The ups and downs of the eurozone crisis and the sluggishness of US economy continue to affect China’s exports during 2012. On the other hand, China’s domestic market continues to rise. To adapt to the changing economic environment, many Chinese exporters are transforming their production models, aiming for better productivity and product quality in order to secure their export markets. Some are diverting resources to develop the domestic market.
The Coface study covers Coface’s assessment of China’s economic performance, a survey on payment performances of Chinese companies, and an analysis of high risk sectors. There is also advice on credit risk control. Coface has categorized 48 sectors according to level of risk, with the following identified as high risk:
- Construction Materials and Construction
- Metals and Manufacture of Fabricated Metal Products
- Furniture, Textiles, Clothing and Leather; Paper and Printing
- Transport (Shipping) and Mechanical Engineering (Ship Building)
- Solar Power and Wind Power
- LED
Here are some key points: More Chinese companies are aware of the importance of credit risk management and implement credit management procedures in their operations. Sales on open credit becomes an accepted business practice. Most overdue debts of Chinese companies resulted from fierce competition and difficulties in finding financing resources. Chinese companies are increasingly turning to credit insurance and factoring.
Close monitoring of existing trading counterparts and caution in offering credit terms to new buyers are essential in receivables protection. Monitoring of industry performance is important in credit risk management, particularly for high risk sectors.
