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50 percent of all payment default cases from US

29 Oct '08
2 min read

Data collated by Ministry of Commerce shows that amount of claims for credit insurance for exports to the United States came up to US $3 billion from January to May this year, which is nearly 3.3 percent of all exports to that country.

On basis of exports to the United States which totaled US $95.5 billion in the first five months; loss in payment should be over US $3 billion if calculated on the default claim rate of 3.3 percent.

"Bad debt rate in exports to the United States has increased by 2-3 times this year and these bad debts have been borne by Chinese enterprises.” said Han Jia Ping, Credit Management Department Director of International Trade and Economic Cooperation Research Institute of the Ministry of Commerce.

It is reported that most exports effected by Chinese enterprises are based on credit terms. Buyers in Europe and the United States generally make payment after 90 days of shipments, and some even extend it to 120-150 days.

But this year, due to recessionary trends many foreign buyers are facing cash flow problems due to which they often have postponed payments to 5-6 months which has Chinese enterprises hard pressed for working capital.

The province of Jiangsu has reported more than 320 claim cases from January to September, involving an amount of US $16 million, the amount which is four times more than that received last year. Among them, the largest arrear was experienced by an exporter in Jiangsu who laid claim to an amount of over US $14 million for shipments made to the United States.

Even from among the cases accepted by Chongqing Department of China export credit insurance company, more than half the cases were from the United States.

Fibre2fashion News Desk - China

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