Fastener Export Case Study: Beware of Big Buyer Trading Risks

For exporters, the ability to stabilize large buyers and their transactions is an important way for them to expand their export scale. At the same time, companies generally believe that cooperation with large buyers with a long history of transactions will not result in foreign exchange risk due to credit problems. . However, the current international situation is complex, and the impact of the financial crisis has not completely subsided. Coupled with the operational risks of the company itself, large buyers are not "safe deposits." The risks of trading with them also need to attract the attention of export companies.

First, the case introduced Haiyan Fasteners industry, a number of suppliers and the United States buyers A company has many years of trading history, has been in accordance with the settlement of billing transactions. The buyer is a larger buyer in the US fastener industry and has direct or indirect procurement relationships with many fastener companies in Haiyan. At the end of 2010, Company A owed arrears to several suppliers, and the rhetoric was almost identical, claiming that due to the replacement of banks, the bank's current stock of mortgages was not good, resulting in the lack of credit lines and the temporary suspension of funds. After several rounds of accusations, Company A still has not paid for it, and several companies involved in exporting have reported losses to China Export Credit Insurance Corporation (hereinafter referred to as “China Credit Insurance”), involving more than US$2 million. Afterwards, with the attention and coordination of Zhejiang Fastener Industry Association, all suppliers communicated fully with China Xinbao, enabling the case to be processed as soon as possible. At present, all insured companies have received claims from China Credit Insurance, which has saved a great deal of losses.

Second, the case of revelation (a) can not relax the risk of the old buyers wary Most companies often take a more cautious attitude towards new buyers, using the non-paying or controlling the frequency of shipments to achieve the purpose of risk lock. However, for the old buyers, given their good trading history and familiarity, they will gradually relax their vigilance against the credit risk of the old buyers. But I do not know, the so-called old buyers are also in accordance with the company's operating form exists, and the operation of the company must have operational risks and maximize their own profits for the pursuit of the goal, "there is no permanent friend on the business field", it is for the old The best interpretation of the buyer's risk.

(II) Controlling the credit limit for individual buyers Due to the severe competition in product homogeneity, exporters will provide buyers with more flexible settlement methods in order to receive more orders, especially for those who have a certain transaction history. The buyer, A company in this article is a very good example, almost all exporters and the buyer's transactions are in accordance with the method of settlement. It is understandable for companies to adopt a billing settlement method, but for a single buyer to quantify the amount of credit they make, instead of ignoring the buyer’s operating scale and financial status, the company has no basis for crediting. Therefore, export companies should rely on professional agencies such as China Credit Insurance to objectively evaluate the creditworthiness of buyers and quantify the credit limit so as to maximize risk control and transfer.

(3) Adept at Detecting Buyers' Risk Signals In this case, the buyer explained to the supplier that the reason for the default payment was to change the bank and the funds were not in circulation at the moment. In fact, this is a risk signal that buyers may have problems in their operations. Businesses generally will not easily give up the main docking banks, and will take into account the impact of replacing the bank's capital chain. A company's replacement of the bank without any warning may reflect, to a certain extent, that the original bank may have some doubts about the operation of the company, resulting in the breakdown of cooperation between the two sides in the financing of the company. When exporters receive similar risk signals from companies, they must pay special attention to the pace of follow-on delivery.

(IV) Adopting China Credit Insurance to diversify business risks and improve crisis management capabilities As the country's only policy insurance company, China Credit Insurance is one of the troikas that support export enterprises in terms of export credit insurance, export credit, and export tax rebates. . In 2010, the penetration rate of enterprises in the Haiyan region has reached 19%, which means that for every $100 of goods exported from Haiyan, 19 of them received the support of China Credit Insurance Corporation. Through the credit investigation function of China Credit Insurance, it can better understand its counterparties and further protect the risk of foreign exchange collection through the risk transfer function of China Credit Insurance, increase the settlement of the risk of the company’s accounts receivable, and improve the ability of crisis management.

(V) Join industry associations and make full use of industry information In this case, Zhejiang Fastener Industry Association gave full play to the role of organization and coordination. In the process of handling the case, it has been actively liaising with China Credit Insurance, so that the communication between the company and China Credit Insurance has been more smooth and the information transmission has been more in place. At the same time, the industry associations also provide a good early warning of the timely tracking and reminding of trade risks of related companies in the industry and the loss of buyers.