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How export companies avoid risks has been a topic discussed by many export companies. Relying on national government support can solve problems to a certain extent. If a long-term and stable mechanism is to be formed, it is a very wise choice to sign insurance policies with insurance companies.
Not long ago, the turmoil in Libya caused 75 domestic companies, including 13 central enterprises, to suffer major losses in Libya’s investment projects by up to US$20 billion. Unfortunately, only a few of them have taken out export credit insurance, and ultimately received insufficient insurance coverage. 400 million yuan is rare.
In stark contrast to this is Yutong's comprehensive strategic cooperation agreement with China Export Credit Insurance Corporation.
As early as the second half of 2005, Yutong Group conducted an analysis of overseas market risks, and on this basis, it signed a comprehensive strategic cooperation agreement with China Export Credit Insurance Corporation. From 2007 to 2009, Yutong Group successively signed four bus sales contracts with Cuba. Due to the consideration of overseas market risks, China Yutong Group has timely insured China's export credit insurance companies. According to the insurance policy agreement, when the Cuban repayment of the loan is in breach of contract, CITIC Insurance will fulfill its liability for the payment, and the proportion of the payment shall be 90% of the insured amount. In the export contract, Yutong Group explicitly requested the China Credit Insurance Policy to become one of the necessary conditions for the entry into force of the Cuban project contract.
Facts have proved that this rainy prevention and control measure of Zhengzhou Yutong Group has opened up an effective umbrella for its export business.
Since then, due to the international financial crisis and hurricanes and other natural disasters, Cuba’s economic situation has deteriorated. In April last year, Cuba filed a request for China’s export credit insurance company to restructure its debts. As of this date, Cuba has already repaid Yutong’s loans. About 76.63 million US dollars, there are still 10268 million US dollars of payment has not been settled. In view of this situation, Yutong Group filed a claim application with CITIC Insurance in July of this year. In March this year, it received the first compensation of US$142.750 million, and in the beginning of July this year it received a second US$33.391 million compensation. Subsequent letter insurance will pay Yutong as planned at the end of this year, next year and 2013 respectively.
Under the protection of China Export Credit Insurance Corporation, Yutong Group will first obtain 90% of the receivable balance from CITIC Insurance, and the follow-up 10% will receive a repayment in accordance with the reorganization agreement reached with the Cuban side. At this point, Yutong Group's single export business completely avoided losses.
Overseas markets provide huge risks for companies to provide profit growth points. Export companies should maintain an objective and rational understanding of the overseas markets. Yutong Group’s timely payment has played a very important role in China’s export enterprises’ active participation in insurance. Good demonstration role. Export enterprises should take into account the overall situation and avoid losing due to minor losses.
China Export Credit Insurance Corporation (referred to as China Xinbao and English Sinosure) is the only policy insurance company that undertakes export credit insurance business in China. It was officially unveiled on December 18, 2001 with a registered capital of RMB 4 billion. Its capital source is exported. Credit insurance risk funds are arranged by the state budget. China Credit Insurance currently has 15 functional departments. The business organizations include the head office sales department, 18 branch companies and 6 business management departments. It has formed a nationwide service network and has a representative office in London, England. The main tasks of China Credit Insurance are: actively cooperate with national policies on foreign affairs, foreign trade, industry, finance, and finance, and support exports of goods, technology, and services through policy-based export credit insurance, especially high-tech, high-value-added electromechanical products. Exports of capital goods, etc., support Chinese enterprises to invest overseas, provide foreign exchange risk protection for enterprises exploring overseas markets, and provide foreign economic and trade enterprises with fast and perfect services in terms of export financing, information consultation, and accounts receivable management. China Credit Insurance underwrites country risk and buyer risk. National risks include buyer's state foreign exchange control, government expropriation, nationalization, and war; buyer risks include buyer's credit risk (arrear payment, refusal to pay, bankruptcy, etc.) and buyer's bank risk (rising of issuing bank or confirming bank).