Keywords: China, social credit system, certified enterprise, general enterprise, discredited enterprise
China Customs published Customs Interim Measures on Enterprise Credit Management (Interim Measures) on 8 October 2014. It is a part of an effort by the Chinese Government to establish a Social Credit System based on a 2014-2020 plan of the State Council. The new system will replace the existing Customs Compliance Rating Scheme and will come into effect on 1 December 2014.
The Interim Measures require China Customs to establish an enterprise credit management system to collect enterprise information, conduct credit appraisal, supervise enterprises accordingly and disclose the enterprise credit-related information to the public.
According to the Interim Measures, China Customs will place enterprises into one of three categories: the Certified Enterprise, the General Enterprise and the Discredited Enterprise.
A Certified Enterprise obtains China AEO (Authorized Economic Operator) status is further classified into two groups: General and Senior. Preferential customs treatment will be provided for all Certified Enterprises, this treatment includes a lower customs goods examination rate and a simplified customs review process. For companies that qualify as a Senior Certified Enterprise, China Customs will designate a customs officer to help coordinate between the company and various functions and offices of China Customs. China Customs will publish the detailed standard for the accreditation requirement/ procedure of the Certified Enterprise separately.
While the General Enterprise is a default category, companies should try their best to avoid being categorized as a Discredited Enterprise.
A Discredited Enterprise is a company which has been found committing non-compliance activities within the last 12 months. Non-compliance activities include smuggling activities conducted criminally or administratively and other violations being penalized by China Customs for a cumulative amount of more than RMB1million.
A Discredited Enterprise will be subject to a higher customs goods examination rate as well as to tightened review of customs declaration documents and tightened supervision when they conduct/ engage in processing trade activities.
Another key point that companies should notice is that China Customs is going to publicly disclose the enterprise credit system information on its website/ notice board. This will include the enterprise category of a company, as well as its customs penalties that a company has been imposed for the past five years. In particular, customs penalties will also be publicly disclosed via the National Enterprise Credit Information Disclosure System.
The National Enterprise Credit Information Disclosure System is to be established by the State Administration of Industry and Commerce according to the Interim Regulation on Public Disclosure of Enterprise Information which is come into force on 1 October 2014. Based on this regulation, penalties imposed against companies by any government agencies are to be disclosed publicly via this system.
Compliance counts, and it is now even more important with China#39;s establishment of its Social Credit System. Customs and trade compliance is often an area that a company does not pay much attention to until a major problem appears. Now a company could suffer huge financial and reputational loss. We recommend that companies take the launch of the Interim Measures as a special opportunity to initiate a self-compliance review of its trade activities and establish or upgrade its trade-related internal controls. This will enable the company to achieve a better balance between compliance and efficiency.
The Interim Measures have yet to provide detailed guidance on a number of areas. These include issues such as what are the appraising standard for Certified Enterprise, how will a company#39;s rating be reconciled between the previous customs system and the new accredited categories, etc. We will monitor the development around these and keep you updated via our Trade Alerts.
Learn more about Mayer Brown#39;s International Trade practice and Mayer Brown Consulting.
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AMSTERDAM, October 29, 2014 /PRNewswire/ --
The latest Global Collections Review survey conducted by Atradius Collections reveals that companies in the APAC and the Americas regions seem to be more proactive than their European counterparts in recovering payments. Almost 50% of the companies surveyed are partnering with professional debt collections agencies.#160;
South American and Chinese companies in particular suffer from limited financing facilities. International and domestic companies in these regions are starting to face substantial payment problems, which is reflected in the way they handle overdue invoices. The use of debt collection agencies is higher in the Americas (46%) and APAC (47%) than in Europe where 30% of the respondents have chosen this option in the last 12 months. In the US (54%), China (52%) and Taiwan (57%) it is common to employ a debt collection agency. Additionally, the debt collections market is evolving most rapidly in the Americas region, where an increase of almost 13% is observed compared to last year. This underlines the importance of cooperating with external debt collection agencies in the region.
In Asia Pacific, companies appear to be more proactive in trying to recover their money and are willing to use a variety of methods to achieve results. European companies are more conservative and cautious when it comes to outsourcing collection of first party invoices. However companies in the APAC region appear more aligned with companies in the Americas, when it comes to using first party collections services. Almost 60% of the interviewed companies in this region have claimed to be (highly) likely to adopt this service during the next two years. This shows their willingness to begin pursuing payment earlier, before starting the traditional debt collections procedures. Raymond van der Loos, Managing Director Atradius Collections, observed: The economic climate in both the South American and Asian markets have started to deteriorate. Payment morale has weakened and insolvency risk has increased. To improve collection success, companies are implementing stronger credit management measures and outsourcing their debt collection efforts to an expert who supports them in recovering outstanding balances and prevents unnecessary write offs.
Worst payers are domestic customers #160;
Across the world, the worst payers are typically domestic customers, irrespective of business size and industry. Companies in the APAC region are more active in recovering late payments from their international buyers, even though they also have a high percentage of domestic cases to collect. Raymond van der Loos observes: The practice of delaying payments as a means of financing operations is problematic in all countries. Atradius Collections strategy has been to expand the global network into the South American and Asian markets to be able to help its customers, at a local level, recover payments, whether the debt is domestic or international.
About the Global Collections Review#160;
The Global Collections Review is based on a survey of almost 6000 companies across 30 countries in the APAC, Americas and European regions and assesses business requirements for outsourcing business-to-business collections services. The detailed insights can help companies create country and industry focused strategies on how to deal with overdue invoices.
The overall report Global Collections Review and the country reports are available at
About Atradius Collections#160;
Atradius Collections, a business unit of Atradius Group, provides efficient, quick and flexible solutions to recover domestic and international trade debts. With 20 offices and an extensive network of collections specialists and lawyers worldwide, Atradius Collections serves more than 14,500 customers. Over 85 years of global credit management industry experience uniquely positions Atradius Collections as a worldwide leader in business-to-business trade invoice collections services.
SOURCE Atradius NV
Millions of consumers are about to gain access to their credit scores.
Citigroup, the fourth-largest credit-card lender by purchase volume in the US, is partnering with Fair Isaac Co., the provider of the credit score most widely used by lenders, to provide its customers with their FICO score beginning in January.
Consumers with Citi-branded credit cards will be able to see the FICO score that Citi has for them--and that it uses to make lending decisions--on their online accounts.
Citi is the largest credit-card issuer so far to join a program that Fair Isaac, often called FICO, launched last year. Participating lenders agree to provide the exact FICO score they have on their customers. Prior to this program, consumers weren't able to view those scores, unless they were denied for a mortgage.
FICO says its credit score will be available on some 32 million credit accounts by the end of this year, up from eight million when the program started in November with Barclaycard, a unit of Barclays , and First National Bank of Omaha, a unit of First National of Nebraska.
Since then, additional lenders that have signed on include Discover Financial Services ; SLM Corp., the largest private student-loan lender, better known as Sallie Mae; and Pentagon Federal Credit Union, the third-largest credit union.
The moves come as the federal government has been upping pressure on lenders to provide credit scores to their customers. The Consumer Financial Protection Bureau sent a letter to the largest credit-card issuers in February urging them to take this step. It has since been in discussion with several issuers to begin providing this service.
On Friday, President Barack Obama signed an executive order to help protect consumers' financial security. In a speech at the CFPB, the President expressed his support for credit-score transparency.
For the most part, the score disclosed by Citi will only help borrowers to know where they stand with that lender. FICO scores can vary by lender, in part because lenders may be pulling the FICO score from a different credit-reporting firm. There are three main firms: Equifax , Experian and TransUnion.
Moreover, more than 45 types of FICO scores are available to lenders, says John Ulzheimer, president of consumer education at CreditSesame.com, a credit management site, and a former manager at FICO. FICO has various scores that lenders can choose among based on their preferences and for different purposes. There are FICO scores that assign more weight to how consumers manage their credit-card debt, others that focus more on car-loan debt and others on home-loan debt.
Lenders use FICO scores in 90% of consumer- and mortgage-loan decisions, according to a study this year by CEB TowerGroup, a financial-services research firm.
Credit-card issuers check the credit scores of their existing cardholders to determine whether to increase or decrease their credit line and whether to change their interest rate.
Customers who have continuous access to their credit score are likely to notice if they are victims of identity theft. For example, if fraudsters open accounts in their name, rack up debt and don't pay it, the victims' credit score will decline.
While people could check their credit report for such evidence, few do. Fewer than one in five Americans check their credit report in any given year, according to the CFPB.
Correction: An earlier version of this post misidentified John Ulzheimer as president of consumer education at SmartCredit.com, a previous employer.
UniCredit SpA (UCG) started exclusive talks with Fortress Investment Group LLC (FIG) jointly with the Italian asset manager Prelios SpA (PRS) to sell its bad-loans division, according to people familiar with the plan.
UniCredit, which received five offers for UniCredit Credit Management Bank SpA, selected the investors after shortlisting two bidders, said the people, who asked to not be identified because the talks are private. Fortress and Prelios signed the exclusivity agreement today and have a few weeks to conclude the deal, according to the people. They are offering to buy the company and a portfolio of about 3.4 billion euros ($4.3 billion) in bad loans, the people said.
UniCredit, Fortress and Prelios will sign a 10-year partnership to manage the servicing of non-performing loans, according to one of the people.
Chief Executive Officer Federico Ghizzoni is selling assets, cutting costs and reducing risk as part of a plan targeting 2 billion euros of net income this year. UniCredit announced last month it's also in talks with Banco Santander SA to combine its Pioneer Global Asset Management SpA with the Spanish lender's fund business.
UniCredit Credit Management reported a net loss of 27.4 million euros in the first half, as it generated 43.7 million euros of revenue and 41.3 million euros of costs. Officials at UniCredit and Prelios declined to comment, while a Fortress spokesman didn't immediately respond to a phone message.