As part of its “Doing Business In” series the recent credit management conference of FCIB (Vienna October 2011) featured a presentation by Dr. Stanki Yuen of the Hong Kong based International Risk Management Consultancy.    The presentation examined the cultural and legal aspects of extending and managing credit in China, how to get access to company financials and how to collect debts which are in dispute.   In view of the imperfections and biases of China’s legal system Dr. Yuen offered specific advice how to protect the commercial interests of sellers.

To access the presentation click on the attachment: iRmc Doing Business in China Presentation_final

Source: Courtesy of FCIB (An Association for Executives in Finance, Credit and International Business) and Dr. Yuen

Editorial Comment:  China’s State Council Legal Affairs Office recently issued a second draft of credit reporting regulations (consumer and commercial) for consultation.   If the regulations are passed all consumer and commercial credit information will be regulated by the People’s Bank of China.  Credit information companies must be licensed and must have a minimum capital of Yuan 50 million.  The implications will be a reduction in credit information sources in China. 

The regulations also contain a provision which prohibits the export of credit information of Chinese individuals and businesses.  The implications are that no credit information will be available for credit assessment of exports into China, specifically when the risk assessment is done from outside China’s borders.   Businesses who export into China will have to move their credit management functions into China to be able to access credit information locally and to make an informed credit decision.