As market competition intensifies, selling products through distribution channels and by account sales has become common among a good number of industries, resulting in serious credit risks caused by account sales. Among the industries that adopt channel distribution, it is nothing new to see the problems with the delayed accounts receivable, great losses caused by bad debts, etc. Moreover, the credit risks hidden in channel distribution have been surfaced since the media frequently uncovers devil default and swindle cases over the past few years.
To improve enterprises’ credit management levels and build a safer distribution environment, SINOTRUST—the pioneer and leader of the credit information service in China, hosted the “China Distribution Channel Credit Management 2007” in Shanghai on March 22-23, 2007. More than 160 guests from the credit and finance management fields were present in the forum.
Mr. Su Guoliang, Section Chief of Credit Verification Supervision Office, Shanghai Municipal Credit Verification Administration, Shanghai Municipal Informatization Commission, and Mr. Zhang Shiqing, President & Co-CEO of SINOTRUST International Information & Consulting (Beijing) Co., Ltd., delivered greeting speeches at the meeting. In his speech, Mr. Su Guoliang pointed out that highly emphasized by the Central Government, the credit verificaiton industry is facing with new development opportunities, and the construction of social credit system across the country will be accelerated.
Meantime, he gave high comments on the positive role of SINOTRUST as a leading credit information service supplier in the construction of China’s social credit system, and appreciated that “this forum helps to enhance the communication between the government administrative departments and credit service suppliers in terms of establishing credit system, fostering credit information and management service markets, as well as to stimulate credit information service suppliers to further expand business development and improve their service performance during the construction of social credit system. At the same time, it provides a platform where companies can exchange experiences, make full use of credit products in credit and transaction services, and enhance credit management in business so as to avoid credit risks.”
This forum invited many renowned credit management experts and senior credit managers from large-scale enterprises, such as Mitsui, Nortel, Lenovo Group, Canon China, Dell China, CNPC, Sinochem International, TSK&F, Sandvik China, Anfunet, etc. At the same time, a good number of credit insurance enterprises and financial institutes also attended the forum and provided explanations on how to use credit insurance and factoring products to address the problems with channel risks and accounts receivable financing. They are China Export & Credit Insurance Corporation(Sinosure), Allianz Insurance Co., Ltd., Euler Hermes Credit Underwriters (HK) Ltd., Atradius Credit Information Consulting (Shanghai) Co., Ltd., Coface Credit Insurance Company, etc. The presentation of so many renowned enterprises and credit service institutes proves the high theoretical level and guidance function of the forum, making it a grand gathering for the credit management circle.
The emergence and expansion of channel credit risks has underlying social origins. Currently, since social credit checking system has not been established and social credit culture is being fostered, most companies lack of effective credit management mechanism and risk mitigation measures. Under such a credit environment, the conflicts between channel members that caused by a variety of factors like price, promotions, services, transaction modes, and market competition are most likely to bring great credit risks to enterprises. At the same time, it is known that credit risks tends to shift between channel members, and this characteristic aggravates the risks and brings troubles to the channel members, especially the upstream members, in terms of credit management.
As mentioned in his speech, Mr. Zhang Shiqing said, “as of now, credit system is just being established, and the theme of ‘credit management on distribution channels’ is not only of general significance, but also of unique complexity. It is always a challenge and problem for vendors that what kind of account sale policy should be taken for distributors, how much credit should be given to distributors, and how to shorten the average payment time. If such problems cannot be solved properly, either the vendors will lose the development opportunity or their cash flow will be influenced seriously.”
To meet the need of the credit management on distribution channels in China, this forum invited over 20 renowned experts and senior executives to make extensive and in-depth discussions on the issues of management and market expansion, credit information about channels and credit decisions, accounts receivable management and account receivable financing, modern credit tool selection and use, etc. From the forward perspective of global credit management development, the speakers used the real cases endeavoring to explore an appropriate development mode for the credit management of channel distributors and its operations in China.
Regarding the problems with credit management and market development that are concerned by credit management managers, Mr. Bin Qiang, Senior Manager from the Credit Management Department of Dell China, drew on his own experience to explain his unique opinions combining the improvement of the credit risk awareness of sales personnel with the improvement of sales-oriented awareness of credit managers. He believes that credit managers should not only provide sales personnel with training on credit risk knowledge, but also enhance communication with them. Also, credit managers should take the initiative to develop customers and to participate in the effect process, thus finding the optimal balance point between the progress in sales performance and control over distribution risks.
As for the hot topic about “Property Law,” Mr. Lai Jinchang, Manager of the Financial Development & Policy Reform Department of IFC, gave comments on the stipulation of personal property and mortgage in the law, and brought forward the conception of “mortgage financing of accounts receivable” that is popular abroad, but is not in the condition to be adopted in China. However, the issue of “Property Law” creates a way for the practice of mortgage financing of accounts receivable in China. He also provided explanations of the two major methods of mortgage financing of accounts receivable—bank financing and commercial financing.
The distinguished guests from enterprises and financial credit institutes had in-depth discussions and extensive exchanges of opinions on the internal distribution policies and credit risk management, the external financing of accounts receivable, credit insurance and factoring of enterprises in different scales and fields. Through communication, the participants shared their experiences with the attendees and found solutions to the existing problems.
Themes of this forum (Partial):
- Successful Elements of Credit Management
- Credit Management and Market Expansion
- CNPC Management of Recovery of Accounts Receivable
- Credit Management of Distribution Channels in China-China’s Credit Management Policies
- Introduction to Creditlink
- How to Promote the Financing of Accounts Receivable in China
- Management of Accounts Receivable & External Cooperation Mechanism of Enterprises
- Factoring of Minsheng Banking－The Good Manager of Accounts Receivable of Enterprises
- Credit Control and Accounts Receivable Management
- Channel Credit Rating and Application
- Credit Insurance
On this forum, SINOTRUST proudly launched China’s first credit information interaction platform, as well as the first network platform that provides one-stop credit information services—Creditlink. Combining SINOTRUST’s extensive resources in credit information with the advanced Internet technology, coupled with manual model, Creditlink collects, stores, processes and integrates the credit information that is scattered in a variety of channels such as governmental departments, industry associations and online media, and provides web-based cross-department, cross-industry and cross-region credit information services to the public.
Creditlink has pioneered the scheme for contribution and sharing of credit information. It is known that such information as the payment records of enterprises and the credit comments voiced by constituents is the most important in decision of credit loans, but it is hard to get it, far more than the information obtained through tradition channels. However, Creditlink works for it. Creditlink places emphasis on interactive collection of credit information, namely, the actual comments on credit circumstances by website members will be integrated with the other credit information of enterprises, which will be open to all browsers; also, the payment records of an enterprise provided by some members will be summarized to a report for each respondent. In addition, the upload and download of learning resources are available to all members of Creditlink website free. It is a brand-new information collection.
Creditlink is the highlight in the construction of credit information system. It breaks up the monopolized and dispersed credit information environment, and makes the credit information open and marketization, and facilitates the perfection and development of social credit system.
Creditlink helps improve the management of social credit. It works to help credit managers grasp the all-round social credit trends as soon as possible so that they can master the leading knowledge and improve working skills in light of the expertise recourses from press media at home, government websites, professional credit websites, industry associations, and research institutes, as well as the various credit management and services corporations (including SINOTRUST), therefore enhancing the management of social credit as a whole.
Creditlink offers “Credit Reports,” “Credit Monitoring,” “Credit Assessment,” “Learning Center,” “Credit Blog,” “Job Opportunities,” etc.
About Creditlink
Creditlink is a community website, where credit professionals share credit information and knowledge. Products and services available include “Credit Reports”, “Credit Monitoring”, “Credit Comments”, “Leaning Center”, “Credit Blog”, “Job Information”, etc. Please visit www.creditlink.cn for more information.
About SINOTRUST Credit Information Services
Sinotrust is the pioneer and market leader of commercial credit information services in China. Since early 1993 when China’s first company credit report was produced by us, we have provided accumulatively about 300,000 credit reports to all major global commercial credit providers and credit insurance companies for their credit decisions concerning Chinese companies.
About SINOTRUST
SINOTRUST is a leading supplier of marketing solutions and credit solutions in China.
We collect, analyze and manage information about markets, consumers and businesses to provide marketing research, business information, consulting and database marketing services through integration of information, services and technology. Our products and services help you make better marketing and credit decisions and develop profitable customer relationships.
Over 80% of the Fortune 500 companies operating in China are using different products and services of ours.
We employ about 800 people in our offices in Beijing, Shanghai and Guangzhou (as of March 2007).
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