Research On Export Credit Risk And Prevention

With the development of the economy, the export trade amount of China is expanding dramatically which will lead to the expansion of the risk. People realize that the export trade credit risk matters a lot especially after the Financial Crisis that many company bankrupt because they could not get the payment. The buyer’s market looms large recently with the globalization that means the corporate realize that they need other effective methods to protect them from the risk, while in the meantime they could improve they competitive advantage. The standard of China’s credit management is far behind the developed country and the corporate lack the awareness of credit risk. This paper analyzes the main reason of export trade credit risk, and discusses how to avoid those potential risks in the micro perspective Also, this paper include the payment terms, export insurance, forfeiting, factoring and other risk-delayed methods.There are five parts of this paper. The first part of this paper gives the general background of foreign and domestic countries. The second part of this paper is to analyze the situation of export of China after the financial crisis, and the corporate export credit evaluation system. Also, China’s short-term export trade credit risk index which was based on the statistics of Sinosure Company is of great help to the exporter. The third part of the papei analyzes the reason of the credit risk on both micro-perspective and macro-perspective. In addition, this part also includes the environment of the world, the loan interest rate, the downgrading of the bank which accelerates the credit risk. The lack of credit management, the informality of the contract and documents, the process of audit, telex release bill of loading, trade fraud, and misunderstanding of receivables also contributes to the risk. The fourth part i about how to control and prevent the risk. That means the management of corporate credit management system, the export insurance, forfeiting, factoring is very necessary to reduce the risk. The fifth part of the paper gives the example of a listed company to explain the whole idea of how to control the risk. The paper has realistic meaning to how to control the credit risk after the financial crisis.