1. A
PROJECT REPORT
ON
“BRINGING THE WORLD CLOSER THROUGH INTERNATIONAL
TRADE”
SUBMITTED
BY
ZION KIM
MBA-II (MARKETING + OPERATIONS)
UNDER THE GUIDANCE OF
Prof Pathankar
VISITING FACULTY
(PUMBA)
IN PARTIAL FULFILLMENT OF THE
REQUIREMENTS FOR THE AWARD OF DEGREE
OF MASTERS IN BUSINESS ADMINISTRATION
DEPARTMENT OF MANAGEMENT SCIENCES
UNIVERSITY OF PUNE
(PUMBA)
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2. (2006-08)
CERTIFICATE
This is to certify that the project entitled “BRINGING THE WORLD
CLOSER THROUGH INTERNATIONAL TRADE” is a bonafide
project work carried out by Mr.Zion Kim, student of Department Of
Management Sciences, Pune University,(PUMBA), under my guidance
and direction, in partial fulfillment of the requirement of the MBA
degree course.
Prof. Pathankar Prof. D.V Sangvikar
(PROJECT GUIDE) (H.O.D D.M.S. PUNE)
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3. ACKNOWLEDGEMENT
I express my sincere thanks to Shin Sung Chemical Co. Ltd.
And Korean Trade (KOTRA), Mumbai for giving me an opportunity to
work with them through this summer project.
Gracious help from various sources has contributed tremendously to
the completion of this project work. I take this opportunity to express my
profound sense of gratitude to Mr. Yeol Woo Choi (President), Mr.
Choi Jae Kwang (International Business) and Mr. Dong Wook
Kim (KOTRA, Mumbai) for their invaluable guidance, constant
encouragement and practical suggestions based on the experience to focus my
efforts to which this work has come to the presentable form.
I am also thankful to Prof. D.V Sangvikar (HOD, PUMBA) and my
internal guide Prof. Pathankar who have helped me whenever required, and
gave me support in every possible form.
Zion Kim
MBA- Dual (Marketing & Operations)
Department Of Management Sciences
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4. University Of Pune
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5. 5

6. 6

7. TABLE OF CONTENTS
Chapter 1 …………….………………………………………………….. 8
About the Company
Chapter 2 …………………………………………………………….…..10
Job Description
Chapter 3…………………………………………………………………11
Business Process
3.1 Price List………………………………………………………….11
3.2 Email communication……………………………………….….11
3.3 Pro Forma Invoice……………………………………………….12
3.3.1 Note (CFR, FOB, CIF)…………………………………….14
3.4 L/C, P/L, C/I………………………………………………….……17
3.4.1 Note (Credit Report)…………………………………..……16
3.4.2 L/C………………………………………………………..…..24
3.4.3 L/C……………………………………………………………25
3.4.4 L/C……………………………………………………………26
3.4.5 L/C………………………………………………...………….27
3.4.6 C/I………………………………………………….…………33
3.4.7 P/L……………………………………………………..……..36
3.5 B/L…………………………………………………………...……..38
3.5.1 Seal No……………………………………………………...40
3.6 Payment…………………………………………………….……..44
3.6.1 Summary of Business Process………………………..44
3.6.2 Summary of Observations Made……….……………..46
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8. 3.6.3 Summary of Conclusions from Observations ……..51
3.6.4 Summary of Recommendations ……………………..53
Chapter 4 .…………………………………………………….…………46
Korean Trade Centers
4.1 KOTRA…………………………………………………….………55
4.2 KITA…………………………………………………..……………58
Chapter 5 ………………………………………………………………..60
Conclusion
Chapter 6 …………………………………………………………..……62
Product Lists: Surfactants
Chapter 7…………………………………………………………..……..64
Chemical Auxiliaries
Glossary…………………………………………………………….……96
Figures and Tables……………………………………………………..97
Bibliography……………………………………………………………..98
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9. Chapter 1
Introduction
About the company
Shin Sung Chemicals was established in 1989 in South Korea. Since
then, it has grown up to be a well-known company in Korea as a
developing, manufacturing and trading company of precision
synthetic chemicals for textile industries dealing with a wide range of
products in nylon, cotton, leather, acryl, and dye-stuff.
In 1997, Shin Sung Chemicals became a joint stock holding company
and changed its name to Shin Sung Chemical Co. Ltd. It consists of
highly qualified and experienced professionals who are dedicated to
providing high quality for customers. With qualified and experienced
experts, Shin Sung is able to design the most reliable and cost
efficient chemicals to suit customer’s requirements.
To fully satisfy our customers’ needs, Shin Sung continuously strive
to improve its products’ quality and value.
The company’s mission is to supply the highest quality products and
services to its customers. In order to fulfill this mission, all employees
work professionally, happily and efficiently together.
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10. Company Profile
Company Name SHIN SUNG CHEMICAL CO. LTD.
Major Business Surfactants and dye-stuff
President Yeol Woo Choi
Address 1355-12 JUNG WANG-DONG, SI HEUNG CITY,
GYEONG GI –DO, KOREA
Telephone +82-31-498-2251/2/3
Annual Turnover $1 million
Number of 20
Employees
Chapter 2
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11. Job Description
My job at Shin Sung Chemical Co. Ltd. was to oversee the operation
of international business, mainly with the export division. As such, I
was responsible for precise communication with foreign buyers
through emails, meetings, exhibitions and visits.
I was given the task of receiving and sending the enquiries, framing
documents such as pro forma invoices, commercial invoices, and
confirming orders and operations through constant communications.
The company has clients from different parts of the world such as
China, Vietnam, Sri Lanka, Bangladesh.
Because of my experience with foreign business cultures and the
knowledge of English, I could utilize my full potential and was happy
to be resourceful to the company.
During various exhibition visits such as Co-Ex exhibition(South
Korea) and Chem Spec, not only was my knowledge towards
international trade increased but I was able to introduce new buyers
to my company.
The summers at Shin Sung Chemical Co. Ltd. gave me an insight of
different processes involved for international business, how they are
actually implemented and know-hows of a successful trading
company.
Chapter 3
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12. Business Process
The competition of chemical industry around the world is fierce. It is
very sensitive to prices and quality. As such, I am bound by mutual
agreement of non-disclosure so as to protect the integrity and
confidential nature of details of international business done by Shin
Sung Chemical Co. Ltd.
I cannot disclose the details of international trade carried out during
my internship but I am happy to share a business transaction which
took place in the month of September with a buyer from Bangladesh.
The international trade process of Shin Sung Chemical Co. Ltd.
during my stay was all done in the similar manner.
3.1 – Business Process
Inquiry email was sent by buyer (EPYLLION KNITEX LTD.) from
Bangladesh and received by Shin Sung Chemical Co. Ltd. The
inquiry was about the product SODA-PS. (refer page 37 for product
details)
3.2 – Business Process
The price list of SODA-PS required by the buyer was sent via email.
3.3 – Business Process
PI (Pro forma Invoice) was prepared as shown in the figure 1.
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13. In foreign trade transactions, a pro forma invoice is a document that
states a commitment from the seller to sell goods to the buyer at
specified prices and terms. It is used to declare the value of the
trade. It is not a true invoice, because it is not used to record
accounts receivable for the seller and accounts payable for the
buyer.
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14. Fig.1: Pro forma Invoice
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15. What to check for in PI?
 Pro forma Invoice Number
 Pro forma Invoice Date
 Payment: type of L/C
 Price per quantity
 Total amount
 Type of shipping(CFR/CIF/FOB)
3.3.1 Note :-
During my internship, I have noted that the price of products differed/
were adjusted according to the type of shipping used. In the above
transaction, the price per kg of SODA-PS was increased due to CFR
charges to Chittagong, Bangladesh.
Usually, CIF was given to the buyers located in China(Shanghai) due
to the close proximity(1 to 2 days).
FOB and CFR were given to the buyers whose proximity from our
ports was far (usually above 15 days).
Shin Hwan Bank of South Korea handles most of Shin Sung
Chemical Co. Ltd. ‘s overseas transactions. It was advised to opt for
FOB and CFR while quoting on the prices of chemicals as the risks
were fairly high.
Cost and Freight (CFR) is an Incoterm. It means that the seller pays
for transportation to the Port of Loading (POL), loading and freight.
The buyer pays for the insurance and transportation of the goods
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16. from the Port of Discharge (POD) to his factory. The passing of risk
occurs when the goods pass the ship's rail at the port of shipment
which means that this term cannot be used for airfreight or land
transport and also is inappropriate for most containerized sea
shipments - the term CPT is the appropriate one for these.
Cost, Insurance and Freight (CIF) is a common term in a sales
contract that may be encountered in international trading when ocean
transport is used.
When a price is quoted CIF, it means that the selling price includes
the cost of the goods, the freight or transport costs and also the cost
of marine insurance. CIF is an international commerce term
(Incoterm).
CIF is identical in most particulars with Cost and Freight (CFR), and
the same comments apply, including its applicability only to
conventional maritime transport. In addition to the CFR
responsibilities, the seller under CIF must obtain in transferable form
a marine insurance policy to cover the risks of transit with insurers of
repute. The policy must cover the CIF price plus 10 per cent and
where possible be in the currency of the contract. Note that only very
basic cover is required equivalent to the Institute "C" clauses, and
buyers should normally insist on an "all-risk" type of policy such as
that under the Institute "A" clauses. The seller's responsibility for the
goods ends when the goods have been delivered on board the
shipping vessel. In the guidelines for CIF published in Incoterms
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17. 2000 the term "carrier" does not appear and it clearly states "the
seller must deliver the goods on board the vessel at the port of
shipment" which makes CIF the incorrect term to use where the seller
wishes their responsibility to end when they deliver the goods into the
hands of a carrier prior to the goods passing the ship's rail at the port
of loading. In the great majority of transactions the more correct term
is CIP. This term is only appropriate for conventional maritime
transport, not ro/ro or international container movements.
CIF ASWP indicates that the supplier is responsible for insuring on
behalf of the buyer until goods arrive and are unloaded at the port of
destination. The opposite to this is FOB (Free On Board), which
means the buyer is responsible for payment to the seller when the
good is loaded onto the ship at the port of origination. ASWP
indicates Any Safe World Port.
Apart from the above poor English it should be carefully noted that
"CIF ASWP" is NOT an INCOTERM of the International Chamber of
Commerce. "ASWP" (any safe world port) may be added as a
separate article in a Purchase Contract but should not be confused
with an INCOTERM.
FOB, is an abbreviation for Free On Board. The term commonly
used when shipping goods, to indicate who pays loading and
transportation costs, and/or the point at which the responsibility and
ownership of the goods transfers from shipper to buyer.
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18. FOB stands for "Free On Board". Indicating "FOB" means that the
seller pays for transportation of the goods to the port of shipment,
plus loading costs. The buyer pays freight, insurance, unloading
costs and transportation from the arrival port to the final destination.
The passing of risks occurs when the goods pass the ship's rail at the
port of shipment. Internationally the term specifies the port of loading.
3.4 – Business Process
Once the PI was issued and terms and conditions met, I would
receive a call from the buyer asking for certain documents required
by him to open L/C in his country. Such documents are commercial
invoice, packing list, Confidential Credit Report, Details of Shipments
and bill of lading. This is the most important stage during the
transaction. During the provision of the said information, if an error
like spelling mistakes or number mismatch occurs, then, it would not
only create delay in processing not to mention $50.00 fine per error
but also throughout the transaction it would create such a chaos that
in the end, it would be difficult to receive payments from my end.
Once it so happened that the Branch manager of the Korean Bank
did not “personally” sign on the Credit report of my company. The
document was sent to the Bangladesh Bank where it was promptly
rejected. This caused delay in payment because everyone in Korea
assumed that the L/C would be delivered in a week’s time; but it
never did. When an inquiry was launched, we soon realized the fault
was actually with the bank, and not with us. Different banks follow
different rules to open L/C. And we must adhere to it.
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19. 3.4.1 Note :-
During my stay with the company, the buyer from Bangladesh has
asked us to send a certificate of weight and measurement list. I did
not understand the need for such requirement because the packing
list document contained the exact information which was mentioned
there. (Refer to fig.9 and fig.10)
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20. Fig.2: Credit Report
Letter of Credit (L/C)
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21. Fig.3: Letter of Credit
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22. Fig.4: Letter of Credit
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23. Fig.5: Letter of Credit
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24. Fig.6: Letter of Credit
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25. Fig.7: Letter of Credit
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26. What to check for in a L/C?
 Credit Number
 The amount
 Expiry Date
 Issue Date
 Type of drafts: AT SIGHT/ USSANCE
 Description of goods
 Type of documents required
 Amendments if any
3.4.2 Note:- (refer to fig.3)
It was very important for me to check the issue and expiry dates
because if the applicant does not pay the bank in time, then, my
company was liable to pay for the interests.
For example, AT SIGHT indicates that the amount MUST be paid by
the applicant within 30 days of issue of L/C. USSANCE indicates that
the period of 120 days are given to the applicant to make the
payment.
If the applicant fails to pay the payment within the stipulated date,
then, my company had to file for the bankruptcy with the Korean bank
as no payment was made against the goods sold. This created a
negative impression with the banks and the company would lose its
credibility with Shin Hwan Bank.
There was a case with my company with one of the companies it was
dealing with. Because of holidays in Bangladesh and the slow, I
mean, really slow document processing power of banks in
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27. Bangladesh, my company had to actually ask for the Grace period to
extend the expiry date of the L/C. Because of the holidays in
Bangladesh, and weekends being an off-day for Korean banks, the
company in Bangladesh could not make the payment on time.
The following conversation took place then:
Korean company: Did you make the payment?
Foreign company: Yes, we did. I made the payment to the bank 4
days ago.
Korean company: My bank tells me that the money hasn’t arrived
yet.
Foreign company: No, no, that’s not possible.
Korean company: The expiry date is 5 days away!!! L/C is closing on
Us!
Foreign company: I will fax you the copy of the payment receipt.
Korean company: That will not help. I will ask for a grace period to
extend the expiry date by a week.
Foreign company: No issues. That would do. I will inquire with my
bank.
3.4.3 Note:- (Referring to fig.6,7)
Another interesting fact is that the number and spelling errors are not
permitted in L/C. In countries like India and Bangladesh, any errors in
the L/C would mean money. The banks charge $50.00 per errors.
That is why it is necessary to confirm the numbers and names before
preparing the L/C. Countries like China do not charge for minor
mistakes.
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28. 3.4.4 Note:- (Referring to fig.4)
Different banks ask for various kinds of documents
(originals/duplicates) of varying numbers. The important documents
would be commercial invoice, bill of lading, packing lists, shipping
documents, original copies of L/C, etc.
The term “Duplicate” in the L/C would mean -> 2 copies of the
originals.
Sometimes, the banks ask for the signatures in writing to prevent
fraud.
One of the most important tip during this particular transaction was with the
reference to Fig.4 , clause No.13. This statement means that since Bangladesh
is an Islamic nation, no vessel of Israel origin and no shipments of Israel origin
must enter the Bangladesh ports.
3.4.5 Note:-
Letter of credit was the safest way to have transactions with buyers
whom we have little or no information/credibility. The disadvantage is
that it takes an awful long time to get work done. L/C requires tons of
documents both for the applicants as well as for the beneficiary. If not
read carefully, getting payment can be one’s nightmare in the world of
globalization where not only the movements of physical goods have
been shortened but also the process of inquiry to the process of
payment have been shortened due to the technological advances
such as satellites and internet.
The countries where L/C base was used were China, Vietnam and
Bangladesh.
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