As a leading credit solutions provider in China, Sinotrust is always dedicated to the establishment and development of Chinese credit reporting system. The “Credit Risk Management for China Domestic Funded Enterprise 2009 Forum” held by Sinotrust came to a successful close in Beijing on March 6. The Guangzhou Sub-session was opened on March 13.
The forum addressed the current demand on credit management in China. The senior experts at credit risk management from Chen Hsong Group, Ping An Insurance (Group) Company of China, Ltd., Shenzhen Development Bank, Cookson Enthone and other organizations together with the forum organizer Sinotrust comprehensively and intensively explained credit risk management to nearly 100 attendees from chemical, logistics, pharmaceutical and IT industries. The explanations center on the current status, future trend, advanced management methods and tools, successful experience and cases, and other core topics of credit risk management of Chinese domestic-funded enterprises and approached from multiple aspects, such as: the improvement and internal coordination of corporate credit management system, collection of customer credit information and the collection flow of accounts receivables.
In the face of current financial crisis and economic recession, the speakers and experts at the forum all expressed necessity for enterprises to strengthen credit risk management. Chen Dianzuo, Vice President of Sinotrust and Credit Solutions Senior Expert pointed out a few days ago, “the ‘honest education’ promoted by government in recent years has little effect on the formation of credit system. Through study of its reasons, we find the key to solving credit problems doesn’t lie in moral influence but relies on the establishment of a macro mechanism and the self-building of micro subjects. Firstly, macroscopically, efforts must be made to establish a credit information collecting and distributing mechanism, raise corporate discredit cost and give due incentive to credible enterprises. Secondly, enterprises as microeconomic subjects should continuously strengthen their own ‘muscles’, foster credit risk awareness, master necessary credit risk management skills, and raise credit management capacity through establishment of an internal credit management system and under the help of external tools so as to realize the general goal of maximized sale and minimized credit risk.”
Xu Bing, Credit Manager of Chen Hsong Group expressed, American credit controllers can complete general credit control work through computer, whereas the credit control of Chinese domestic enterprises is not so easy. The countries with advanced market economy pay particular attention to the legal building of social credit in the development course of market economy. The United States has formulated 17 laws for basic credit management. They form a legal environment for the normal operation of credit management system. Moreover, in America, credit information is reasonably disclosed and particular attention is paid to the application of credit products, rating results in particular. In China, effort should be made to improve the building of the legal system and regulatory agencies for credit system, and accelerate the building of the basic credit information system - a backbone of Chinese credit reporting industry.
Li Qingtian, Credit Risk Senior Manager of the Property Insurance Underwriting Department of Ping An Insurance (Group) used a group of shocking figures to indicate the necessity of the enhancement of credit risk management. Every year, RMB585 billion of economic loss is caused by credit problems in China, including RMB180 billion of direct loss from evasion of debts; RMB5 billion of direct loss from fraud during cooperation; RMB200 billion of cost from chain debts and increased cash transactions; RMB100 billion of overseas arrearage of Chinese enterprises; and RMB160 billion of arrearage among domestic enterprises. The average return period of accounts receivable of Chinese enterprises is 90.3 days; the average rate of bad accounts of Chinese enterprises is 5%-10%, 20 times as high as that in the United States; in Chinese market, the volume of contract transactions accounts for 30% of the total economic transaction volume, but contract performance rate is only around 50%.
No doubt, enterprises need a set of scientific, standard and highly operable credit management system. Li Jie, Consulting Director of Sinotrust Business Information & Consulting Services, introduced, the credit management consulting services of Sinotrust can help enterprises establish a set of operable system. The consulting steps are: diagnosis of credit risks, establishment of a credit management organization, design of a credit management flow, development of a credit evaluation model, and formulation of a credit policy. After the establishment of a credit management system, the enterprise should be provided with scientific and efficient credit evaluation and risk prevention tools. Sinotrust pointed out: “Risk Index Report is such a product. On the basis of application of world leading rating technology, through the comprehensive evaluation of the indexes of corporate scale, profitability, operating capacity, solvency and development capacity, it can more accurately evaluate the bankruptcy risk of the enterprise. Credit monitoring is another effective tool. By it, an enterprise may obtain the negative news report, court record and corporate change information of the target company and comprehensively understand the operation and reputation of this company.
Wang Jingping, Trade Financing Director of Shenzhen Development Bank Guangzhou Branch expressed, the credit cost control brought by a good credit management system is the foundation of the survival and development of an enterprise. Through control of credit cost, an enterprise may on the one hand raise profit margin and enhance profitability; on the other hand enlarge business scale and extend business to the fields it couldn’t involve in the past due to excessive credit cost. Zhang Lirong, Credit Manager of Cookson Enthone China also pointed out, the formulation of an effective credit policy should give consideration to the following important issues: corporate management culture and development strategy; industrial characteristics, market position and external market environment; risk tolerance and risk management goal.
The credit management of an enterprise runs through its whole business process, from customer contact, negotiation, contract signing, shipment, payment reception and debt payoff. This business process involves management of customer files, customer decision-making and model setting, management of accounts receivable and other credit management links. On this basis, Sinotrust developed RiskManager to help enterprises with full-course credit management. Yang Zhiqiang, Technical Director of Sinotrust said in confidence: “RiskManager possesses the functions of customer file management and customer group analysis. These functions can fully integrate customers’ credit information and data and help establish a company-wide customer file database; in addition, the credit decision making management module can select different rating model, quota model, duration model and standardized examination and approval flow based on different customers. These functions are all very helpful and attractive to enterprises.”
It is reported that after Guangzhou Sub-session of the “Credit Risk Management for China Domestic Funded Enterprise 2009 Forum”, Shanghai Sub-session will be held on March 20.
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About Sinotrust Business Information & Consulting Services
Sinotrust is a leading supplier of business information & consulting services. We provide company credit reports, database products, industry information and database technology services, and help you make informed decisions in credit management, marketing and sales development, industry analysis and competitor monitoring.
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.
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