Sinosure Credit Insurance: How Companies in Hong Kong Avoid Complications
by Axton Global
Hong Kong has been frequently referred to as the dominant gateway to China, and there is a vast range of international importers who launch companies within the city of Hong Kong, aiming to make trading operations smoother with China, minimize their tax burden and retain money within the economically and politically stable region.
The huge number of international companies that start and use Hong Kong entities to trade also seek to reap the rewards of credit terms – credit terms that can be obtained from the China Export Credit Insurance Corporation, (known as Sinosure). In this article, we will focus on the complications that can occur and the decisions that take place when applying for credit.
The huge number of international companies that start and use Hong Kong entities to trade also seek to reap the rewards of credit terms – credit terms that can be obtained from the China Export Credit Insurance Corporation, (known as Sinosure). In this article, we will focus on the complications that can occur and the decisions that take place when applying for credit.
The Axton Global consultant team assists Hong Kong-based companies, started by international buyers, with their goal of setting up postponed payment conditions with Chinese suppliers. This is achieved by way of the Sinosure Credit Insurance tool. Obtain your Sinosure credit limit by checking out our company's services page, and visit our homepage for more information.
What is Sinosure and how does it work?
Sinosure is a Chinese insurance organization that establishes export credits and insures Chinese exporters, or suppliers. Sinosure credit works by ensuring that Chinese suppliers get their payment on time and protects them against credit risks – in this case from Hong Kong-based companies set up by international importers.
To set up Sinosure credit arrangements, first, your company will need to go through a credit evaluation. Once approved, your company will be issued with a credit rating and limit from the insurance company. The exporter will then initiate an insurance policy with Sinosure and will receive insurance for the invoice. After you have paid a deposit for your order, the exporter will deliver your goods – for which you can defer your payment for between 90 to 180 days. You will then make the payment after the deferred payment period.
To set up Sinosure credit arrangements, first, your company will need to go through a credit evaluation. Once approved, your company will be issued with a credit rating and limit from the insurance company. The exporter will then initiate an insurance policy with Sinosure and will receive insurance for the invoice. After you have paid a deposit for your order, the exporter will deliver your goods – for which you can defer your payment for between 90 to 180 days. You will then make the payment after the deferred payment period.
Which complications do Hong Kong companies face with Sinosure applications?
International entities importers from different countries that make use of Hong Kong companies to supply goods from China face the following problems:
Sinosure's lack of access to financial reports
The first common complication for Hong Kong companies is that they are not obligated to share or publish any financial reports. For this reason, Sinosure often encounters the difficulty of evaluating the company's financial status or situation. Therefore, it is impossible to provide the company with a credit limit.
We, at Axton Global, take the complexity out of this process by manually gathering together the documents and then uploading them to Sinosure. This helps companies overcome the complication of being verified for their credit investigation and, subsequently, pass the evaluation.
Hong Kong companies often are not real consignees
As the Hong Kong company might not be classed as a real consignee, and the imported goods are transported from China straight to the importer's international port (in their country), the importer can face certain complications.
Because the Hong Kong company is used solely for making transactions or payments, the importer might encounter difficulties if the Sinosure credit limit has been provided and accepted in the name of the Hong Kong company. It can lead Sinosure to reject the shipping documents that bear the name of the international company (or actual importer).
With this in mind, certain documents are needed to permit the real consignee to receive their goods at the international port.
Our expert consultancy services at Axton Global remove the complications from this process, making international imports unproblematic.
Sinosure's lack of access to financial reports
The first common complication for Hong Kong companies is that they are not obligated to share or publish any financial reports. For this reason, Sinosure often encounters the difficulty of evaluating the company's financial status or situation. Therefore, it is impossible to provide the company with a credit limit.
We, at Axton Global, take the complexity out of this process by manually gathering together the documents and then uploading them to Sinosure. This helps companies overcome the complication of being verified for their credit investigation and, subsequently, pass the evaluation.
Hong Kong companies often are not real consignees
As the Hong Kong company might not be classed as a real consignee, and the imported goods are transported from China straight to the importer's international port (in their country), the importer can face certain complications.
Because the Hong Kong company is used solely for making transactions or payments, the importer might encounter difficulties if the Sinosure credit limit has been provided and accepted in the name of the Hong Kong company. It can lead Sinosure to reject the shipping documents that bear the name of the international company (or actual importer).
With this in mind, certain documents are needed to permit the real consignee to receive their goods at the international port.
Our expert consultancy services at Axton Global remove the complications from this process, making international imports unproblematic.
We help importers from all over the world to improve their trading terms with Chinese suppliers and extend payments to the supplier for 90 to 120 days using the Sinosure credit insurance tool
We help companies to obtain a new Sinosure credit limit, increase existing credit and provide comprehensive consulting services regarding Sinosure credit insurance
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Axton Global is an international consulting company helping importers worldwide secure trade credit terms with Chinese suppliers.
We serve customers from 82 countries across 5 continents.
info@axtongl.com
We serve customers from 82 countries across 5 continents.
info@axtongl.com