SINOSURE:
Trade Credit for Importers

The cost of Sinosure credit insurance typically ranges from 0.5% to 1.5% of the invoice value for shipments with a 90-day deferred payment term.

The exact rate depends on several factors, including:

• transaction amount
• buyer’s country risk
• financial profile of the buyer
• size of the supplier’s insurance policy

As the policyholder, the Chinese supplier pays the Sinosure insurance premium.

Depending on their contract with the buyer, the supplier can either absorb this cost or include it in the price of the goods.

Many large exporters — particularly companies from priority industries, state-owned enterprises, or exporters with large annual policies — often have VIP or subsidized Sinosure policies. In these cases, the effective insurance cost may be around 0.3%–0.5% of the invoice value for a 90-day payment term.

To access 90- or 120-day trade credit terms from Chinese suppliers, an importer must first be registered within the official Sinosure credit information database, which is known as Sinorating. This registration process, known as onboarding, ensures your company is visible to underwriters and can become eligible for credit insurance coverage.

Sinorating is the credit information arm of Sinosure. It’s responsible for collecting, verifying, and consolidating data on buyers outside China. Essentially, Sinorating acts as a global credit bureau that provides Sinosure’s underwriters with the standardized information they need to approve credit limits and insure deferred payment transactions.

For an underwriter in China, analyzing raw financial data from various regions, each with different accounting standards and legal frameworks, is very inefficient.

Sinorating addresses this problem by converting diverse global data from more than 200 countries into a unified format. That allows underwriters to make informed decisions quickly, ensuring that companies from different jurisdictions are evaluated on a level playing field.

To create a comprehensive profile of an importer, Sinorating collects several key layers of information:

• Corporate Identity: Sinorating collects registration details, active business status, and shareholder/management structures.
• Risk Compliance: Sinorating checks import businesses against international sanction lists, and looks through court records for legal disputes.
• Trade History: Sinorating analyzes the business’s current import volumes, its existing supplier relationships, and its customer base.
• Financial Transparency: Sinorating requires importers to submit their financial statements for the last two fiscal years.

Once the data collection is complete, Sinorating issues a Sinorating Credit Report. This report includes:

1. Sinosure ID: A unique identification number assigned to your company.
2. Credit Rating: An internal score based on your financial indicators and trade history.

This report is stored in Sinosure’s central database. When a Chinese supplier applies for a credit limit for your orders, the underwriter pulls this standardized report to determine the maximum amount of credit that can be safely approved for your company.

Expert Insight: Providing complete and accurate financial data is the most crucial factor here. Missing or incomplete financial statements can delay the assessment or negatively affect the outcome.

To purchase goods from Chinese suppliers on deferred payment terms, the importer must obtain a Sinosure credit limit. This credit limit is a number that represents the maximum amount of credit that Sinosure is willing to insure for transactions between a specific Chinese supplier and an overseas buyer.

A Sinosure credit limit is an electronic approval issued by Sinosure after assessing the creditworthiness of a buyer.

The credit limit is issued as a PDF document available in the supplier’s Sinosure account and contains the key conditions for an insured transaction

A typical credit limit includes:

• the name of the Chinese supplier (policyholder)
• the name of the buyer, along with company registration details, address, and the buyer’s Sinosure ID
• the approved credit limit amount
• the approved payment tenor, typically between 30 and 180 days (the most common term is 90 days)
• the supplier’s policy number
• the buyer’s identification details in the Sinosure system

This document confirms that Sinosure is willing to insure shipments from that supplier to the buyer up to the approved amount.

The process of approving a credit limit is called a credit investigation. Only a Chinese exporter who holds a Sinosure insurance policy can submit an application for a credit investigation. The supplier submits the application through their online Sinosure account.

If the buyer is already registered in the Sinorating database, the supplier only needs to enter the buyer’s Sinosure ID, and the buyer’s information will load automatically.

The supplier may optionally upload supporting documents such as:

• the sales contract with the buyer
• a pro forma invoice or purchase order
• information about previous shipments

However, these documents are not always required.
Once the application is submitted, the Sinosure underwriting department begins the credit investigation.

The underwriter checks whether a valid Sinorating credit report already exists for the buyer. Normally, the report must be no older than three months. If the report is outdated or if the buyer is not yet in the database, Sinosure initiates a credit information collection process.

After the credit report is available, the underwriter evaluates the buyer’s financial condition and calculates the credit limit that can be approved.

This process (both the automated and the manual part) means it’s important that Sinosure has complete and accurate information about the buyer.

A credit investigation typically takes up to 21 days, although decisions may be issued faster for financially strong companies, or take longer in more complex cases.

After the investigation is completed, Sinosure issues the credit limit document, which becomes available in the supplier’s Sinosure account.

Sinosure credit limits have some important characteristics that buyers and suppliers should understand:

• Credit limits are issued for a specific supplier. If a buyer works with multiple Chinese suppliers, each supplier must apply for and reserve their own credit limit.
• The total exposure depends on the buyer’s financial capacity. Sinosure evaluates the buyer’s financial position and assigns an overall credit capacity, often referred to as the cumulative credit limit.
• Credit limits are assigned for a limited period. Once approved, a credit limit is typically reserved for the supplier for 120 days. If the supplier does not use the limit during this period, it may be released and become available to other suppliers.
• Credit capacity may be fully reserved by other suppliers. If the buyer’s total credit capacity is already reserved by existing suppliers, Sinosure may inform new applicants that the buyer’s credit capacity is currently exhausted.
• Credit limits are revolving. Once the buyer pays for previous shipments, the credit capacity becomes available again and can be reused for new deliveries.
• Credit limits can be increased. If the buyer builds a positive payment history or significantly improves their financial position, suppliers may apply to increase the credit limit.