Risky Times (For Payment)

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As companies suffer from slowing sales, growing inventories, and failing clients and suppliers, payment risks are at the front of many people’s minds. But it is no longer eager foreign companies that are worried about getting paid by Chinese counterparts. The credit crunch has put the shoe on the other foot, as AFP has recently reported:

    “China has warned exporters they may end up not getting their money as the international financial crisis has eroded foreign banks’ and importers’ ability to pay.

    “Some foreign commercial banks are suffering from insufficient liquidity and cases of malicious debt evasion and breach of contracts by importers in certain nations or regions are on the rise,” the commerce ministry said in a statement.

    The statement urged government agencies, insurance firms and industry associations to closely monitor credit ratings of foreign banks and the business operations of overseas importers.
    It also encouraged exporters to buy export credit insurance to protect themselves.

    The official Xinhua news agency said Monday that China Export and Credit Insurance Corporation, the nation’s only provider of export credit insurance, paid 210 million dollars in indemnities in the first 11 months of 2008.

    That is up 174.5 percent from the same period in 2007, it said.

    In December, the insurer reduced credit ratings for a record 48 countries including the United States.”

Welcome to the new world order. And think about re-evaluation of risk, getting some of that insurance, and a bit of due diligence (more of which might now be required by your Chinese partner). As we reported here, times have changed.

One Response to “Risky Times (For Payment)”

  1. Archive » Briefly….Top Ten Tweets (Stimulating Times For Autos, Adverts, Regional Cities, Regions Near And Far, Risks, And Rich Barbie Buyers).| China Business Blog Says:

    […] out our posts on these issues here Risky Times (For Payment) and here Due Diligence = Sound Sleep. Or, even better, contact us for help with these […]

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