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Internship Report August 2011

Foreign Trade University

PREFACE
External economic, in general, and the importing and exporting activities, for specific play an important role in developing and improving the national economy and society. Vietnam is in the process of integrating into the world economy; therefore, strengthen and encourage the external business is of the first priority of our countries. Phu An Loc Company is a company of exporting hand embroidery is the firm that I will have a chance to explore in this internship program. The department that I have applied for the internship program is the Export and Import- one of the most important functions of the Company. After one-month internship, I would like to present in this report the real situation of this a young entrepreneur. The question raised is simply how effective the company is operate and how to improve the overall performance in the near future. This internship has finished; however, there are still many regrets as well as things which is not as expectation. In short, due to the limit of time and personal restrictions, this paper must have contained a lot of mistakes. Therefore, I appreciate all the comments and contributions in order that I can do a better job in the next papers. I send my sincere thanks to my supervisor teacher, Mrs Trinh Thi Thu Huong and the whole staff of Import and Export department - Phu An Loc Company, especially my direct instructor Mrs Pho Thi Bich Huong, have helped me a lot during the internship program and the progress when I complete this report. Hanoi, 2nd August 2011

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Internship Report August 2011

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MAIN PART
CHAPTER 1 - AN INTRODUCTION OF PHU AN LOC LIMITED COMPANY
1.1 1.1.1 The establishment and development of the Phu An Loc Ltd. Co Phu An Loc Ltd Company

Established in 2008 with factory located in Tuan Cao village - Ninh Thang, Hoa Lu, Ninh Binh province - the ancient capital of Vietnam 1000 years ago, which is 100 km to the South of Hanoi, Phu An Loc is one of the biggest factories of Hand-Embroidery in Vietnam. This place is a village of traditional handembroidery, which has the most skillful workers and craft man. With its own specific characteristics of Hand-Embroidery, most of products are produced at households. In the context of the development of international business and realizing that the skillful hand-embroidery is of great demand in the global market, the company is confident in expanding the operation especially investing in the chain of manufacturing. After many years of operation, this company has experienced a lot of difficulties as well as some achievements. The following is some basic information of the company:

Vietnamese name

Cong ty TNHH MTV Phu An Loc

International name Phu An Loc Limited Company Address Hanoi head office Tuan Cao, Ninh Thang, Hoa Lu, Ninh Binh G11, Lang Quoc Te Thang Long, Dich Vong, Cau Giay, Ha Noi Telephone 0084 43 7912 407

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Internship Report August 2011 Fax Email Website General Director Deputy Director Company size 0084 43 7931347 info@phuanloc.com

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http://anloc.ninhbinhcraft.com.vn/?mdl=home&IdStand=243 Ms Vu Thi Tue

General Mr Le Tuan Anh

20 staffs in Hanoi office, 65 full-time worker in Ninh Binh factory and over 1000 craft men in households

Phu An Loc Company is the private company, has the legal entity and independent accounting system. Its forerunner was An Loc Ltd Company which is established according to the decision 3823/TLDN of the Committee of Hanoi. Phu An Loc was officially operated in February 2009. The business license number is 05060167831 issued by Hanoi Department of Planning and Investment. (Phu An Locs profile) The motto of company is to establish and maintain good, long-term, stable business with clients basing on the spirit of mutual understanding, benefit and support. In the process of development, the company always takes care of the quality to assure that all the standard are met as well as the requirement of international customers are satisfied. To assure the quality, Phu An Loc have many skillful workers at our factory specializing in inspecting quality during the processing time or in-line. To have proof of quality, the Company also co-operate with international- independent QC companies such as ITS, Bureaus Veritas, SGS(Phu An Loc profile). In 2010, Phu An Loc was planning to apply ISO 90012000 quality system for the hand-embroidery products with aim of maintaining satisfactory and stable quality for clients. Phu An Loc well understands the importance of quality. The companys commitment to quality is first priority. Additionally, in order to widen the range of buyers choice, company has already started to develop machine embroidery and this will soon contribute to our
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Internship Report August 2011

Foreign Trade University

turnover. Attending Heimtextile fair in Frankfurt in this January will help Phu An Loc see clients feedback and look for new buyers. The head office of Phu An Loc located in Hanoi, capital of Vietnam has take advantage of communicating with clients from many countries in the world

1.1.2 1.1.2.1

Functionality, responsibility and the scope of operation Functionality

The company specializes in high-class Hand-Embroidery products such as bed linen (flat sheet, bedcover, duvet cover, quilt ), table linen,(tablecloth, napkin, placemat, runner). Besides, the company supply many other textile embroidery products like apron, kitchen towel, bath towel, hand towel, laundry bag, decorative products, gifts and othersAiding and lowering cost for clients, Phu An Loc work as direct importer, producer and exporter: At clients request, company import raw materials such as fabric, threadfrom Thailand, China, Italy for production and export finished products to them. During the past years, Phu An Locs products have been on good sales in United Kingdom, Spain, Italy especially due to the fact that their quality are always highly appreciated.

1.1.2.2

Responsibility

Setting and organizing business plan in alignment with the current policies in order to fulfill the goals and objectives that the Company has set. Ensuring that the capital is guaranteed and supplied on the basic of self-raising capital in order to finance for the whole activities of the company and reasonably use it, following the regime of government and complete the responsibility of paying tax for the State. Strictly following the financial management system, asset management and implementing all the policies related to the labor and working right, the company also continues to improve the requirement for all staffs in order to meet the demand and complete all the business responsibilities at a higher standard.

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Internship Report August 2011

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1.1.2.3

Scope of operation

The company has constructed a good relationship with international partner from the Asia to European and America. The company not only takes advantage of domestic raw material but also import from Thailand, China and Italy for the variety of input for production. The company manufactures and sells a wide range of products including the following kinds: Table cloth

Runner

Duvet cover, flat sheet, pillow case

Napkin

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Internship Report August 2011 Cushion caver

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Bag

Lavender sachet

1.2 1.2.1

Company structure and the role of each departments Company structure


The following is the model of the structure of Phu An Loc Ltd Co. As a

young entrepreneur, Phu An Loc has not too many employees; however, all the department are well organized and they has a close relationship.

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General Director

Deputy General Director

Export and Import Department

Designing Department

Accounting and Finance Department

Organisation Administration Office

Factory

Figure 1: Organisation structure of Phu An Loc Company (Source: Phu An Loc profile)

1.2.2
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Task and role of each function


General Director

General Director now is Mrs Vu Thi Tue. She plays the critical role in guiding, organizing and managing all aspects of the companys business activities including manufacturing, exporting, importing, investing. General Director has to manage and make sure that available resources are utilized and the company will be able to grasp opportunities, fulfill or even outstrip the targets. Then, the company can improve its image and brand name, promote the corporate capacity, outnumber in the market share. Deputy General Director

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Internship Report August 2011

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He has to be responsible for assisting the general director in managing the operation of business activities of the whole company. Export and Import Department + + Conduct production and consumption plans Implement marketing promotion and sale strategy to different kinds of products + Managing materials for input of production, ensuring the stable and high quality material for manufacturing + + + Importing material when necessary Exporting products, following all the steps in conformity with Searching for new markets

Designing Department + + Design the products according to the requirement of customers Do the research and give out new products with more fashion styles

Accounting and Finance Department + Managing financial situation of the company to ensure that the core

business of the company are sufficiently and effectively financed. + State + Record and reflect accurately, systematically the Companys Strictly follow the Law of Accounting and Finance issued by the

financial situation and effectiveness of its operation, suggesting plans for future plans. + + Carry out internal and external payments Inform the Company Directors and Board of Director clearly and

timely the loss and profit, capital resource to that they can have plan for settlement. Organization Administration Office + Implementing the responsibility of managing organisation and personnel.
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Complying with the Constitutions and State Laws

Factory + Implement the producing plans of the company in accordance to the design and assure producing progress

1.3 1.3.1

Overview of business performance Overview


Company is the young entrepreneur and it started to operate only since

2009. Although complying with a lot of difficult at the beginning, the company still continues to develop. Company invests in manufacturing line, bring the market with more and more high quality products. Business result also gains considerable achievement.

1.3.2

Business performance result for the periods from 2009-2010


In two years, 2009 and 2010, the business performance of the company has

achieved good results: + In 2009, the gross revenue is 15,803 million Vietnamdong + In 2010, the gross revenue is 33, 624 million Vietnamdong Nm Data Revenue Earning before Tax Earning after Tax 15,803,509,814 (372,339,846) (372,339,846) 33,624,896,764 85,568,255 64,176,191 2009 2010

Table 1: Business result in 2009 and 2010 It can be seen that the company has grown quickly for the one year time. Interestingly, in 2009, the company has suffered from a loss of 372 million vnd. Its due to the project of building factory and equips it with modern machines to increase the productivity and the quality of the products. However, thanks to the
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Internship Report August 2011

Foreign Trade University

increase in all aspects of business activities, the company has gained a high growth rate and its hoped that the company will achieve quickly development in the future. Also, the company also invests in some other finance activities (See also Appendix A) Next, the following is the balance sheet which presents the real situation of the firm in two years 2009 and 2010. 2010 I. Current investment 1. Cash 2. Short term investment 3. Account receivable 4. Inventories 5. Other current assets 6. Investment (Securities, CK KD, CK n, Ldoanh) II. Non-current assets and Long term investment 1. Tangible non-current asset 2. Intangible non-current asset 3. Long term investment 4. Other non-current assets Total assets III. Liabilities 1. Short-term liability 2. Account Payable 3. Long-term liabilities 4. Other debt 521,629,143 410,450,942 0 0 111,178,201 24,365,535,896 21,702,648,709 21,702,648,709 0 0 0 526,316,332 434,534,776 0 0 91,781,556 14,188,658,312 11,589,947,316 11,589,947,316 0 0 0 0 0 assets and short term 23,843,906,753 4,162,309,230 0 8,258,420,832 10,706,704,388 716,472,303 13,662,341,980 1,688,184,884 0 5,967,872,995 5,864,824,275 141,459,826 2009

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Internship Report August 2011 IV. Shareholders equity 1. Total shareholders equity 2. Other fund Total equity

Foreign Trade University 2,662,887,187 2,662,887,187 0 24,365,535,896 2,598,710,996 2,598,710,996 0 14,188,658,312

According to the above balance sheet, it can be seen that the total asset of the company has increased by VND 10,176 million in 2010, or increase by 71,73%. In there, current assets and short term investment in 2010 has gone up by 74.52% in comparison with 2009. Especially, cash and cash equivalent increased 146% rather than the number in 2009; whereas, short term investment experience little change. Account receivable increase to VND 2,290 million or 38.38%. Inventory also increases by 82.56%. Other current asset also increases by 406.56%. Liabilities of the company increase two times. In overall, assessing the balance sheet, it can be seen that high liquidity assets, like cash, increase, reflect the high liquidity of the firm. The account receivable increases with a low rate, proving that the ability to recovery the debt of the company is good or maybe the policy of credit sale of the company is strictly. However, looking at the balance sheet and income statement, the financial situation of the company does not contain a lot of problem. However, company also has to learn more to be able to manage finance wisely, in order to take advantage of more huge finance resource, utilize the capitals to invest in manufacturing and exporting.

1.3.3

Exporting fact and figure in Phu An Loc Company (2009-2010)


Although it has just been established for nearly 3 years; however, the

company has experienced a good sale of handicraft products in the global market. The exporting revenue of Phu An Loc sustainably increases years on years. The following table will illustrate the revenue from exporting activities in year 2009 and 2010.

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Internship Report August 2011 Quarter 2009 Revenue (USD) I II III IV Total 30,530.74 210,833.33 212,194.74 421,044.15 874,602.96 3,5 24,1 24,3 48,1 100 % 2010 Revenue (USD) 368,394.54 340,240.8 445,318.24 647,229.53 1,801,183.11

Foreign Trade University Increased by % (%)

20,5 18,9 24,7 35,9 100

1106.6
61 109,9 53,7 105,9

Table 2: Export situation in 2009 and 2010 (Source: Report by Phu An Loc Ltd.Co) If we categorized the number of exported products by products, it can be seen the significant increase in each types of products by Phu An Loc. Specifically, having the highest growth in revenue (132%), the bed linen seem to be favored in the international market. Other products of table linen such as table cloth also had a very high growth (123.7 %) (See also Appendix B) Phu An Loc Company use mainly two modes of exporting, namely direct export and commercial processing. Commercial processing including two types: processing export and producing export. Firstly, direct export is the mode of export in there sellers export the finished products to buyers. In this case, products are made by Phu An Loc from the designing to processing. Secondly, Processing export is kind of exporter receive the material from importer and finally producing export is the mode of export in which the exporter only produces in accordance with the design and standards from importers. Also, materials are imported from other countries. Because the core business of Phu An Loc is hand-embroidery exporting, its necessary to have an overview of the business performance and exporting situation. Its helpful for me in analyzing the real situation and giving some suggestions for the development of company in the future.
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Internship Report August 2011

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CHAPTER 2 - INTERNSHIP DIARY


[Duration: 1/7/2011 30/7/2011] [Instructor: Mrs Pho Thi Bich Huong] [Position: Head of Export and Import Department]

Week 1
Before I started my internship I was nervous about what my department and manager would be like. I was also very excited about finding out what the real operation in an importing and exporting firm would be. The night before I had called a friend, who also apply for the internship in Phu An Loc Company and we spend time discussing what to wear in the next day or what we would bring for the first day of intern period. I decided to choose official clothes with white blouses and black trousers. I also prepare a file of some necessary documents including my CV, my references in case the director would like to see it. In the first day, I and my friend spent a morning with a staff in human resource department whose name is Phuong. She provided us with information about the history of the company, the core business of the company, some policies, code of conduct. Next, a receptionist, named Nhung, was asked to take us a tour of all departments. The import and export department is the first room in the second floor and its quite large. We entered the room. I noticed that the head of this department is a young woman. Ms Nhung informed the woman of two new interns, Thu, my name and Phuong, the name of my friend. This is the first time the company receive intern students, especially from the Foreign Trade University, they are both friendly and eager. The atmosphere is cozier when the head of department talk to us. Her name is Pho Thi Bich Huong. She is 35 years old; however, her appearance can not say any thing about her age. She asked me some things about my study at university. We truthfully answer the entire questions with the regarding that I wonder whether we study exactly as the real import and export

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Internship Report August 2011

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operation. She smiles and say that she hoped that in this internship we can answer those question. The next two days we continued to go to the office and we sit in the import and export department. In those today, we often sit in a blank desk in the corner of the room. Mrs Bich Huong gave us some documents related to the products of company, some performance results of the Phu An Loc for recent years. We spend most of time looking at the documents. People in the department are still busy doing their works. At the end of the week, we asked Mrs Hng for a drink at the end of the last working day. She accepted and we went for coffee and we had a chat about her background in the past, her own family and her working experiences. She shares with us some things related to her internship before when she was a student in Ha Noi National Economic University. She said that at that time, during the internship periods, she was almost neglected and she was often asked to do some work like making tea or coffee. She said that at this time the import and export department is quite busy. Each person has their own job to do; therefore, we need to carefully take a look and we can learn some things. In overall, for the first week, I come to the company in four working days from Tuesday (5/7) to Friday (8/7). I spend all the day at the office and most of the time, we used to read the document and get acquainted with people in the department through some short conversations

Week 2
In the second week, we were asked to come in just two days (Thursday and Friday )since the department is busy working for a contract to export their product to EU and there would be nothing to do, even, we can disturb people, I guess so. For the last two days coming to the office, we are allowed to bring our own laptops, assessing the internet. We have visited the Website of Phu An Loc Company and find that there is little information. The website was recently

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Internship Report August 2011

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constructed; therefore, the information is still insufficient. After two week, I find myself get familiar with all the department staffs and all of them are very friendly.

Week 3
Its the third week of this internship periods and I found myself gain nothing much the day before. We has investigated all the documents and most of information are about the range of products and some thing about the partner, the supplier and import and export market that the company is looking for. Its time for us to think about a specific topic so that we can focus on the core content and by that way, we can also learn some thing. My friend, Phuong, is searching for make the report related to the mode of export of the company. According to her saying, she choose this topic in order to know more about the import and export operation of the company in the reality. Moreover, its suitable for the Foreign Trade University Student, majoring in international economics and business. For me, choosing a topic for the final report becomes more difficult since I dont want to choose a topic which is similar to her. Also, my friend suggest that we should not choose such topic like the import and export contracts, the process of import and exporting because a lot of students also report about this issues. Studying the business, I look back about all the subjects in the university program. Finally, I made up my mind with the topic about the real situation of a exporting and importing firms. In my opinion, assessing the financial situation of a firm is the best way to know how well the company is operating and I can evaluate the efficiency of the company in exporting and importing performance. Later in the week after establishing where my direction to the internship report is, I brainstormed the task ahead and start searching about what I need to fulfill the report. From this time, I created a schedule for the following two weeks, to ensure I utilize my time in the most effective manner. I set my goals is to find appropriate source of information about the topic.

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Internship Report August 2011

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In this week, I and my friends come in two days (Monday and Tuesday). We asked Mrs Huong to give me some documents and we can read at home and think about the topic that we need to focus in the final report.

Week 4
With the specific topic, I asked Mrs Bich Huong for more suggestions. She talks some things about the financial issue of the company for recent years in association with the exporting operation of Phu An Loc. She promised that she will help me to have the data of the company. The rest of the week consisted of collating all the data surrounding the companys operation and financial statements. The Head of accounting department seems to be quite strictly and its hardly to ask for the financial statement of the company at the beginning. However, at the end of the week, we have provided the financial statement of the company for the latest three years. I feel as a relief that finally, there is little obstacles in order to complete this internship program. At the end of the week, we come to say goodbye to everyone. The director of Phu An Loc asked both of us for the feelings when having internship programs here. Although the limited time was spent on this period and we are actually not allowed to do any thing, we still say that this internship is very useful and send the wish for prosperous development of Phu An Loc Company in the future. We brought some kinds of fruits to thank for the warmly welcome and the help of all people in the Export and import department, especially Mrs Huong. I thanked her for the help with the financial statements and ask for another coffee drink whenever she has free time.

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Internship Report August 2011

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CHAPTER 3 PROBLEMS AND SOME SUGGESTIONS


3.1 3.1.1 Some existing problems Some drawbacks from the mode of exports
As mentioned in the previous chapter, Phu An Loc currently uses three mode of export including: direct export, processing export and producing export. Among them, producing export is the most used mode of export (91% in 2009 and 94.66% in 2010) and direct export is the less used one (2.57% in 2009) (Phu An Locs custom declaration, 2009-2010, See also Appendix C). Also, the company achieves many successes; however, a larger proportion of producing export used can results in some shortcomings. Producing export is the model in which the exporter will receive the request from the importer and then produce in alignment with those requirements from the material and designs. Therefore, Company can not take advantages of cheap domestic material and the ability of design department can not be utilized. So, its not the best way for the sustainable development of any enterprises because they can not build their competitive strength in the context of this intensively competitive world.

3.1.2

Problems with human resource


Human resource is of great importance to any organization. Phu An Loc is

lack of creative designers, and skilled workers. The number of people to be called craftsman in factory is in need. The weak human capital can results in the deterioration in the quality of products. Phu An Loc design lacks of creativeness and fashion in order that it can attract foreign customer and promote the direct exporting.

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Internship Report August 2011

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3.1.3

Problems with governments policies and macroeconomic issues


Phu An Locs performance is not only affected by internal factors but also

external factors especially the unstable macroeconomic situation recently. The fluctuation of foreign exchange rate, the high interest rate, high inflation cause many difficult for the firm in searching and approaching both domestic and foreign market. As an exporting and importing firms, Phu An Loc will has to suffer from such issues as the exchange rate risk. Small and young enterprise as Phu An will find it hard to assess the loans with the high interest rate. Therefore, the firm will can not invest more in the R&D activities as well as increase the production scale.

3.2

Recommendation
The following are some recommendations to these mentioned problems.

3.2.1

Strengthen internal resources


Internal resources include finance health, human asset and management

skills. Those factors should be improved since business environment nowadays is more and more vulnerable and competition between enterprises becomes intensified. + Finance should be wisely managed and staffs in the accounting and finance department must be willing to learn and increase their capabilities to serve the best for the general director in making efficient decision to ensure that Company also have a healthy finance. + Human resource has to be improved by selecting good qualified

candidates. Knowledge and skills such as export and import expertise, computer literacy, excellent foreign language usage has to be highly appreciated in accordance with encouraging the creativeness of staffs and urge them to contribute

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Internship Report August 2011

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positive ideas for the development of enterprise. Old employees should continuously improve their ability; otherwise, they will be out of the firm. + Management skills are about to be mastered by those who are at the

top management level. Mrs Tue and Mr Tuan Anh should continuously learn effective management expertise in order to lead the company to success.

3.2.2

Setting a vision and a specific development plans


After identifying the problems of enterprise, top managers should have a

vision for the future development. Then, a specific plan should be conducted with changes and innovation. For example, the firm has to have the plan to continuously improve the product quality in many aspects. Such issues as investing in technology and human resource and applying international standards should have a specific roadmap and once it is carried out, company has to ensure that it will success.

3.2.3

Solving problems related to government actions and policies carefully and purposely and wisely
As a part of the whole economy, dealing with the real situation of Vietnam

economy, the firms has to be active. Instability in the economy should be taken care of in order that the firm will not be seriously affected. For example, the company should have plans to deal with fluctuation of exchange rate or the inflation. Risk management should be highly considerate

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Internship Report August 2011

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CONCLUSION
The internship program has finished; however, it instilled in me a lot of feelings and excitement. I have ever engaged in some part time jobs; but, those works are not related to what we learned at school. Before starting the internship, I feel nervous about whether I can ask for the intern vacancy in an enterprise or not. At the beginning, I aimed at the internship program in a bank. However, a friends advise me that internship in a exporting and importing company should be more effective since this is our major at university. During the internship, I have learned some things. Firstly, Its not true that all what we have learnt at school will be used when going into work. What we use to work is just a small part of knowledge that the subjects provide us Secondly, soft skills are very important when we do a job. For example, a wide network of contact will help me in searching for information, finding a company in this internship. When going to the company, I realized that relationship between staffs inside the company is quite complicated. Its the relation which based on the mutual benefits in term of both economic and social benefit. Sometimes, I realized that if a corporate does not build it own value and culture, people with different benefits can destroy that firm in a certain way. Thats when people do not work for the common goals and objectives Thirdly, a manager in a enterprise has to deal with tons of problems. She must have not only knowledge and skills but also experiences and a strong spirit. In addition, I realized that management expertise is very essential for each individual because each one has to be self managed in order to complete the objective in their lives. In short, this is a useful internship. Although, what I have learnt maybe not strongly related to the professional knowledge; however, I think that this experiences are helpful for me in the future.
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