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China Trade Commission

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China Trade Commission Increases International Collections By 12% As International Debts Soar
Due to China's biz boom and ailing western economies, international debts have tripled since 2008. As Chinese vendors consider reverting to C.O.D. terms of old days, the CTC now offers collection solution that avoids litigation and is 87% effective., 7/25/2011 - Today the CTC announced that payment delinquencies have tripled since 2008 between businesses in around the world doing business in or with China. According to CTC director Anthony S. DeMarco “On average Chinese businesses are waiting almost 90 days to receive final payments for good and services sold to foreign clients, and foreign clients are waiting an average of 57 days to be paid from their Chinese clients” Clearly the economic melt-down of the West is the major cause for the delayed payments. Regardless of the reasons ,the Chinese have clearly been more responsible, honorable, and timely on their payments.

But a recent CTC credit survey also shows that the non-payment rate has increased 12% from foreigners and 7% from Chinese since 2009, which has stimulated a current boom in international collections. DeMarco went on to explain “Typically the CTC receives an average of $14.8 million in collection requests every month, but in recent months that figure has grown to over $20 million”. If the European debt crisis continues and the U.S. does not show a substantial economic rebound by September, the CTC expects their monthly collection requests to sky-rocket and fear that Chinese merchants may start demanding C.O.D. terms.

Currently, the CTC allocates almost 30% of it’s resources to the difficult task of international collections and another 35% to professional due diligence. According to DeMarco “If merchants do proper due diligence to begin with, they can almost eliminate the risk of payment delinquencies”. The CTC offers its members the most extensive credit database for Chinese and foreign businesses in it famous “Debtor Database” which gets searched over 9,000 times per day on average. If a company from China, America, Canada, Australia or the U.K. has exceeded it’s payment deadlines, the creditor lists them with the CTC to warn others, and the listing is then removed when payment is received. “This is sort of like an early warning system for entrepreneurs”.

At present, the CTC has an 87% success rate on international collections and in less than 10% of the cases, litigation is required which DeMarco calls “an expensive lesson in futile frustration”.

Since beginning international collections in 2005, the CTC has collected over $12Billion USD for small and mid size business owners in China and the West.

The CTC is now in the process of developing a factoring division to further reduce the risks of non-payment between East and West. “Our goal is to be the first factoring operation in China by 2012”. In the meantime, the CTC’s official advise is to check their database and “Let caution prevail”.

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