of supply requiring the seller to obtain supplies from
another more expensive source. However, these events will not normally operate to frustrate a
contract.

4. SETTLEMENT OF DISPUTES
Ways of settlement of disputes parties often incorporate in to their contract are: negotiation,
conciliation (mediation), arbitration and litigation.

• AMICABLE SETTLEMENT (NEGOTIATION):

Negotiation is an interaction of influences. Such interactions include the process of resolving

disputes, agreeing upon courses of action, bargaining for individual or collective advantage, or
crafting outcomes to satisfy various interests. Negotiation is thus a form of alternative dispute
resolution.

Negotiation is typically evidenced by trained negotiator acting on behalf of a particular

organization or position. Compare this to mediation (conciliation) where a disinterested third
party listens to each side’s arguments and attempts to help craft an agreement between the parties.

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The parties can formalize the memorandum of agreement by inserting a condition that will be
binding. The parties generally share equally in the cost. On any matters unresolved, the parties are
free to pursue other options.

• CONCILIATION:

Conciliation is an alternative dispute resolution (ADR) process whereby the parties to a

dispute agree to utilize the services of a conciliator, who then meets with the parties separately in
an attempt to resolve their differences.

A conciliator assists each of the parties to independently develop a list of all of their objectives
(the outcomes which they desire to obtain from the conciliation). The conciliator then has each of
the parties separately prioritize their own list from most to least important. Thus the conciliator
can quickly build a string of concessions and help the parties create an atmosphere of trust which
the conciliator can continue to develop.

Conciliation differs from arbitration in that the conciliation process, in and of itself, has no
legal standing, and the conciliator usually has no authority to seek evidence or call witnesses,
usually writes no decision, and makes no award. If the conciliator is successful in negotiating an
understanding between the parties, said understanding is almost always committed to writing
(usually with the assistance of legal counsel) and signed by the parties, at which time it becomes a
legally binding contract and falls under contract law.

• ARBITRATION:

Arbitration is similar to a legal proceeding, whereby both sides make an argument of their
"case" and then the arbitrator decides the outcome both parties should follow (non-binding
arbitration) or must follow (binding arbitration).

Arbitration is a legal technique for the resolution of disputes outside the courts, wherein the
parties to a dispute refer it to one or more persons (the "arbitrators", "arbiters" or "arbitral
tribunal"), by whose decision they agree to be bound. Arbitration is a form of binding dispute
resolution, equivalent to litigation in the courts, and entirely distinct from the various forms of
non-binding dispute resolution, such as negotiation, conciliation, or non-binding determinations
by experts.

• LITIGATION:

A controversy before a court or a "lawsuit" is commonly referred to as “litigation”. If the

dispute is not settled by agreement between the parties, it would eventually be heard and decided
by a judge or jury in a court.
The term "litigation" is sometimes to distinguish lawsuits from “alternate dispute resolution”
methods such as "arbitration" in which a private arbitrator would make the decision, or
“conciliation” which is a type of structured meeting with the parties and an independent third
party who works to help them fashion an agreement among themselves

* ADVANTAGES AND DISADVANTAGES OF ARBITRATION AND CONCILIATION:

+ Arbitration:

The arbitration is regarded as speedier, more informal and cheaper than conventional judicial
procedure and provides a forum more convenient to the parties who can choose the time and place
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for conducting arbitration and the procedure. Further, where the dispute concerns a technical
matter, the parties can select an arbitrator who possesses appropriate special qualifications or
skills in the trade".

However, it must be said that the result of any arbitration depends upon the personality of the
arbitrator. In some legal systems, arbitral awards have fewer enforcement remedies than
judgments.

To summarize, properly conducted arbitrations give acceptable results with speed and
thoroughness at relatively lesser costs. As there is no right of appeal in Courts, the decision gains
finality saving further time and costs.

+ Conciliation:

- Advantages: the parties control the resolution of their dispute–not a hearing officer/court (and
thereby ownerships in it); it presents an opportunity for a "win-win" result and to maintain a
cooperative partnership relationship; all negotiable issues can be discussed not just "legal"
matters; its confidential; and, it avoids a complaint which may be costly in terms of both money
and relationship. In short, the advantages of conciliation are time and expense-saving,
confidentiality, flexibility.

- Some of the disadvantages are: There is not guarantee of an end to the dispute (although a
process might be identified which would lead to a resolution); there is no way to force the other
party to conciliate; time and money may be lost if the effort of conciliation is unsuccessful.

Advantages Disadvantages

Amicable • Create friendly atmosphere. • Time-consuming

Settlement • Help develop long-term • Can’t satisfy both
relationships. sides.
Conciliati • Cheap, time-saving. • Conciliators can’t
on • Flexible. enforce his
• Confidential. solutions.

Arbitratio • Time-saving. • Expensive

n • Depend on
arbitrator’s
character

5. DELIVERY & COMPENSATION

a/ Steps in negotiating delivery?????

b/ Common preconditions for a contract to come into force

- Receipt of import/export approval
- Receipt of foreign exchange approval from a central bank
- Issuance of bank guarantee
- Making down-payment by the buyer
- Issuance of insurance policy
- Issuance of a certificate of origin
- Delivery goods and documents.

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  Signature date (Date of Execution): Signature date is the date when two parties agree to do
business with each other and are legally bound in a contract by their signature.

 Date of coming into force (Effective Date): The date of coming into force is the date when
the preconditions for the sale have been met.

 Cut-off date: Cut-off date is the date when the contract becomes null and void, if the con
tract has not come into force within a certain time.

Signature Date Date of coming into force

The contract is binding The contract is

binding and effective

Cut-off Date Delivery Date

 Typical clause of “coming into force”

“This agreement shall come into force after execution by both parties on the date for the last
necessary approval by the competent authorities in the country of the Seller and the Buyer.
If the contract has not come into force within ninety days of execution, it shall become null
and void“

c/ Differences between Penalties & Liquidated damages

Liquidated Penalties
Damages
To compensate the To terrorize the exporter into punctual delivery
Motive buyer fairly for any
delay in delivery
Everywhere but Not enforceable in English law or other common law
subject to increase or systems
Enforceabili decrease in some legal
ty systems

 Example of a specimen clause of “Liquidated damages”

If the Seller fails to supply any of the Goods within the time period specified in the
contract, the Buyer shall notify the Seller that a breach of contract has occurred and shall deduct
from the Contract Price per week of delay, as liquidated damages, a sum equivalent to one half
percent of the delivered price of the delayed Goods until actual delivery up to a maximum
deduction of 10% of the delivered price of the delayed Goods.

6. INCOTERMS: The natures of E, F group

E group: Departure
- The seller’s obligation is at its minimum

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- The goods available at the seller’s own premises
The buyer is responsible for export formalities (not mentioned)
F group: Main carriage unpaid
- The goods are delivered to a carrier named by the buyer
- The buyer must pay the main carriage
- The named place is domestic to the seller
- The seller is responsible for export formalities
Notice: FCA

7. INCOTERMS: The natures of C, D group

C group: Main carriage paid
- The seller pays for the main carriage
- Risks of, loss of or damage to the goods are transferred to the buyer in the export country
- The seller is responsible for export formalities
D group: Arrival
- The seller must bear all risks and costs needed in bringing the goods to the place of
destination
- DDP represents the maximum obligation for the seller

8. TRANSPORTATION DOCUMENTS
 Types of Transport documents
• Marine Bill of Lading (B/L)
• Seaway Bill
• Airway Bill
• Rail Consignment Note
• Road Consignment Note
• Combined Transport Bill of Lading
 What makes a Bill of Lading different from other transport documents?
A Bill of Lading can be negotiable or non-negotiable.
- “To order of…” means negotiable
- “To order” (To order of Shipper): must be endorsed by shipper
 Functions of a clean Bill of Lading
- The proof of carriage contract
- The goods in good condition
- The legal title to the goods
- A compulsory document for receipt of payment in Documentary Credit
Bad comments or not?

Unclean Clean

Insufficient packaging Unboxed

Goods deformed Second-hand packing materials used

Said to be weighed Unprotected

Contents leaking Packaging repaired/ resewn / cooper

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 Packing soiled by contents

9. PAYMENT
 Methods of international payment:
- Commonly used methods of int’l payment
- Remittance
- Open account
- Letter of Guarantee
- Counter-trade
- Collection
- Documentary credit
Telegraphic transfer remittance

Open account
- Close relationship
- The Seller sells the goods on credit (finances the Buyer)

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Cash in advance
- The Buyer finances the Seller
- The Seller is in a strong position

Counter trade
- A close relationship
- Commonly used in transactions between two governments

Collection

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Clean Collection

Documentary collection

10. PAYMENT BY L/C

 Features:

- L/C is a document issued by a bank stating its commitment to pay the Seller / Exporter a stated
amount of money on behalf of the Buyer. In other way, L/C is a written undertaking on the part of
the import bank (the issuing bank) to accept or make payments, on instructions from the importer
(the applicant), to the exporter (the beneficiary) within a prescribed period and against the
surrender of documents under the L/C.

- L/C is a conditional payment commitment of the issuing bank. The issuing bank undertakes the
first obligation of payment and is liable to pay so long as the presented document is in accordance
with the conditions and requirements stipulated in the L/C.

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- It is formally called documentary letter of credit because the banks handle transaction deal in
documents as apposed to the goods.

- L/C is opened based on the sales contract, while independent of it at the same time. What it deals
with are documents and has nothing to do with the actual goods.

 Procedure of payment by L/C

(2)
Advising bank Issuing bank
(6)
(3) (5) (8) (7) (1)

(4)
Buyer
Seller

(1) The Buyer request the Issuing bank to open L/C

(2) L/C is sent from issuing bank to Advising bank
(3) Advising bank gives advice to the seller, confirms that the Buyer opened L/C
After that, the Seller checks the terms in L/C, and requires the Buyer change or modify some
conditions if necessary.
(4) After checking, the Seller sends the goods to the Buyer, and takes B/L from the shipping
company
(5) The Seller sends B/L and other document such as Invoice, Insurance, Policy, C/O, D/O to
Advising bank
(6) The Advising bank transfers shipping document to the Issuing bank
(7) The Issuing bank sends the shipping document to the Buyer and the Buyer pays for the
Issuing bank
 There are 10 types of L/C
1) Revocable L/C: This credit can be changed or cancelled by the Buyer without prior notice to
the Seller.
2) Irrevocable L/C: This credit cannot be changed or cancelled without the consent of the
Buyer and the Seller. This L/C is one which the Issuing bank commits itself irrevocably to
honor payment provided that the beneficiary complies with all stipulated conditions.
3) Confirmed Irrevocable L/C: open by an issuing bank whose authenticity has been
confirmed by the advising bank and where the advising bank has added its confirmation to
the credit. This L/C is assured of payment even if the importer or the issuing bank default
4) Unconfirmed irrevocable L/C: open by an issuing bank in which the advising bank doesn’t
add its confirmation to the credit. This promise to pay comes from the issuing bank only
5) Back – to – back L/C: This is a new credit opened on the basis of already existing, non –
transferable credit. A trade receives an L/C from the Buyer and then opens another L/C in
favor of the supplier. The first credit is used as collateral for the second credit
6) Revolving L/C : This credit is a commitment on the part of the issuing bank to restore the
credit to the original amount after it has been used or drawn down
7) Deferred payment L/C: in this credit, the Buyer takes delivery of the shipped goods by
accepting the documents and agreeing to pay the bank after a fixed period of time for
payment.
8) Transferable L/C: This credit allows the supplier to transfer all or part of the proceeds of the
L/C to a second beneficiary, usually the ultimate supplier of the goods. This is a common
financing tactic for middle men

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 9) Stand – by L/C: This credit is primarily a payment or performance guarantee. It is often
called non – performing L/C because it is only used as a back up payment method if the
collection on a primary payment method is part due.
10) Reciprocal L/C: This credit is valid only when another L/C reciprocal with it is issued. It is
used in goods exchange. The main feature of this L/C is the payment. In regulation, the
acceptance and or payment under this L/C is valid only after our receipt of full proceeds
under L/C No...dated issued by... ...) In simple, both of two L/Cs are written that payment is
made only after an other L/C reciprocal with it is opened. It can be said that this L/C is only a
half of L/C in conditional commitment of the bank.

Key features and benefits

• Secures payment, provided the terms and conditions are fulfilled
• Delivery and payment occur at the same time
• Offers the exporter and importer maximum security
• Various types of documentary credits are available
• It is time-consuming.
• Governed by the Uniform Customs and Practice for Documentary Credits
• Drawbacks.
• Credit risk
• Exchange risk
• Force majeure risk
Other risks: law, language, culture…

11. TYPES OF L/C

COMMON DISCREPANCIES BY WHICH PAYMENT BY L/C IS REFUSED
(xem thêm trang 92 sách Hợp đồng)
Discrepancies in the document presented according to L/C in which:

- Quantity and content of the presented documents are under required as the stated in L/C.
- There is conflict between the presented documents.
- The documents are under required of UCP-DC.

The common discrepancies in which payment by L/C is refused :

-The date of presentation documents and shipment is late with the stated in the L/C.
-The documents: commercial invoice and bill of lading are not set up exactly.

12. L/C DOCUMENTS

THE COMMON DOCUMENTS REQUIRED BY AN L/C PAYMENT
(xem thêm trang 99 sách Hợp đồng)
 Commercial invoice
• Transport document
• Insurance document
• Other documents: certificate of origin, certificate of analysis, packing list…

13. MAKING A CONTRACT SAFE

Defect liability
A defect is any shortcoming in materials, workmanship or design provably present at the date of
delivery.

Defects liability period

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It means that the seller must be responsible for the damages or the loss of the goods in the specific
time.

Defects liability period

The Seller shall be liable for the defects which come to light during a period of three months
from the date of delivery of the goods. After the end of this period, the Buyer shall have no right
to raise claims of any kind against the seller for any defect in any goods of the Seller’s supply

Notification of defect
When we state that the buyer has to notify us when arising the damages. Commonly, the buyer
must notify the damages to the seller in a specific period after he check the consignment at the
port of discharge.

Notification of Defects

If within twenty – one days of receipt of any consignment from the seller, the Buyer does not
notify the Seller that the consignment is defective and submit samples as evidence of defect,
then the consignment shall be deemed to comply in all respects with the specifications and the
Buyer shall forego all right to reject the consignment.

Total liability

Total liability

The Seller’s total liability for all claims for damage made against him by the buyer under this
contract or otherwise shall not exceed 10% of the contract price.

Delivery
Define what counts as delay and what does not. Like total liability, we should set a ceiling figure,
commonly maximum is 10% of contract price.
We should define the excusable delay, especially force majeure. Force majeure is an effective tool
to protect the interest of the seller. The delay which belongs to the force majeure clause was not
the responsibility of the seller.

*****
1. The ceiling
Ceiling figure is the largest money that the exporter has to pay when he is late in delivery, or
in curing the defects or whatever.

For each week of delay, the Seller shall pay 1% of the contract price up to a
maximum of 10% of the contract price.

The ceiling figure may be a fixed percentage of the contract price or a cash ceiling
2. The roadblocks
The most familiar roadblocks in the export contract are set up to cover force majeure and
exporter’s liability for large damage incurred by the Buyer.
The risks of an export contract are from: - nature of products

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 - transportation
- market situation
- the economic or political situation

3. Iron curtain
This will restrict the effect of unknown provisions of an unknown legal system.
When the duties of the exporter involve unexpected cost or the right of the Buyer
against the exporter, the “Iron curtain” can clarify the situation and protect the seller.

Comprehensiveness

The rights and duties provided for this Contract are the only rights and the
duties existing between the parties, and all further rights and duties, be they
expressly contract or otherwise, are hereby expressly excluded.

4. Changing the road signs

This step will mention about the third liability, there are two sources of third party interference
in the exporter’s contract affair:
- Taxation
- The outsider who sustain the loss from the goods under the contract.

PART 2: BUZ COMMUNICATION

14.
OUTLINE:
 The importance of communication
 Three main forms of communication
Two communication networks
 Six factors affect the types & amount of communicating that a business does
Various contexts for each act of business communication
 Communication process
Reason why business communication is a form of problem solving
Three basic truths about communication
The importance of adaptation to successful communication
THE IMPORTANCE OF COMMUNICATION TO YOU:
• Communication is important to business à businesses need good communicators
• By improving your communication skill, you improve your chances of success.
THE IMPORTANCE OF COMMUNICATION TO BIZ:
• Communication is vital to every part of business.
• Communication enables human beings to work together
SOME SURVEYS:
• 96% OF 1000 largest US employers: today employees must have good communication
skill to advance professionally
• Deans of 90 programs: Communication is one of the greatest teaching priorities of an
MBA programs.
• 94% of 2000 executives & senior managers rank communicating well as the most
important skill for them to success today & tomorrow.
• Job seekers: To stand out from the competition, you must demonstrate the unwritten
requirements that are now most in demand: leadership & communication skill

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 15. 3 MAIN CATEGORIES OF BIZ COMMUNICATION:
 Internal-operational communication
 External-operational communication
 Personal communication

Personal communication: is all exchanges of information and feelings among people without
relating to business.
è Both internal and external communications are vital to business success, and personal
communication elements can enhance them.
2 COMMUNICATION NETWORKS OF THE ORGANIZATION:
The formal network:
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 A body has blood vessels
A company has formal communication network
 Within the company: upward, lateral and downward (reports, memos, emails,
announcements)
 Toward the public: external-operational communication

Eg: weekly
Memo phone meeting
Manager supervisors shift leaders Staff

Each company has its preferred communication forms

The informal network:
• Includes thousands of personal communications outside official channels
Eg: chatting over lunch or coffee after work
• Contains much gossips and rumors grapevine or rumor mill
Disadvantage: cause damage if information is incorrect
Convert disadvantage to advantage:
• Build credibility in formal communication
• Carefully select information into network, place it where it is most likely to reach right
ears.

16. FACTORS EFFETCTING COMMUNICATION – CONTEXTS OF

COMMUNICATION

THE NATURE/KIND OF THE BIZ:

• Deciding the amount of communicating.
• The businesses in the service sector are the most communicative.
• Some kinds of business need much communication: insurance, advisory, public health,
banking …
ITS OPERATING PLAN:
• Affecting the amount of internal communication
• More complex plan, more communicative.
• Some operating plans have less communication: photocopy service, transportation service
…
ITS ENVIRONMENT:
• Influencing its type of communicating.
• Businesses in a comparative stable environment: tend to establish formal communication

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 • Those in a volatile environment: tend to improvise more in their communication
THE GEOGRAPHIC DISPERSION OF ITS MEMBERS:
• Affecting the internal communication in a business
• More dispersed, less communicative.
ITS PEOPLE:
• Affecting its volume of communication.
• Varying combinations of people will produce varying needs and abilities
ITS ORGANIZATIONAL CULTURE:
• Strong effecting on the company’s communication.
• Influencing the employees’ attitudes and behavior.
• A good and formal culture will result in good communication in a business.

THE VARIOUS CONTEXTS FOR EACH ACT OF BIZ COMMUNICATION

a. The larger context: such as:
- the general biz-economic climate
- the surrounding culture
- the historical timing of the communication
=> The skillful communicator is sensitive to these larger contexts, which are always changing.
b. The relationship of communicators:
Good relationship will create good communication between persons.
c. The communicators ‘own worlds:
- Organizational context
- Professional context
- Personal context

17.
 THE COMMUNICATION PROCESS

I. Sender
5 factors that influence the sender:
 Communication skills
 Attitudes
 Knowledge
 Position in the social system
 Culture
II. Message
Every message has at least two major aspects: content and treatment

19
 – The content: includes the assertions, arguments, appeals, and themes which the
sender transmits to the receivers
– The treatment: the arrangement or ordering of the content by the sender
III. Channel
Social scientists recognize two types of channels:
– Sensory channels based on the five senses of sight, sound, touch, smell, and taste
– Institutionalized means such as face-to-face conversation ,printed materials, and
electronic media
IV. Receivers:
– The receiver must intend to, interpret, and respond to the transmitted message
– The goal of communication is reached when the receiver accepts the sender’s
message
Feedback: Feedback is the sender’s way of determining the effectiveness of his message.
During feedback the direction of the communication process is reversed
 BIZ COMMUNICATION AS PROBLEM SOLVING
• Two main types of problem: well defined and ill defined
– The business context itself is often complex, presenting you with multiple options for
handling any given situation
– Even a simple problem that requires thinking through the likely short – and long term
effects of several possible solution
– Successful communication is both more challenging and more exciting than you have may
thought
 Three basic truths about communication
1. Meaning is in the mind, and no two minds are alike
Use the mental resources you have to construct the vision of the situation and a sense
of the purpose
2. The symbols for communicating are imperfect, and so are our best communication efforts
• Cultural differences can cause drastic variation in terminology and the assumed meaning
of words
• Different people will handle different cases somewhat differently
3. Communication is about information & relationship
 THE IMPORTANCE OF THE ADAPTATION
• Overcoming the unstable nature of language and the uniqueness of each person
• Put your audience at the heart of your communication efforts
• Analyze your intended communication partners and direct your message to them

PART 3: GENERAL BIZ ISSUES

18.
1) Management
 3 levels of management:
¬ Top management
Foreman
Supervisor
Sergeant
Pastor
Chairman of history department
¬ Middle managers
Head of accounting
Factoring manager
Army captain
¬ Supervisory management

20
 President
Premier
Vice president
General Chairman of the board
 Is management an art or science? Why?
=> Management is both art and science.
2) Manager in a company
 Key roles of a manager in a company:
 Planning (setting objectives)
 Organizing
 Planning Integrating (motivating and communicating)
 Measuring
 Developing people
3) Types of managerial skills
 Technical skills
 Human skills:
Oral communication
Written communication
 Conceptual skills
4) Functional organization
Definition:
- A structure in which authority rests with the functional heads; the structure is sectioned by
departmental groups.
- Based on organizing resources to perform specialized tasks or activities in order to attain
the goals of organization.
+ Hierarchical organization with vertical functional structure
+ Staff are grouped and located by specializing into Functional Departments each
headed by a Functional Manager.
 Advantages of a functional organization:
¬ Simple and clear; coordination left to top management.
¬ Clearly marked career paths for hiring and promotion.
¬ Employees work alongside colleagues who share similar interests.
¬ Keep staff located in their unit.
 Disadvantages:
¬ Limited authority and responsibility
¬ Low staff motivation
¬ Duplication
¬ Poor response time

19.
20.
21.
22.
23.
 Market leader: The Company has the largest market share in its field.
 Market challenger: The company holds a major market share and competing vigorously
with the market leader for outright leadership.
 Market follower: a business contents to maintain its existing market share behind an
established market leader.
Examples in Vietnam:

21
  KinhDo corporation produces 1500 tons of mooncake this year, make up 50% of domestic
Moon cake market.
 Bibica, DongKhanh, HyLamMon, DucPhat…are respectively noticeable rivals
attempting to gain better market share.
 Some small business resigns themselves to the fate, they are happy with their position on
the market place.

24. FLEXIBLE LABOUR MARKET (4 ref. only) to

1. What is a flexible market?
A flexible market is a market in which it is easy for companies to hire non-permanent
staff.
2. Advantages
• Flexible labour markets are of great importance in reducing unemployment and
improving the competitiveness of the economy
• Improved inflation-unemployment trade-off
• Reduce Classical (Real Wage) Unemployment : Real wage unemployment occurs
when wages are set above the equilibrium Flexible labour markets help to keep
wages close to the equilibrium and therefore avoid creating unemployment
• Increased Investment: help to reduce costs for firms; for example, workers can be
employed when they are needed. It is not necessary to pay for workers who are not
productive. This will help attract inward investment
it would be easier and cheaper to make workers redundant if they were no longer
wanted.
• Reduces Wage Price Spirals : If workers have too much market power they can
bargain for higher wages, this can lead to inflation
• Increases Labour Participation Rates: Flexible labour markets can be beneficial for
workers. This is because it gives them more options of, when and where to work.
This is particularly helpful for women with young children, for example, they can
work part time and still look after their children
• Flexible employment suits more flexible life-styles
3. Disadvantages
• risks in social unrest, crime due to unemployment.
• if labour markets are very flexible workers may have greater job insecurity, and this
can lead to lower productivity
• although flexible labour markets have created work in the part-time, service sector,
there has been less success in creating permanent, full time jobs.
• Rising inequalities
• Income uncertainties - as the balance of risk in the workplace shifts from the
employer to the employee
• Training deficit for part-time staff? Are firms devoting sufficient investment to
improving the human capital of their workforce?
4. Vietnamese labour market
• weak in professional skills, foreign languages
• the qualifications of Vietnamese workers still fail to meet international and regional
requirements (80 percent of the total workforce (43 million labourers) are unskilled
labourers. 12.8 percent of 95, 430 labourers working abroad are trained workers )
• weak in maintaining discipline, thus leading to negative impacts

22
 • labourers’ certificates of vocational training are not accepted in foreign countries,
directly affecting their income and working status.
*** In the past, cheap labour cost was often mentioned when talking about the attraction
of the Vietnamese market. Presently, however, this advantage can easily become a
disadvantage. Normally, cheap labour cost goes with low professional skills.
5. Some solutions
• Training: a ‘revolution’ in vocational training is needed. Providing vocational
training and granting certificates for labourers involved the three sides –
enterprises, universities and vocational training schools with the participation of
highly skilled artisans. This will make vocational training more practical.
• Reduction in employers’ social security contributions
• Changes in attitude among employers

25.
FAMILY BUSINESS
Definition: ¬ A family business is a company owned, controlled, and operated by members of
one or several families
Advantages:
 Common values
 Strong commitment
 Loyalty
 Stability
 Decreased costs
Disadvantages:
 Family interests conflict with business interests
 The risks of ownership
 A relative may take advantage of family status, knowing that it’s hard to fire them.
 Family problems may be brought into the workplace
CENTRALIZATION:
Centralization is the process by which the activities of an organization, particularly those
regarding decision-making, become concentrated within a particular location or group
Advantages:
 Close control of operations
 Uniformity of policies, practices, and procedures
 Better use of centralized experts
Disadvantages:
 Due to power being consolidated at the top of the organization, risk is great if the top of
the organization becomes incapable of leading the organization.
 Employees also will feel less motivated to perform for the organization as they will not
have an avenue for sharing their ideas on how to improve the organization
DECENTRALIZATION:
May be defined as the transfer of decision-making authority, responsibility, and tasks from
higher to lower organizational levels or between organizations
Advantages:
 Faster decision-making
 Decision better adapted to local condition
 Better management experience for managers that are considered for promotion to higher
level management
 Allow organizations to take advantage of division of labor by sharing decision-making
across the organization.
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  Empower employees and allows them to improve their performance by improving
inefficient areas immediately without approval from the top of the organization.
 Allow the managers of business areas to use their knowledge and experience to improve
their areas.
Disadvantages:
 May result in a lack of goal congruence
 Requires more effective communication abilities
 May create personnel difficulties
 Employees asked to do too much too soon
 Some managers have difficulty relinquishing control

26.
Manage staff in an efficient way:
 First, never stop improving yourself
 Second, be fair to everyone
 Third, make decentralization and empowerment
 Forth, appoint the right person to the right position
 Fifth, give your staff goal and leadership roles to reward for their performance
 Sixth, motivate staff
7 ways to motivate your staff
 Give training
 Have good working environment
 Create team spirit
 Give incentives, bonus and promotion
 The top non-money motivating factors
 SEFT-EVALUATION TOOLS
 Hold outdoor activities

TOPIC 27:
1. What are the functions of taxation?
_ General definition: A tax is a financial charge or other levy imposed on an individual or a legal
entity by the government of a country.
_ Including:
+ direct tax: income tax, wealth tax …
+ indirect tax: VAT, special consumption tax …
_ Function:
 Raise revenue to finance government expediture, such as: public sector in building
hospitals,streets,… ,pay official salaries…
 Orienting product consumption :
 The government imposes higher tax on dissuaded products like: tabacco, alcohol,
gamblingcads…
 Sometimes the governments use tax as a tool to restrict imports in order to encourage
residents to use domestic products.
 Control overwhelming overseas goods in local market.
 Encourage capital investment because if the enterprises use part of their profits before tax
to reinvest so that their enterprise income tax will be lower.
2. What are the legal ways to reduce income tax liability?
The employers give highly-paid employees lots of perks and benefits instead of taxable money such as
company cars, free health insurance and subsidized lunches.
Donations to charities that can be subtracted from the income on which tax is calculated.

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3. Tax incentives: is a means of employing the tax code to stimulate investment in or development of a
socially-desirable economic objective.
Tax incentives allow corporations to receive credits or deductions ranging from 10% to 35% against the
cost of equipment or installation to promote renewable energy equipment…
4. How can it help a cuontry to attract foreign direct investments?

_ The government should have a clear, generous tax policy and announce to publicity widenly.
_ Granting / Offering tax incentives.
_ Create an attractive environment in EPZ, IP to appeal foreign investment.

TOPIC 28: How can you explain the common ways of protectionism in foreign trade? What are the
advantages and disadvantages of a free trade area. Given an example to illustrate your idea?

1/ The common ways of protectionism in foreign trade:

Protectionism is the economic policy of restraining trade between nations, through methods such as high
tariffs on imported goods, restrictive quotas, a variety of restrictive government regulations designed to
discourage imports, and anti-dumping laws in an attempt to protect domestic industries in a particular
nation from foreign take-over or competition. This is closely aligned with anti-globalization, and contrasts
with free trade, where no artificial barriers to entry are instituted

Methods of Protection
Governments use a variety of tools to manage their countries’ international trade positions.
•Tariffs: Tariffs are taxes on imports. Tariffs make the item more expensive for consumers, thereby
reducing the demand.
•Import Quotas: Governments sometimes restrict the sale of foreign goods by imposing import quotas.
These limit the quantity of foreign goods that can be imported and help domestic producers by limiting
the share of the market that can be taken by foreigners.
•Voluntary restraints: Sometimes governments negotiate agreements whereby a country agrees to
voluntarily limit its export of a certain product. Japan voluntarily limited its export of cars to the
United States in 1992 to 1.65 million cars per year.
With tariffs, it is the importing country that stands to gain through increases in the tax revenue. However,
in case of quantitative restraints, the exporting country gains as the price of the imported good rises.
Both import quotas and voluntary restraints thwart the functioning of the free market. The quantity of
goods remains constant while the price changes, instead of demand and supply determining both quantity
and price.
•Subsidies: Another way to achieve the goals of protectionism is to make the domestic industry more
competitive. Subsidies, which are grants by the government to an industry, can accomplish this.
Subsidies can be:
+ Direct-outright payments
+ Indirect-special tax breaks or incentives, buying of surplus goods, providing low-interest
loans or guaranteeing private loans
For example, the United States subsidizes the sugar and dairy industries, among others.
•Trade ban: Sometimes governments ban trade with certain countries for political reasons-during times
of war or political crises. Governments also ban import of certain products to protect domestic
industries. For instance, Japan bans importation of rice to protect its domestic rice industry.
•Imposing standards: Health, environmental and safety standards often vary from country to country.
These may act as a barrier to free trade and a tool of protectionism. For example, the European Union
has very stringent health and safety standards that goods have to meet in order to be imported.

25
 •Others: Apart from the legal restrictions there may be other less formal obstacles that impede trade.
Cultural factors are one such obstacle.

2/ The advantages and disadvantages of a free trade

a. The advantages:

Free trade occurs when there are no artificial barriers put in place by governments to restrict the
flow of goods and services between trading nations.

When trade barriers, such as tariffs and subsidies are put in place, they protect domestic producers
from international competition and redirect, rather than create trade flows.

i. Increased production

Free trade enables the countries to specialise in the production of those commodities in
which it had a comparative advantage.

With specialisation countries are able to take advantage of efficiencies generated from
economies of scale and increase output.

International trade increases the size of a firm’s market, resulting in lower average costs
and increased productivity.

*FOR SLIDE Only ( Specialization efficiencies lower average costs and increased
productivity.

ii. Production efficiencies

Free trade improves the efficiency of resource allocation. The more efficient use of
resources leads to higher productivity and increasing total domestic output of goods and
services.

Increased competition promotes innovative production methods, the use of new

technology, marketing and distribution methods.

*FOR SLIDE Only: efficiency of resource allocation higher productivity

increased output of goods and services

Increased competition innovative production methods, the use of new technology,

marketing and distribution methods

iii. Benefits to consumers

Consumers benefit in the domestic economy as they can now obtain a greater variety of
goods and services.

The increased competition ensures goods and services, as well as inputs, are supplied at
the lowest prices.

iv. Foreign exchange gains

26
 When Australia sells exports overseas it receives hard currency from the countries that buy
the goods. This money is then used to pay for imports such as electrical equipment and
cars that are produced more cheaply overseas.

v. Employment

Trade liberalisation creates losers and winners as resources move to more productive areas
of the economy. Employment will increase in exporting industries and workers will be
displaced as import competing industries fold in the competitive environment. With free
trade many jobs have been created in Australia, especially in manufacturing and service
industries.

vi. Economic growth

The countries involved in free trade experience rising living standards, increased real
incomes and higher rates of economic growth.

b. The disadvantages

Although free trade has benefits, there are a number of arguments put forward by lobby groups and
protestors who oppose free trade and trade liberalisation. These include:

o With the removal of trade barriers structural unemployment may occur in the short term.
The Australian textile industry will face this problem when tariffs are reduced from 25
percent to 7 percent in 2005. However it is interesting to note that when tariffs increased
greatly in the period 1974–1984 for textiles and footwear employment in the sector fell by
50 000 for the same period.
o Increased domestic economic instability from international trade cycles, as economies
became dependent on global markets. The Asian economic crisis in 1998 and economic
slowdown in the global economy in 2001 illustrate this situation.
o International markets are not a level playing field as countries with surpluses may dump
them on the world markets below cost. Some efficient industries may find it difficult to
compete for long periods under such conditions.
o Developing new industries may find it difficult to become established in a competitive
environment with no short-term protection polices by governments.
o Free trade can lead to pollution and environmental problems as companies fail to include
these costs in the price of goods.

3/ Example

From July 1, 2006 Vietnam will have to fully implement its commitments to the ASEAN Free Trade Area
(AFTA), under which ASEAN-member countries’ goods exported to Vietnam will enjoy a tariff of between
zero and 5 percent.

During the past 10 years, since Vietnam became an official member of the block, Vietnam has been
working to reduce import tariffs on all commodities, but this gradual opening of the market has brought
about both opportunities and challenges.

Vietnam begun to reduce tariffs as required by AFTA on January 1, 1996, about six months after it became
the seventh ASEAN member.

Joining AFTA helped increase the competitiveness of Vietnamese goods in the ASEAN market. As a result,
Vietnamese businesses are becoming stronger.

After joining AFTA, Vietnamese enterprises have become aware of the need for competition and self-
improvement to maintain their existence. Therefore, they operate more effectively, winning a strong

27
foothold in the market by manufacturing and exporting high-quality products. Vietnamese businesses are
now faring much better than before the country joined AFTA.

As an AFTA member, Vietnam has opportunities to make full use of new advantages in trade relations with
powerful economies. AFTA will also contribute to increasing foreign investment in the country. That is
because investors can produce goods in one or a number of countries while selling these goods in all
member nations with low tariffs, thanks to the removal of tariff barriers. More particularly, when foreign
investors invest in Vietnam, they will not only think of a country with 80 million people, but also the much
bigger market of all ASEAN-member countries with a total population of 500 million.

In addition to these advantages, Vietnam is also facing several difficulties due to the similarity of goods
structures across ASEAN nations and the inferior status of some commodities. Vietnamese goods will only
be able to compete in ASEAN markets and gain a good market position if improving import-export
procedures is prioritised and transport expenses reduced. This is also very essential for attracting more
foreign investment.

Economists said that although Vietnam is under pressure from other ASEAN members during its
implementation of AFTA, the biggest pressure is from within.

As soon as it deals with its own economic pressures, Vietnam will be able to compete with other ASEAN
nations. Challenges are very great, but a majority of them are domestic issues relating to technology,
management capacity, market and finance. Vietnamese businesses should restructure their finances and
activities, design a development strategy toward an equal competition, and be prepared to confront
challenges while trying to look for capital sources, as well as markets, and ensure effective management.

TOPIC 29: What is the role of government in promoting traders in importing and exporting activities?
What should Vietnamese government do to promote our foreign trade activities? What are the
opportunities and challenges after Vietnam became a full member of WTO?

1/ The role of government in promoting traders in importing and exporting activities: to issue
efficient policies and administrate the implementation.

2/ Vietnamese government promotes our foreign trade activities:

1. Supporting the business environment

- To expand the right to business and open the market for goods and service trading and distribution
according to international commitments to which Vietnam is a contracting party; to ensure the principle of
equality in the commercial provision of export-support services in Vietnam; to step by step eliminate
monopoly in the provision of post and telecommunications, energy, insurance, communications, seaport
and logistics services... so as to raise the efficiency of operation of, and reduce business cost for, the
business community.
- To facilitate the establishment and operation of centers to supply raw materials and auxiliaries for export
goods-producing enterprises.
- To reform customs procedures and modernize the customs service, shorten the import-export customs
clearance time.
- To conclude agreements on international payment via banks for export markets with difficulties in
transactions and payment guaranty; to conclude bilateral agreements on mutual recognition of plant and
animal quarantine as well as food hygiene and safety standards with other countries.
2. Completing the system of financial, credit and investment policies for export

28
- To renew the credit policy in line with the market mechanism; to complete the development investment
credit policy for production of export goods and the export credit policy according to principles of the
WTO and international commitments to which Vietnam is a contracting party; to expand forms of credit,
assure more favorable conditions for capital access and more convenient forms of guaranty at commercial
banks; to step by step provide loans to exporters that have stable turnovers and hold big market shares,
especially in relation to agricultural commodities.
- To well observe the tax-refund mechanism applicable to importers of raw materials which are supplied to
export goods producers.
- To reform and complete financial institutions by concentrating on input factors of export goods
production and trade promotion, create conditions for raising competitiveness of export products; to
continue improving taxes, charges and fees; to boost asset and goods insurance business in production,
especially in agricultural production.
- To regulate exchange rates close to the actual exchange rates and suitable to the Vietnam dong’s
purchasing power, and, at the same time, adopt a policy to associate Vietnam dong with some convertible
foreign currencies so as to avoid export risks.
3. Raising the effectiveness of the administration of trade promotion
- To renew the mode of operation, management and use of the foreign economic relation fund in order to
promote its effect on the business community’s activities of developing markets and seeking business
partners.
- To diversify and expand forms of trade promotion.
- To improve the elaboration and implementation of annual national trade promotion programs; to
coordinate trade promotion activities under big inter-branch programs on trade promotion, investment,
tourism and culture to enhance the country’s image, even through international telecommunication
channels.
- To boost trade promotion at high-ranking level so as to accelerate cooperation, investment and business,
particularly to attract transnationals to invest in the production of goods for export.
- To reorganize the system of trade promotion organizations and the mechanism of supply and forecast of
market information and provision of consultancy on investment, trade, law as well as domestic and foreign
business environment for the business community.
4. Training and developing labor sources for a number of export goods production branches
- To elaborate specific plans and organize the implementation of programs on job training to address the
shortage of labor and improve labor quality in export goods production enterprises which are facing
workforce difficulties; to step up the socialization of job-teaching and labor-training services; to balance
budget sources to support the training of jobs for export goods production according to specific demands.
- To complete mechanisms, policies and laws on labor and employment so as to protect laborers’ legitimate
rights, raise their income and improve their living conditions; to encourage the business community to
train and exchange human resources and laborers among themselves.
5. Restricting import deficit

29
- To boost the growth of goods and service export, first of all for markets where Vietnam experiences trade
deficit, and regarding this as the principal measure to restrict trade deficit;
- On the basis of assured competitiveness and market demand forecasts, to develop the production of
products with comparative advantages in order to meet the domestic demand; to renew production and
management technologies to save raw materials, materials and fuels;
- To regulate exchange rates and interest rates in conformity with the economic development situation; to
restrict trade deficit;
- To control and manage foreign loans and debts;
- To develop forms of services, tourism and labor export, attract overseas remittances;
- To attract more strongly foreign investment and ODA, and efficiently use these resources.

3/ The opportunities and challenges after Vietnam became a full member of WTO:

Opportunities
Joining the WTO, Vietnam will no longer be discriminated by specific countries. Its products will have
a chance to tap into markets of WTO’s member countries, which also means that tariff and non-tariff
barriers imposed on Vietnam’s textiles and garments will be removed.
As an official member of the WTO, Vietnam could rely on settlements of specific organization or even
appeal when a disadvantage is felt. Vietnam’s exports would be protected in trade disputes. Also, Vietnam
could coordinate with other WTO’s developing countries to ask for supports and a special treatment in its
implementation of WTO’s regulations, which in turn would help the country to strengthen its
competitiveness.
WTO membership will help Vietnam to attract more foreign investors who are familiar with the
WTO’s practices. They, for the first time, will tap into previously restricted sectors such as telecom,
banking and insurance.
For their parts, foreign investors will introduce new technologies and better business practices,
increasing production in Vietnam, developing local markets and generating more jobs. Accordingly, local
consumers will be provided with high quality goods and services.
In post WTO-admission period, the country’s legal environment will be modified, setting a ground for
Vietnamese enterprises to compete in regional and international markets.
On the other hand, WTO membership will increase pressures, speeding up equitization of state-owned
enterprises. State monopoly will be abolished.
Challenges
Opportunities are obvious; however, there will be a great many challenges to tackle. As an official
member of the WTO, Vietnam will be forced to open the market. Disadvantages of local enterprises
include out-of-date technologies, high costs, weak distribution networks, and insufficient knowledge about
legal systems. They will have to raise more capital, improve management and introduce advanced
technologies.
Local enterprises will face possible failures in legal disputes or acquisitions by foreign corporations.
Current legislation system would be further modified, laying a competitive pressure on those which are
not familiar with WTO’s regulations and practices.
Also, modifications of regulations will pose challenges to the services sector which are weak in either
capital or technologies and experience in doing business with foreign partners. The distribution sector will
also face an ever-toughing competition from foreign companies.
Once state monopoly is abolished, local telecom and electricity markets will be opened. Tough
competition will be seen in such lagging sectors as services, steel, auto assembling and agriculture.

30
 Possible bankruptcy of a number of enterprises will result in social issues, including unemployment
and unstable social situation. Government’s spending on social allowance and re-education would be
higher.
Rapid economic changes would possibly lead to destruction of environment and unstable financial
situation.

30: Which activities conform to the basic rules of VN society, or not?

1.Bribing foreign official in order to win foreign orders
2.Industrial espionage
3.Selling supposedly durable goods with “built-in obsolescence”
4.Spending money on lobbying
5.Telling only half the truth in advertisements, or exaggerating a great idea, or keeping quiet
about the bad aspects of a product.

1.Bribing foreign official in order to win foreign orders

Vietnamese entrepreneurs often have to give bribery to officers in order to make thing done easily.
However, this is not “common” to foreign people, so we cannot expect bribery to work with other
countries as well.

Bribery is a crime implying a sum or gift given that alters the behavior of the person in ways not
consistent with the duties of that person. It is defined by Black's Law Dictionary as the offering, giving,
receiving, or soliciting of any item of value to influence the actions as an official or other person in
discharge of a public or legal duty. The bribe is the gift bestowed to influence the receiver's conduct. It
may be any money, good, right in action, property, preferment, privilege, emolument, object of value,
advantage, or any promise or undertaking to induce or influence the action, vote, or influence of a person
in an official or public capacity.

It is a form of political corruption and is generally considered unethical. In most jurisdictions it is illegal,
or at least cause for sanctions from one's employer or professional organization.

For example, a motorist may bribe a police officer not to issue a ticket for speeding, a citizen seeking
paperwork or utility line connections may bribe a functionary for faster service, a construction company
may bribe a civil servant to award a contract, or a narcotics smuggler may bribe a judge to lessen criminal
penalties.

In some cases, the briber holds a powerful role and controls the transaction; in other cases, a bribe may be
effectively extracted from the person paying it.

Expectations of when a monetary transaction is appropriate can also differ: tipping, for example, is
considered bribery in some societies, while in others the two concepts may be interchangeable. In Spanish,
bribes are referred to as "la mordida" (literally, "the bite"), in middle eastern countries they are Backshish
or Bakshish.

The offence may be divided into two great classes—the one where a person invested with power is induced
by payment to use it unjustly; the other, where power is obtained by purchasing the suffrages of those who
can impart it.

Bribery may also take the form of a secret commission, a profit made by an agent, in the course of his
employment, without the knowledge of his principal.

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2.Industrial espionage

We actually don’t have this kind of espionage since we haven’t developed in technology-heavy industries
nor other kinds which need spying.

Industrial espionage or corporate espionage is espionage conducted for commercial purposes instead of
national security purposes.

The term is distinct from legal and ethical activities such as examining corporate publications, websites,
patent filings, and the like to determine the activities of a corporation (this is normally referred to as
competitive intelligence). 'Instead, it describes activities such as theft of trade secrets, bribery, blackmail,
and technological surveillance.' As well as spying on commercial organizations, governments can also be
targets of commercial espionage—for example, to determine the terms of a tender for a government
contract so that another tenderer can underbid.

Industrial espionage is most commonly associated with technology-heavy industries, particularly the
computer and automobile sectors.

3.Selling supposedly durable goods with “built-in obsolescence”

Today we are heading for a new image of “Vietnam high quality products” which aims to raise our brands
and makes, so the idea is no longer meaningful.
ensuring that something becomes obsolete: a policy of designing and making products that quickly
become outdated or wear out, so that they must be replaced

4. Spending money on lobbying:

The lobbying activity is first widely introduced to Vietnam in 2003 when we were pursuing the case of
anti-dumping on basa-fish in the U.S. Nowadays, we have recognized the importance of lobbying.

Lobbying is a concerted effort designed to

achieve some result, typically from government
authorities and elected officials. It can consist of
the outreach of legislative members, public
actions (e.g. mass demonstrations), or
combinations of both public and private actions
(e.g. encouraging constituents to contact their
legislative representatives). As a professional
occupation it is also known as "government
affairs" or "public affairs". Practitioners may
work in specialist organizations or as part of
government relations or as public relations
consultancies.

5.Telling only half the truth in advertisements, or exaggerating a great idea, or keeping quiet about
the bad aspects of a product.
This is very common to VN enterprises as well as foreign ones. People often promote the good things on
their advertisements since they’re trying to catch consumers on the commercials, not to driving them out of
their market share and ruin the balance sheet of the company. Except for some regulations which force
some producers to warn their consumers the unexpected results or restrictions of their products, for instant,
“Adult only” items.
However, Vietnamese today are not so weak as before. They could make the manufacturers take
responsibility and repair their mistakes, otherwise, there’s always the publicity who is willing to exploit the
news and force them to take action. And people are much more sophisticated which means they could
realize even the smallest defect and will fight for what they paid!

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A very popular example recently is food sanitation and safety. It was a rather big and notorious since most
of the sauces in our market contain 3-MCPD (3-chloro-1,2-propanediol) – a carcinogen which is a concern
to human health.

PHẦN SLIDE NÀY KHÔNG BIẾT CỦA NHÓM NÀO, MÀ CŨNG KHÔNG
BIẾT CỦA TOPIC NÀO NỮA, CÁC BẠN XEM THAM KHẢO
Steps in negotiating delivery
 Timing
 Location
 Transport
 Transfer of risk, ownership and insurance
 Terms of trade
Step 1: Timing

Step 2: Location
 The exporter should have no liability for the goods when they are beyond his control
Ex:
If I order a computer and the computer store asks a specialist company to transport it => where
the delivery takes place
If I ask my friend to arrive and pick up the computer => where the delivery takes place
 In international trade
Step 3: Transport
 The first question about transport is HOW?
 Modes of transport:
Air transport
Sea transport
Inland transport
Step 4: Transfer of risk, ownership and insurance
 At the point of delivery, risk generally passes from the exporter to the buyer.
 If the goods are smashed by a fork-lift, stolen by a stevedore or damaged by a downpour-
one side must bear the loss.
 Negotiators often decide that the risks are transferred at the point of delivery and this is the
standard arrangement under the so-called Incoterms

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Insurance:
The issues of risk and insurance go hand in hand. A businessman who faces a risk, arranges
insurance

 GHI CHÚ: Có 1 số topic ko có là do các bạn ko gửi bài cho mình tổng hợp, có gì các
bạn tìm thêm tài liệu nhé

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