China Export & Credit Insurance Company (Sinosure) signed a framework co-operation agreement with China National Electronics Import and Export Corporation (CEIEC) yesterday, providing a package of insurance services to enhance CEIEC's exports.

According to the agreement, Sinosure will offer all-round insurance services to CEIEC, including short-term as well as medium-and-long term credit insurance, overseas investment insurance and financing services.

"Backed up by Sinosure, we are more confident in shifting our focus from the overly competitive low-end market to overseas engineering contacts and package equipment exports," said Cong Yadong, CEIEC's president. "These lucrative areas come along with higher risks, and that's why we joined hands with Sinosure."

As a leading import and export company in the electronics industry, CEIEC has exported more than US$1 billion to some 140 countries and regions.

"Sinosure's support will also help sharpen our competitiveness and improve our risk control capabilities," Cong added.

With the agreement, Sinosure will help CEIEC set up a risk management scheme so that CEIEC will be more skilled when it comes to choosing trading partners and minimizing export risks.

Meanwhile, Sinosure is also designing special insurance services for CEIEC needs, with which CEIEC will be more competitive in tapping into overseas markets. In addition, CEIEC will find it easier to get warranties and financing from Sinosure to fuel its exports.

In fact, export credit insurance is playing an increasingly important role in heightening Chinese exports and fueling China's enterprises as they take on "going global" strategies.

In 2004, Sinosure, China's only policy-oriented insurance company specializing in export credit insurance, provided insurance worth about 108 billion yuan (US$13 billion) in China's exports, accounting for 5.5 per cent of China's total volume of general trade.

"Export credit insurance has been an essential tool in expanding China's foreign trade and improving the risk management of overseas investment and engineering contracts," said Zhou Yanli, assistant chairman of the China Insurance Regulatory Commission (CIRC). He made the remarks at a seminar on export credit insurance earlier this year.

Meanwhile, China's booming foreign trade offers huge potential for the export credit insurance industry.

The total amount of China's imports and exports in 2005 is expected to exceed US$1.1 trillion, according Sinosure figures.

As economic globalization deepens, government subsidies and other policies supporting exporters are being further restricted, meaning that export credit insurance, a widely accepted indirect means of support, is attracting more attention and turning out to be an effective way to promote trade and investment.

According to Sinosure General Manager Tang Ruoxin, the functions of export credit insurance are mainly demonstrated in three ways:

Providing exporters with payment security and more flexible means of settlements, thus making firms more internationally competitive

Helping enterprises build an improved risk prevention mechanism and improving management of debt collection

Providing enterprises with convenience in trade and project financing and helping exporters solve working capital shortage problems

Source: China Daily