Overseas debt plagued Chinese exports

Right now, Chinese export companies are facing multiple challenges: Escalating trade barriers have made it more difficult for companies to export, and raw materials such as cotton have continued to rise in prices and companies have been unable to breathe. The exchange rate fluctuations have not only reduced corporate profit margins, but also The problem of making overseas accounts difficult to recover has become increasingly prominent.

"The appreciation of *** will cause more and more Chinese export companies, especially small and medium-sized exporters, to face serious overseas arrears. Moreover, overseas debt owes an annual growth rate of 15%." Sharon Gillman, the company's SGA president and chief executive, told reporters. After entering the Hong Kong market in 1997, SGA, which has more than 40 years of experience in collecting business debt, has successively opened offices in the Mainland. As a member of the China Business Chamber's Business Account Management Working Group, the SGA has continued to pay attention to Chinese exporters’ overseas arrears for 13 consecutive years.

According to statistics, about 30% of Chinese exporters generally face the problem of unrecoverable overseas accounts. Among them, the exporters of the clothing and textile industries bear the brunt, and the electronics and mechanical equipment industries are also quite common. As of the end of 2009, Chinese exporters had over 100 billion U.S. dollars worth of international debt outstanding, which is equivalent to the total export value of Zhejiang Province in 2009.

During the Canton Fair, which had just ended, many exporters under pressure to enter into agreements with overseas merchants. Sharon Gilman suggested that under the current situation that exchange rate changes are still difficult to predict, Chinese exporters can avoid possible risk factors in the process of dealing with foreign merchants. Once they encounter overseas accounts, It is necessary to carry out debt recovery in accordance with the law on the premise of complying with the legal framework of China and the importing country.

The reporter understands that the problem of recovery of the accounts usually met by export companies falls into two situations. One is that the debtor has experienced a financial crisis, and the other is that the debtor has not encountered a crisis but still has a bad debt, that is, he is good at defaulting on the debtor. The "professional debtor" of the account. Since exporters are often unfamiliar with local laws and languages, recovering arrears is difficult. Sharon Gilman pointed out that in the first case, professional organizations usually first choose friendly negotiations, negotiate friendly agreements, and strive to achieve partial repayment. In the second case, they will choose to initiate legal proceedings in the local area. .

Then, in the complex and ever-changing process of international trade, how should Chinese small and medium-sized exporters better avoid risks? Sharon Gilman reminded that in the process of trading with the other party, small and medium-sized exporters must pay attention to details when signing the contract. For example, the contract states that the importer must arrive at the goods within a certain period of time after receipt of the goods, as well as quality. Issue a written notice to the exporter. Once there is a courtroom situation, this will be a strong proof. Second, if exporters face overseas payment problems, they must be resolved as soon as possible and no delays can be made. According to the statistics of SGA, within 3 months from the agreed payment date, the success rate of collection accounts is high, between 80% and 85%. If more than 6 months, the success rate is only about 50% -55%.

The reporter learned that the collection of business accounts is a common industry in developed countries. The development in China has only just begun. In developed countries, business receipt recovery services are protected under strict legal restrictions, which can save collection time and maintain relations with international customers.

Han Jiaping, director of the Credit Management Department of the Institute of International Trade and Economic Cooperation of the Ministry of Commerce, pointed out that due to contractual awareness and contractual skills, Chinese export companies have experienced a significant increase in the ratio of bad debts, bad debts, and dead debts. Since more than half of Chinese companies use credit sales as their main mode of trade, China will become the world’s largest commercial debt collection market with the support of China’s huge trade volume.

“China is a very big market for business receipts. What we are interested in is not only how much profit it can bring. What's more important is that we have seen an opportunity to change the concept of international trade of Chinese exporters, which will drive business operations. The transformation of the model." Sharon Gilman said. Although he has long been concerned about and involved in the Chinese market, Sharon Gilman is still not satisfied with the current pace of business development in China. "In the future, China's commercial debt collection market will usher in a new era."

As for fees, Sharon Gilman explained that the SGA insists on the principle of "unsuccessful, no charge". In the case of friendly negotiation and settlement, the fee for all recovered amounts is charged 15%, while in the case of lawyers' participation, all charges for recovering 25% of the arrears are charged.