How UAE-Based Entities Avoid Obstacles When Applying for Sinosure Credit Limit

There is a vast range of international companies that choose to set up UAE-based entities in order import goods from China. Various motives back these decisions. Not only is the UAE a fiscal paradise or tax haven, but it also offers free trade zones and has the ideal, developed and advanced infrastructure to support businesses. Add to this the fact that UAE-Africa trade is increasing, with the UAE becoming a gateway to Africa, and it's easy to see why the flow of import through UAE-based entities is on the rise from China.

Indian companies, as well, choose to establish UAE-based entities – mainly due to the taxation differences. It is for this reason that imported Chinese goods travel through those UAE-based entities.

The result of this is a demand for trade credits, particularly because banks in the UAE are barely offering them to UAE-based trading companies.

Meanwhile, the China-UAE relationship is flourishing. This has led companies in the UAE to receive more support in regards to their importation of goods from China. Sinosure (which is a Chinese Export Credit Insurance corporation) is one type of support that is assisting UAE-based companies.

Formerly two separate companies (the Export Credit Insurance Department of the PICC, and the credit insurance department of the China Export and Import Bank), Sinosure is a corporation that arranges export insurance for Chinese exporters. It guarantees that suppliers always receive payment for their goods – even if companies default on their credit agreement.

There are a few steps involved in setting up a credit:

• Your business will need to be evaluated in a credit appraisal
• You will be provided with a credit rating
• After this, the insurance company will establish and grant you a credit limit
• The Chinese exporter will register their contract with the insurance company
• They will obtain insurance for the invoice
• You will make a deposit for the goods you have solicited
• Your goods will be delivered by the exporter – with no payment required from you
• After the period of postponed or deferred payment you will make your payment

Sinosure often cannot access or appraise financial reports of UAE companies

Given that for some UAE companies distributing or publishing their fiscal reports is not compulsory, Sinosure can in some cases struggle to appraise these financial reports or even initiate their evaluation. For this reason, Sinosure cannot issue a credit limit to these companies.

Axton Global helps UAE organizations to get appraised for credit and assists them when it comes to preparing for the evaluation. We do this by using a manual process of collating the essential paperwork and submitting all required evidence to Sinosure. This drastically reduces the difficulty UAE companies face when clearing this first hurdle.

The UAE company may face complications when making transactions

The second obstacle is that the importer may face challenges when making transactions for imports using the UAE entity's name. The main reason for such complications is, if you have chosen to register the UAE company name with Sinosure, Sinosure may decline your shipping documents – (as the real consignee is the international importer).

Receiving the shipment successfully therefore relies on particular documents that give the consignee authorisation.

Axton Global's proficient insurance consultancy team can put in place the required arrangements to make receiving shipments effortless for your company.

If you are a company with an established UAE-based entity, and want to receive imports from China, Axton Global is the ideal choice to help you overcome these challenges. Take a look at our homepage and find out more about our insurance consultancy services to start benefitting from Sinosure credit limits.