SINOSURE — China Export & Credit Insurance Corporation

What is SINOSURE? 

Sinosure is a state-owned Chinese export credit insurance corporation. Sinosure insures Chinese suppliers against credit and political risks in international trade. If your company becomes financially insolvent, Sinosure guarantees the supplier payment under the contract. 

Why is this important for buyers?

If your company has a Sinosure credit limit, you can get a deferred payment from your supplier for a period of 90, 120 or even 180 days.

Lack of working capital is one of the main problems of international trade. Buyers want to receive goods from China with deferred payment, while Chinese manufacturers want to receive a full prepayment from the customer. The main reason for Chinese suppliers not wanting to provide deferred payment is the risk of non-payment on the side of overseas buyers. Very often, Chinese manufacturers do not have enough experience to independently verify the creditworthiness of their buyers and decide whether or not to grant a deferral. And if the buyer is unable to pay, the resulting credit risks can ruin the supplier’s business.

Sinosure helps solve this problem by providing Chinese exporters with insurance against the buyer’s non-payment. If there is a guarantee, suppliers are willing to grant deferrals, taking advantage of the opportunity to increase trade turnover with their foreign partners.

Nearly all Chinese companies that provide credit to foreign businesses do so because their invoices are insured by Sinosure

That means that if your company has a Sinosure credit limit, you can get a deferred payment from your supplier for a period of 90, 120 or even 180 days.

How does Sinosure credit insurance work?

The purpose of this type of insurance is to guarantee Chinese factories receive timely payment from foreign buyers for products delivered with deferred payment terms. The objects of insurance are commercial loans provided by a Chinese exporter (policyholder) to foreign buyers.

The transaction involves three parties: the Seller (Exporter), the Buyer (Importer), and the insurance company (Sinosure).

Foreign trade transactions covered by Sinosure insurance comprise the following steps:

• The importer passes through a credit investigation procedure
• The insurance company assigns the importer a credit rating and credit limit
• The supplier opens a Sinosure insurance policy (or has previously opened one)
• The supplier registers the contract with the insurance company
• The supplier gets insurance for the invoice
• The importer pays a deposit (for the first part of the order, usually 10 to 30%) to the supplier
• The supplier produces the goods and ships the goods without payment
• The importer receives the goods with a deferred payment period of 90–180 days
• After the deferral period expires, the importer pays off the debt owed to the supplier

The key point is that in order to work with suppliers under Sinosure insurance coverage, the importer must pass through the credit investigation procedure and obtain a Sinosure credit limit. 

How to get your Sinosure credit limit approved? 

A Sinosure credit limit (also called the Sinosure credit rating) is the maximum amount of trade loans that Chinese suppliers can provide to your company using Sinosure insurance.

In order to get the Sinosure credit limit, your company must pass through a credit investigation procedure and receive a credit rating. After the credit investigation procedure, Sinosure will set a credit limit for your company, which can then be used to purchase goods from Chinese suppliers with deferred payment.

The credit investigation procedure takes 21 days.

Once your company receives the credit limit, Chinese exporters with Sinosure insurance policies can book this credit limit (partially or completely) for the shipment of goods to your company with deferred payment.

The maximum credit limit that can be granted to you is determined by several factors: first of all, your company’s financial indicators (the company must be profitable and have sufficient turnover, assets, and so on), credit history (timely payments to your suppliers in the past), and a history of trade transactions with China.

In order to complete the credit investigation procedure, we recommend that you consult with an expert.