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��Home>>China Observer
Insufficient risk management results in huge deferred payment
www.chinanews.cn 2005-12-20 16:40:28
Chinanews, Beijing, Dec. 20 �C Turnover of the import and export in China
is expected to reach 1,400 billion US dollars this year, a step forward
than last year��s 1,100 billion US dollars.
While import and export in China makes progress year by year, at least an
amount of 100 billion US dollars of payment overseas are delayed and the
number is increasing by15 billion US dollars every year.
��The high level of deferred payment overseas is attributable to the lack
of risk management system in our domestic enterprises��, said Han
Jiaping, director of the credit management department from the research
institute of the Ministry of Commerce.
While many domestic enterprises complained that their overseas customers
delayed a 30-day payment to 90 days, 120 days or even longer, related
survey showed that this payment delay resulted from a lack of a
well-established credit management system in domestic enterprises.
Most often, domestic enterprises do not pay much attention to risk
management and therefore do not have effective means and capability to
control risk. As a result, domestic enterprises have a long-term delayed
payment and a high ratio of bad debt.
Related statistics showed that of all enterprises involving in import and
export, only 11% of them have set up a crediting management system and
93% of these are foreign-funded enterprises.
Han pointed out that many domestic enterprises do not set up a policy to
trace payment, or if they do have such a policy, it is not being executed
fully. For some enterprises, they do allocate people to monitor payment.
However, these people often lack experience. And for others, they just
concern that tracing debt might spoil their relation with the customer.
��In the long run, many overseas enterprises might habitually delay their
payment.��
In order to solve this problem, Han suggested Chinese companies set up an
internal risk control system. At the same time, establishing a credit
system in society is equally important. However, credit service industry
in China is still at its beginning point and many companies do not know
where to seek help if they encounter a problem overseas.
At present, almost all U.S. companies involving in credit service have
opened their business in China and some companies in Europe and Japan are
showing their interest to the Chinese market. ��International giants��
coming to China will speed up competition in credit service market in
China, and it will boost China��s credit service industry as well��, said
Han.
Copyright� 2004 Chinanews.com. All rights reserved.
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