Pay attention to foreign trade! Please keep this risk map
Recently, the 2018 Country Risk Analysis Report (hereinafter referred to as the "Risk Report") released by the China Export and Credit Insurance Corporation pointed out that the current trend of unilateralism, trade protectionism and anti-globalization has constantly had new manifestations, posing a serious threat to global economy and trade, and recommends that export enterprises strengthen risk prevention in overseas markets, obtain the latest risk information, and actively explore diversified markets and diversify national policy risks. It is understood that this is the 14th time that Sinosure has released the Country Risk Analysis Report.
Global risks have risen
The 2018 Report is divided into two volumes. The first volume is "Country Risk Analysis Report 2018 - Country Risk Rating, Sovereign Credit Risk Rating and Risk Analysis of 62 Key Countries", which deeply analyzes country risk from the four dimensions of "political risk", "economic risk", "business environment risk" and "legal risk", and elaborates on the reasons for rating changes. The next volume is "Country Risk Analysis Report 2018 - Global Investment Risk Analysis, Industry Risk Analysis, Global Enterprise Bankruptcy Risk Analysis", which shows the risks faced by Chinese enterprises in outbound investment from multiple dimensions and levels such as countries, industries and enterprises, and provides a large number of cases to help readers understand relevant risks and provide control suggestions.
"Overall, the level of global country risk has increased since the second half of 2017. It is mainly manifested in four aspects. First, political risks continue to rise, second, the divergence of world economic development has intensified, third, financial market risks may be further accumulated, and fourth, trade frictions may become long-term. Guo Xinshuang, deputy general manager of Sinosure, said when interpreting the report.
According to Sinosure's country risk rating results, in 2018, there were 178 countries with little change in country risk level and stable ratings. Seven countries, including North Korea, South Korea, Thailand, Greece, Portugal, Colombia and Djibouti, were upgraded mainly due to the easing of geopolitical tensions in some regions, the increased political stability and uncertainty in some countries. There are 7 countries with downgraded ratings, including Jordan, Qatar and Turkey, due to the widening of contradictions and differences in some Gulf countries and the possible reduction of the efficiency of national risk management and control.
There are 168 countries with unchanged sovereign credit risk levels and stable ratings. Six countries were upgraded to Singapore, Albania, Montenegro, Russia, El Salvador and Palau, while seven countries including Turkey, Yemen and Ecuador were downgraded. From the perspective of country risk and sovereign credit risk outlook in 2018, there are 13 countries with "positive" country risk outlook, 13 countries with "negative" and 166 countries with "stable". There are 25 countries with "positive" sovereign credit risk rating outlook, 23 "negative" and 133 "stable".
Increased abandonment by U.S. buyers
As the only policy-oriented insurance company in China, Sinosure has been actively performing policy functions to serve the development of the open economy and the development of the real economy. Data show that as of September 2018, Sinosure has supported a total of US$3.5 trillion in foreign trade and investment, provided export credit insurance services for tens of thousands of export enterprises, paid a total of US$10.94 billion in compensation to enterprises, and driven 260 banks to finance export enterprises of more than 3.2 trillion yuan.
According to the Development Research Center of the State Council, export credit insurance drove exports of more than US$600 billion in 2017, contributing 4.9% to GDP, and driving employment to more than 15 million people for two consecutive years. From this point of view, Sinosure's underwriting territory is another perspective for the risk survey of foreign trade enterprises.
Sinosure believes that its underwriting and claims settlement in different regions can also provide a glimpse of the main risks in different regions. For example, data shows that in the first three quarters, Sinosure's underwriting in Europe was US$48.4 billion, a year-on-year increase of 10.5%. In terms of general trade exports, the economic growth rate of individual countries has declined, and cases of trade fraud have begun to appear, making it difficult to identify. In terms of overseas project contracting and overseas investment, the strengthening of foreign acquisition reviews by individual countries may drag down the pace of Chinese investment in the EU.
Sinosure's underwriting in Asia in the first three quarters of this year was US$138.99 billion, up 20.9% year-on-year. In terms of general trade exports, in 2018, major oil-producing countries in West Asia were affected by the stabilization of oil prices, and the overall trade demand stabilized, and the scale of underwriting increased slightly. The economic growth rate in Central Asia has stabilized, and the overall trade and underwriting scale is relatively stable. The scale of underwriting in Southeast Asia grew steadily, and the regional average loss-reporting premium ratio decreased slightly year-on-year; Loss claims in South Asia are mainly concentrated in the pharmaceutical and chemical industries. In addition, business risks in the light industry and agricultural products sectors have increased. In terms of overseas project contracting and overseas investment, the political changes in some Asian countries have increased the political risks faced by Chinese enterprises in the implementation of projects, and the political situation and policy trends of relevant countries have been adjusted, and the political risks are worthy of attention.
In the first three quarters of this year, Sinosure's underwriting in Africa was US$26.86 billion, down 2.6% year-on-year. However, with the gradual implementation of the "eight major actions" proposed by the Forum on China-Africa Cooperation, China-Africa economic and trade cooperation will enter a new stage.
Latin America fared the best, with Sinosure's underwriting volume of US$23.04 billion in the first three quarters of this year, up 35.9% year-on-year. In terms of general trade exports, the stabilization and recovery of Latin America's overall economy has led to significant recovery growth in credit limit application amount and underwriting amount, and significant improvement in business quality.
In North America, in the first three quarters of this year, Sinosure's underwriting amount was US$42.56 billion, a year-on-year increase of 7.0%. In terms of general trade exports, the bankruptcy of the US department store retail industry continued to deteriorate, with a significant increase in buyer defaults and a year-on-year increase in risk indicators. Since the Sino-US trade friction, US buyers have abandoned goods due to their inability to pay their own import tariffs, or poor downstream sales due to rising costs, and then maliciously defaulted on payment. For example, a Chinese drone exporter encountered a US buyer who was in arrears of payment, and Sinosure's investigation found that the buyer had entered bankruptcy proceedings in September 2017. In August 2018, Sinosure paid more than $10 million in compensation to the company. Data show that since the beginning of the year, nearly 600 compensation cases have been paid under the US buyer, and 110 million US dollars of compensation has been paid to customers, an increase of 9.9% and 9.6% year-on-year.
"In terms of overseas investment, after the implementation of the Foreign Investment Risk Review Modernization Act in the United States, Chinese companies will face a wider investment review, a longer review period and a stricter reporting system. This will make Chinese companies investing in the United States face greater uncertainty. Guo Xinshuang said.
Three measures to prevent foreign trade risks
At present, unilateralism, trade protectionism and anti-globalization are constantly showing new manifestations, posing a serious threat to the global economy and trade. Not long ago, at the press conference of the State Council Information Office to introduce and interpret the white paper "Facts on Sino-US Economic and Trade Frictions and China's Position", Fu Ziying, international trade negotiator and vice minister of the Ministry of Commerce, said that in the face of the risks related to entering emerging markets, the government will enable export enterprises to use more export credit insurance tools in accordance with international rules to effectively reduce corporate risks.
It is understood that Sinosure has established a credit evaluation center and a country risk research center in 2003 and 2013, whose function is to provide technical and intellectual support for enterprises to reasonably avoid trade and investment risks. Wang Tingke, general manager of Sinosure, said that it will continue to expand the coverage of export credit insurance to enterprise exports, foreign project contracting and foreign direct investment, further expand the financing convenience of export credit insurance policies, and better escort Chinese enterprises "cross-border going abroad".
In view of the current risk situation in overseas markets, Sinosure put forward risk prevention suggestions for export enterprises:
First, it is recommended that export enterprises make full use of export credit insurance to ensure the safety of foreign exchange collection, communicate with Sinosure's local business institutions in a timely manner, obtain the latest risk information, and jointly sort out and investigate business risks.
Second, it is recommended that export enterprises actively explore diversified markets and diversify national policy risks. Be cautious about new large orders in the short term and the needs of small and medium-sized buyers; Overseas investment needs to pay more attention to due diligence and risk assessment, and strengthen risk prevention by insuring overseas investment insurance.
Third, for export enterprises with business needs for the United States, if the type of exported goods falls within the scope of additional / pre-imposed tariffs, it is recommended that the export enterprises consult with the buyer as soon as possible before arranging shipment, whether the goods continue to be shipped, the subject and specific method of the additional tariffs, and other issues; After the risk occurs, entrust Sinosure to recover as soon as possible. Considering that the legal environment in the United States is relatively sound and the litigation efficiency is relatively high, it is recommended that export enterprises increase the recovery of buyers who maliciously default on the grounds of tariffs and initiate legal procedures when necessary, so as to effectively protect their legitimate rights and interests.