Ministry of Commerce: Notice on Strengthening the Risk Prevention of Enterprises’ Export Collection of Foreign Exchange

The commercial departments of all provinces, autonomous regions, municipalities directly under the Central Government and the Xinjiang Production and Construction Corps, and all chambers of commerce and associations:
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Since 2008, affected by the expansion of the U.S. subprime mortgage crisis and shrinking demand in the international market, the risks faced by enterprises in export foreign exchange collection have increased significantly. In some areas, importers have defaulted on payment, export enterprises have increased bad debts, and export damage reports have increased rapidly. Condition. In order to help enterprises enhance their awareness of risk prevention and ensure the safety of export collection, the relevant matters are hereby notified as follows:
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                                                                                                                                             Attach great importance to the prevention of risks in foreign exchange collection from exports 
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Preventing export exchange collection risks is related to the overall healthy and stable development of my country’s foreign trade. All local commerce authorities should attach great importance to it and actively take various measures to help enterprises improve their awareness of export exchange collection risks through various channels. First, we must pay close attention to the situation, strengthen the tracking and analysis of the export foreign exchange collection risks of enterprises in the region, actively study and solve problems that involve a wide range of issues and have great impact, and promptly report important situations that arise in the foreign exchange collection risks. The second is to do a good job in information disclosure, risk warning and other publicity and guidance work, focusing on revealing and disclosing early warning information such as major policy adjustments and changes in the economic and financial environment in the region’s major export target markets, and reminding enterprises to pay attention to changes in foreign exchange collection risks. Third, we must pay attention to collecting and summarizing the experience and practices of enterprises in effectively preventing foreign exchange collection risks, and actively publicize and promote them by holding experience exchange meetings, symposiums, etc., and using media such as radio, television, the Internet, and newspapers. Fourth, in view of the fact that small and medium-sized enterprises have insufficient experience in international trade, relatively low risk awareness, and poor risk tolerance, small and medium-sized enterprises should be the focus of the work of commercial authorities at all levels.
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​​​​2. Collaborate with multiple parties to increase support for preventing foreign exchange collection risks
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Enhancing the ability of enterprises to prevent export exchange collection risks is an effective way to promote the healthy development of foreign trade enterprises. Local commerce authorities should strengthen information communication with local industry associations, financial and insurance institutions, etc., establish and improve collaboration mechanisms to prevent export foreign exchange collection risks, strengthen services to export enterprises, and build platforms to help enterprises enhance their risk prevention capabilities. First, various types of training courses are held to help enterprises fully understand country risk trends, master the tools and methods of foreign trade risk prevention and control, and improve corporate credit management levels. The second is to increase the publicity of credit tools such as export credit insurance, encourage enterprises to actively participate in insurance, and vigorously promote risk prevention tools such as factoring and forfaiting to reduce foreign exchange collection risks. The third is to actively explore the introduction of internationally advanced credit management and rating agencies, commercial debt recourse and other service industries, and introduce competition mechanisms and advanced service concepts. The fourth is to actively try and innovate boldly. According to the needs of enterprises, we will work with financial and insurance institutions to seriously study and innovate hedging tools and develop more, better and more favorable hedging products. We can pilot them in places with conditions and then further summarize and promote them. . Industry business associations should further exert their organizational, coordination and service functions, combine industry characteristics and enterprise requirements, and provide various forms of risk prevention services to member enterprises and service objects. It is necessary to timely publish export risk warning information in the industry to provide risk reminders; it is necessary to promptly publish information on foreign bad importers reported by enterprises in the industry through industry publications, the Internet, etc.; it is necessary to strengthen industry coordination to reduce vicious competition in exports within the industry.
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​​​​3. Strengthen management and improve the ability to prevent export foreign exchange risks
 
As the main body of risk prevention, foreign trade enterprises must proactively enhance their ability to resist risks. It is necessary to strengthen the management of export contracts, improve the terms of contract responsibilities and rights, strictly perform the contract, and prevent the other party from refusing to pay the payment on the grounds of non-compliance with the contract. It is necessary to strengthen the understanding of the credit standing of foreign customers, and for old customers, it is necessary to promptly grasp dynamic information such as their commercial credit and debt repayment ability; for new customers, credit management companies can be used to investigate the customer’s creditworthiness to avoid blindly signing export orders. We should try our best to choose safe and secure trade settlement methods guaranteed by bank credit, such as letters of credit and bank guarantees, to settle payments in a timely manner. Once a foreign party is found to have intentionally defaulted, we must be highly vigilant and take appropriate measures to avoid losses. It is necessary to actively use export credit insurance and other hedging tools to ensure the safety of export receipts.
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              4. Actively respond to protect the legitimate rights and interests of enterprises to collect foreign exchange from exports
 
In the process of collecting foreign exchange from exports, when foreign parties maliciously default on arrears, refuse to pay goods, breach of contract and destroy orders, apply for bankruptcy, etc., local commercial authorities, financial and insurance institutions, industry associations and export enterprises must actively respond to fully protect the legality of enterprises. rights and interests. First, through cooperation with overseas intermediary organizations,Through active consultation and other methods, we help enterprises take appropriate measures to resolve economic and trade disputes and reduce losses. Second, when a major foreign exchange collection risk event occurs, China’s overseas business institutions can negotiate and coordinate with local government departments and other relevant institutions to carry out post-event remedial work. The third is to actively organize export companies that have suffered losses to seek judicial channels and fight for their legitimate rights and interests.