Why
The goal of this Website
This website aims to provide students at RMIT Vietnam with a platform that allows them to estimate actual trade costs using available databases. By estimating expenses and gains from transactions, they can make informed decisions – for instance, on the combination of products and markets they should import from or export to.
This website aims to connect topics discussed in some courses, namely Global Trade Operations, International Trade, and International Business, with trade practice. Furthermore, this webpage is a valuable hands-on teaching tool for multiple courses in Global Business Program.
The pedagogical value offered is experiential learning which delivers experiences to students that authentically imitate the global business environment. Therefore, students can experience opportunities to develop complex international trade plans and manipulate variables to see changing results in response to their reflection and consideration of the steps to complete an international transaction.
Estimating Costs AND Making Strategic Decisions in Global Business
In conducting global trade operations, estimating costs associated with the transaction is significant. A trader may need to know the costs arising in a transaction to estimate the actual expenses they would have to pay. Such expenses are vital for estimating the price for the imported/exported goods sold in the domestic/destination market. The costs arising in a particular transaction typically include (i) transportation and insurance costs, (ii) import duties and domestic taxes levied by the authorities, and (iii) other costs.
It is noted that the responsibility to contract for carriage and insurance is usually agreed upon by the seller and the buyer in the international sale contract, which is generally determined by the Incoterms rule used by the said contract. For instance, if a contract is signed under the term "FOB, Hai Phong port, Vietnam, Incoterms 2020", the buyer shall be responsible for the risks and costs associated with the carriage of goods after the goods are loaded on board at Hai Phong port. However, it will be different if the seller wishes to export the goods using a C-rule or a D-rule, in which he should contract for carriage of goods. The export price thus will differ depending on which Incoterms rule is used in the contract.
The import tariffs and domestic taxes applied to the goods are even more complicated. Most countries, including Vietnam, have signed various free trade agreements (FTAs), offering different tariff liberalization levels. The same product imported to Vietnam may be subject to different tariff rates under different FTAs to which Vietnam is a party. Sometimes, the goods may not be eligible for preferential tariffs under an FTA even if the exporting and importing countries have signed such an FTA because the goods are not considered originating. On top of import duties. the goods may be subject to domestic taxes, such as value-added or excise taxes. Tariffs and taxes may significantly increase the costs incurred in a specific trade transaction. Other costs may include fees financial costs if the transaction is financed by a bank(s), customs fees, port charges, inspection and certification fees, etc.