Research On Credit Risk Management Of Overseas Credit Business In America

Export is one of the three carriages in the development of China’s economy, and export is the only way for China’s manufacturers globalization road, which in three stages:OEM\ODM\OBM. Frankly speaking, most of the manufacturers are in the first stage and they need to increase the sales by credit but control the risk also. That’s the reason why I writing this paper.Midea Group is one of the biggest and comprehensive manufacturers producing household appliance. The export business counts for 40% and increases 20% YOY. However the credit sales percentage grew up from 30% to 70% and the total amount reached USD 5 billion at last year. We are facing a tremendous risk. Fortunately the bad debt rate was under milli because of the good management in finance control. But is it still work well for the economic crisis recently? That’s a question.Therefor I tried to look from the angle of an export manufacturer. Firstly I found that the credit risk came from information asymmetry which cause adverse selection and moral hazard. Secondly I found that the credit promoted sales a lot by a math study and brought risk on the other hand. Thirdly I looked through the whole process of Midea’s international trade and credit control by questionnaire and found out the risk behind. Finally according the case study in credit management of global companies I raised a solution in how to improve Midea’s credit risk control. One is setting up a independent credit control department at headquarters. Secondly Midea need to enhance the internal risk control system at the whole international trade process. In brief the credit risk need to balance the sales chance and risk tolerance and need to swift the risk uncertainty to measurable certainty problem which could be easy to solved for a company.