Enterprises must hold the ring of export credit insurance
The so-called export credit insurance is not really a new thing. It appeared in the UK in the early 19th century. It is actually an official credit support institution established by governments to promote the export of their products and services. There are more than 50 currently. The state has established an export credit insurance agency.
The export of enterprises has the risk of non-payment by the other party, and export credit insurance can allow enterprises to avoid this risk and provide enterprises with a safe and stable export and financing environment.
China Aviation Technology Import and Export Beijing Company is a typical example in the use of export credit insurance. In the Southeast Asian financial crisis, which was severely tested by foreign trade companies, the total import and export volume of China Aviation Technology Import and Export Beijing Company has not only declined, but has increased from 61.05 million US dollars in 1997 to 187.76 million US dollars in 1999. The total number of foreign trade companies in the country has also jumped several levels forward. The secret they summed up is that “export credit insurance has reduced the risk of foreign exchange collection for the development of international markets, and also gave confidence to the company’s competition.â€
Another case is Anhui Technology Import & Export Co., Ltd. In 1990, the company's export value was only a few million US dollars. However, because they took advantage of export credit insurance at the beginning of their foreign trade export business, they successfully passed the risk of collecting foreign exchange from the motor export to the United States and obtained export credit insurance. The amount of arrears provided is approximately $1.2 million. Thanks to the help of credit export insurance, the company quickly developed into a former large export company in Anhui Province and reorganized into Minmetals and Anhui Import and Export Corporation. In 2001, the company's exports reached US$156.31 million.
Regrettably, although export credit insurance has such "divine power" and strong government support, there are only a handful of companies that truly understand their skills and use them to enhance their overseas competitiveness. According to statistics, in 2000, China’s export credit insurance underwriting accounted for only 1% of the export value of the year, and the insured enterprises were less than 8% of the total number of export enterprises. From the perspective of the whole world, the coverage rate of export credit insurance in developed countries is between 20% and 30%, and that of France, which covers more than 37%. That is, 37% of all exports in France have invested in export credit insurance.
Why is there no market for export credit insurance in China? Mr. Wang Wenquan, the head of the insurance department of the Export Credit Insurance Company, said that the export credit insurance, which was originally operated by the People’s Insurance Company of China and the Export-Import Bank, has a small proportion in the overall business, and the two institutions overlap. The crossover of functions leads to inefficiency, while the insurance premium rate is too high and the legal guarantee system is not perfect, which restricts the development of export credit insurance. On the other hand, the insurance awareness of export enterprises is generally not strong, and many enterprises do not understand the business of export credit insurance.
With the globalization of the economy and the increasing dependence of countries on trade, the risk variables faced by export enterprises are increasing, which makes the demand for export enterprises to secure export collection more urgent. At the same time, after China's accession to the WTO, the practice of directly subsidizing exports through the Foreign Trade Development Fund will be increasingly restricted. The international common practice of supporting exports is export credit insurance.
Experts in the industry believe that the benefits of exporting enterprises to export export credit insurance are three. One is to use the guarantee and compensation functions of export credit insurance, which can change the large amount of bad debt losses as the determined insurance premiums that can be included in the cost. Second, in the case of ensuring low risk of foreign exchange collection, boldly adopt a variety of flexible payment methods to reach trade contracts, and even export to some risky markets to improve competitiveness. Third, relying on the risk investigation and evaluation of foreign buyers mastered by export credit insurance companies, accurately select the trade objects, and can transfer the insured export credit insurance rights and obtain the convenience of the bank's export financing.
Mr. Wang specifically mentioned that since the old state-owned foreign trade enterprises are shrinking, many new foreign trade enterprises are small and medium-sized enterprises. Due to the low creditworthiness, it is difficult to talk with big international companies in overseas markets. With export credit insurance, you can quickly increase your credit rating. Especially in this year's export situation, if you want to win overseas, how to take advantage of export credit insurance is even more important.
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