Beware of international "Lao Lai" Chinese companies' overseas bad debts as high as US$30 billion due to exports
According to reports, Sinochem and Liaoning Import and Export Corporation once signed a 100,000-tonne urea export contract with a Cuban company. Sinochem and Liaoning shipped most of the products according to the contract, and Cuba was satisfied with the quality, quantity, and packaging of the products and put them into use. However, up to the final payment period of the contract, Cuba still had $2.5 million in unpaid payment.
This is just a microcosm of the export of chemical companies. Large companies such as Sinochem have not been spared, and the experience of numerous small and medium-sized chemical companies in the international market can be imagined.
Once upon a time, the low compliance rates of domestic transactions and the trilateral debts that were in arrears each caused domestic companies to suffer headaches. The clean-up of inter-firm triangular debt has even been regarded as one of the major issues in China's economic development by the Prime Minister himself. Now, it seems that chemical companies that are one of China’s major exporters are just as important as international Lao Lai.
In the past, in the era of planned economy, the state-owned enterprises’ foreign exchanges were the masters of power. Foreign traders could settle their accounts with Chinese companies by setting up a few key corporate affairs. Now, a large number of exporting chemical products are private enterprises. Although no one will use their own hard-earned money to make jokes, they have been caused by the lack of experience in the world, lack of experience, strict precautions, and unfamiliar rules, leading to continuous international bad debts and even international 'Lao Lai' when.
There are many reasons for large-scale bad debts in the export trade, but one of the important aspects is that the risk awareness of the company is not strong. With the increasingly fierce competition in domestic and foreign markets, the share of the international market has become the basis for the survival of many export-oriented chemical companies. Therefore, many companies only focus on the number of exports, export prices, market share, etc., but also need to spend efforts to deal with various trade barriers, in the prevention of payment recovery risk countermeasures, human and material resources to much less. The international market is also a place for the game of interests. Even if strict protection against the purse string is inevitable, it will inevitably be 'black'.
In addition, most chemical products in the international market are considered as special products. Many countries have strict requirements on their safety and environmental protection, and they have a series of regulatory requirements for their circulation. Chinese chemical companies must fully understand and familiarize themselves with these rules when exporting products, so as to avoid giving people a hand and losing everything. In some cases, domestic products have no problems in terms of quality, specifications, or even safety and environmental protection. Just because there is a slight gap in the standardization of the transaction process, they may be caught by foreign 'Lai Lai' people. Make a big fuss and make the money a bad debt.
The long-closed domestic chemical companies entering an open international market are required to pay tuition fees, and bad debts are one of them. This kind of tuition cannot of course be paid indefinitely. In order to stand firm in the international market, we must strengthen our awareness of risk and prevent international “Lao Lai†from all aspects in order to save our hard-earned money.