Textile Enterprises Must Re-Examine Export Safety

In January this year, a number of domestic export enterprises shared the risk of large rejection of the same buyer in the China Export and Credit Insurance Corp with the total amount of nearly $6 million.

The buyer is a well-known enterprise in the United States operating sports brand clothing. It has a large scale and has more than 100 chain stores in the United States and is expanding rapidly every year at the speed of more than 30 stores.

However, by the end of 2007, the buyer had a risk reaction and began to default on the payment of Chinese exporters.

Considering that buyers have good historical payment records, domestic export enterprises still continue to supply goods without timely receipt of foreign exchange.

At the beginning of 2008, the buyer refused the goods due to capital turnover.

At the third national risk management forum held recently, the people of China's credit insurance company reminded the participating enterprises with the facts mentioned above. The impact of the financial crisis triggered by the "subprime mortgage crisis" in the United States is increasingly infiltrating into the real economy.

Export enterprises should seize risk signals in time to avoid buyers' rejection of risks.

In the above cases, China's credit insurance survey found that the reason for the rapid expansion of US buyers was the investment of a Private Equity Investment Firm.

However, under the influence of "subprime mortgage crisis", the Private Equity Investment Firm suffered a great impact and abandoned its investment in the company, which directly led to a shortage of liquidity for buyers.

At the same time, the "subprime mortgage crisis" led to a setback in consumer confidence in the United States and a decline in purchasing power. Buyers' planned sales plan originally scheduled for Christmas did not reach the expected level, resulting in a large backlog of stocks.

Although China's credit insurance has helped some of the damaged export enterprises recover some of the losses and compensated the actual losses, it is still a heavy lesson for the relevant export enterprises.

Liang Zhidong, deputy general manager of China credit insurance, pointed out that with the deep spread of the "sub prime mortgage crisis", many banks in the United States entered bankruptcy reorganization or liquidation procedures, many enterprises were in a dilemma of shortage of funds, unable to pay the goods on time, and less able to fulfill their obligations under the normal trade contract, so the risk of buyers' rejection of goods increased significantly.

He said that in this case, buyers had a risk change signal at the end of 2007, but did not cause the insured's vigilance.

If the insured continues to provide the goods without the receipt of foreign exchange, it will eventually be subject to the buyer's risk of rejecting the goods.

In view of this, export enterprises should pay close attention to buyers' risk changes in the current complex international economic environment, and effectively realize that "the preceding paragraph is not collected and the goods will not be delivered".

The financial crisis has created a sharp rise in the short-term credit risk in Europe and America. Many textile enterprises engaged in foreign trade export have the same view: making European and American orders is more "worry free", because the European and American markets are relatively mature, the operation standard is high, and the bank credit is relatively high.

However, this situation has undergone great changes during the financial crisis in 2008.

According to the relevant data of China's credit insurance company, the loss of Chinese export enterprises in the US market has increased substantially in the first 11 months of this year. The textile and electromechanical products reported the largest amount of losses, reaching tens of millions of dollars.

The European market has become the most severely damaged textile exporters.

The amount of loss reported by China's textile insurance company increased by millions of dollars compared with the same period last year.

According to the analysis of the textile industry, the impact of the US subprime crisis has become increasingly obvious. The shortage of us importers has led to a drop in the ability to pay and increase the risk.

In the context of China's abolition of textile quotas in Europe and the appreciation of the euro in the first half of this year, the export of textiles and clothing to the EU has maintained a high growth rate in 1~8 months this year, the amount increased by 39.18% over the same period last year, and the growth rate increased by 38.3 percentage points over the same period last year.

This is also one of the reasons why China's textile exports have increased in the European market in addition to the financial crisis.

There are many controversies in the case of refusal to pay, and the importance of self-regulation should be equally important. China's credit insurance officials said that since the beginning of this year, there are various controversies over 80% of the cases in the United States that do not pay by importers.

The types of disputes mainly include the disagreement between the product and the contract requirements, which can affect the marketability, and the claim is not caused by the quantity of the contract. The delayed shipment causes sales over the season, inventory backlog or order cancellation, as well as unfair competition and infringement disputes.

In order to minimize potential risks, export enterprises should carefully subscribe to the terms of the contract and strictly fulfill their contractual obligations.

At the same time, taking into account the rising probability of bankruptcy of American enterprises and the appearance of disguised bankruptcy, export enterprises should actively respond to risks and flexibly apply legal means to protect their own rights and interests.

At the same time, the export trade disputes between China and the developed economies in Europe are also increasing, and there are complex and diversified trends, involving intellectual property, product standards, environmental factors, agency agreements, confidentiality agreements and so on.

The political system, cultural background and legal system of the emerging market economies in Europe are relatively complex. The legal system is still in a pitional stage, and the judicial efficiency is low. In the import and export pactions, customs and tax links are generally not standardized and the information pparency is poor.

China believes that exporters should pay close attention to changes in the economic environment of exporters, especially foreign exchange reserves and foreign exchange earning capacity, which directly reflect solvency.

For countries with heavy debt burden, poor performance records and poor government management, careful consideration should be given to the actual effectiveness of sovereign guarantees.

At the bank level, we should pay close attention to the degree of crisis affected by the financial system, including the M & A of the government rescue measures.

At the main level of the project, we should carefully assess the qualification and related risks of the participants.

Yang Jing: editor in charge