Top Biz News
One firm's pain is another's gain
By Zhou Yan (China Daily)
Updated: 2009-12-31 08:08
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Two foreigners watch a Chinese worker manufacturing textile products at the Fashion Shanghai expo recently. More and more Shanghai exporters are increasing their export credit insurance to mitigate potential foreign risks. [China Daily] |
Call him "Lucky Lu". When Lu Jinguang learned that one of his key German clients, mail-order company Quelle, had gone bankrupt in June he told himself he was one of the lucky ones.
Lu, chairman of textile exporter Shanghai Yihua Industry Co, knew Quelle's bankruptcy wouldn't affect the firm because a month earlier his firm purchased export credit insurance to protect it from the turbulent economies some of his foreign customers were experiencing.
"Quelle's financial troubles put our accounts receivables, valued at tens of millions of yuan, into real danger," Lu said.
Luckily for Lu his company was compensated for its losses by its export credit insurance firm.
He refused to disclose the amount of compensation the company received.
Indeed, more and more Shanghai exporters have upped their export credit insurance to mitigate potential foreign risks related to the global financial crisis.
"Between January and November, we raised our export insurance coverage to $183 million.
That's up from $5 million two years ago, Lu said.
"Other exporters have also begun mitigating their risks after seeing long-standing partners in the US and Japan slide into the red earlier this year," said Huang Qin, president of Shanghai New Union Textra Import & Export Co, which exports household textiles to over 60 countries.
Apart from receiving 750,000 yuan in compensation following the collapse of a foreign buyer, Shanghai New Union also raised 7 million yuan from one domestic bank allowed the company to use its credit insurance prepayment as collateral.
New Union Textra's exports rose 4.3 percent in the first eleven months of this year to $287 million.
The figure is more than double the amount from a year earlier.
Sensing the difficulties Shanghai exporters have had to endure during the global economic downturn, the State Council in May of this year launched preferential policies for the sector, including allocating $84 billion to help smaller firms obtain short-term, export credit insurance.
"We have 169 more companies insuring their exports this year, bringing the total number to around 400, among which 85 percent are small- and medium-sized enterprises," said Li Kedong, general manager of Sinosure's Shanghai branch.
Shanghai, along with neighboring cites in the Yangtze River Delta, is the country's major export base.
In the first eleven months of 2009, Shanghai's exports hit $291.8 billion, accounting for 27 percent of the nation's total.
