US Enterprises Default Rate Sharply Increased, Wenzhou Foreign Trade Shoe Enterprises Red Light

The "subprime mortgage" spread to foreign trade enterprises, the export volume sharply reduced, and the export bad debts increased sharply.

The subprime mortgage crisis has become a major disaster for export enterprises, especially for China's foreign trade enterprises.

The subprime mortgage crisis has increased the default rate of US companies.

According to statistics from China Export and Credit Insurance Corp Wenzhou office, from March 2007 to February 2008, the total amount of Wenzhou foreign trade export loss reported by the Department was $8 million 793 thousand and 800, an increase of 639% over the same period (the same period reported by the whole country increased by 250% over the same period).

75% of the reported losses in Wenzhou came from the United States.

It shows that the impact of the economic slowdown of the major developed countries caused by the subprime mortgage crisis on the US is constantly emerging.

The 639% increase in the number of reported losses reflects that under the influence of the big economic environment, the debt crisis of China's foreign trade, especially the export oriented enterprises in Wenzhou, is escalating and growing.

The subprime mortgage crisis has led to the announcement of Wenzhou's "one low, one high" international 5 thousand delinquent households.

A series of effects were eventually pferred to the export enterprises themselves.

Take footwear enterprises in Wenzhou as an example, buyers are more concentrated, and the United States is the main market. Because of the subprime crisis, the prosperity of the general consumer goods market in the United States has been dragged down, resulting in a decline in market demand.

According to statistics, the loss of Wenzhou footwear enterprises has increased by 138% over the same period last year, and the growth rate of exports in dollar terms is only 0.3%. If the export value is calculated in Renminbi, the volume of business is actually negative growth.

Not only shoe companies, but also the overall situation of Wenzhou's foreign trade is not optimistic.

According to materials released by the Wenzhou Municipal Development and Reform Commission, 1-4 indexes of import and export, export and import were all lower than the national average and the provincial average level in the past three months, which were lower than the 5.7, 0.5 and 18.3 percentage points of the whole country, lower than the 6.2, 2.9 and 17.8 percentage points of the whole province.

Just as Wenzhou's foreign trade industry is going down as a whole, the market must accept a phenomenon of "going higher", which is not good news.

Zhou Yi told reporters that in the first quarter of 2008, the number of reported damages by American buyers increased little, but the amount of reported losses increased sharply.

In the first quarter, the number of cases reported by American buyers increased by 12.2% compared with the same period last year, while the total reported losses increased by 144.4% over the same period.

In the case of a small increase in the number of reported cases, the amount of reported losses has increased sharply, which indicates that in the first quarter of 2008, the amount of loss reported by US buyers is higher and the risk is more concentrated.

In fact, Wenzhou is not a case. The risks faced by foreign trade enterprises such as the Yangtze River Delta and the Pearl River Delta are increasing.

Some buyers have even frozen the underwriting credit line by China Export and Credit Insurance Corp due to the payment of goods owed to the exporters.

So far, more than 5 thousand overseas buyers who are in arrears with Chinese exporters' businesses and overseas buyers due to bankruptcy insolvency have been registered worldwide.

Nationwide, in the first half of this year, tens of thousands of China Export and Credit Insurance Corp customers who had helped insure insurance carried out credit qualification surveys of overseas business customers.

Take the less developed private economy of Liaoning as an example. In the first two months of this year, the China Export and Credit Insurance Corp branch of Liaoning received more than 20 cases of enterprise export risk reporting, and the case value was more than 6 million dollars, which is 283% and 286% higher than that of the same period last year.

From the reporting situation, the risk encountered by export enterprises in the first two months of this year has two characteristics: first, the risk rate of developed countries and regions with low risk level, such as Europe and the United States, has increased sharply, accounting for more than half of the total reported cases, which has increased by 333% over the same period last year; two, the total number of cases of "refusing to accept" in the report has been 9, and the proportion is as high as 39%.

The increase of the "rejection" ratio often means that the buyer's ability to pay is insufficient. It also indicates that the prosperity of the buyer's country's market is decreasing, which leads to the loss of the property and profits of the exporters.

Zhou Yi told reporters that from the perspective of the types of American buyers, the buyers involved in different industries, traders, manufacturers and chain operators all had the majority of the consumer goods in the industry.

3% of the export credit insurance coverage is lower than the international standard loss amount in the same period increased by two times and half.

It needs to be pointed out that the international trade debt default has existed in the world for a long time. However, the export credit system of other countries is very developed, which has played a good role in avoiding and preventing foreign trade. However, due to the late start of the China Export and Credit Insurance Corp, many enterprises have not enough knowledge. The subprime mortgage crisis in the United States has caused this phenomenon to be very prominent.

It is reported that 12% to 15% of the total export trade in the world trade is covered by credit insurance risks, while the proportion of insurance export credit insurance covered by China's general trade exports accounts for only about 3% of the total trade export volume, and the proportion of credit insurance used in domestic trade is much smaller.

We can simply calculate an account. Taking 2007 as an example, the amount of the loss received by China Export and Credit Insurance Corp under general trade terms is 270 million US dollars. In fact, the share of China Export and Credit Insurance Corp's insurance coverage accounts for about 3% of the total trade export volume, so it can be easily estimated that the annual amount of loss from China's export receipts should be around 8 billion dollars, which is precisely the hidden danger or risks faced by many export-oriented enterprises.

If we analyze this problem from the root, we will find that since the second half of 2007, under the influence of the subprime mortgage crisis in the United States, some American importing enterprises have been blocked by sales, their solvency has declined, their external payments have slowed down, and even they have fallen into insolvency and bankruptcy.

Zhou Yi said that in the case of US buyers, millions of dollars in major cases increased by nearly three times compared with the same period last year, and reported losses increased by nearly two and a half times compared with the same period last year.

Statistics from the Ministry of Commerce show that the arrears of overseas debts owed by Chinese enterprises are nearly 100 billion US dollars and increase at an annual rate of around 15 billion US dollars. The risk of business risks of American enterprises will undoubtedly rise further in the subprime crisis.

It is worth noting that some of the international buyers' arrears are affected more.

For example, Wenzhou's export enterprises mainly engaged in shoemaking (25%), low-voltage electrical appliances (20%), textile raw materials and clothing (14%), lighters (10%), leather making (5%), plastic (14240385.00,2.78%, bar) products, glasses, buttons zippers, printing and packaging, pen making and other industries.

These industries are labor-intensive industries with low value-added products, which are greatly affected by macroeconomic regulation and the American subprime mortgage crisis, and are facing great difficulties at present.

It is reported that in the past 5 years, China Export and Credit Insurance Corp has provided credit insurance services to thousands of enterprises, paid hundreds of companies more than $500 million in compensation, and led some 70 banks to finance about 200 billion yuan for enterprises and recover about 200 million dollars for export enterprises.

Compared with other countries, China's foreign trade enterprises are still at an early stage in terms of insurance coverage.

The US subprime mortgage crisis is far from over, and the global economy is not showing any signs of warming. What will this impact on Chinese enterprises? Will the US continue to be the hardest hit area for Chinese enterprises?

We need to wait and see.