Meaning and Purpose of

Enterprises’ International Credit Rating and Promotion

1.Significance and Value of Enterprises’ Credit in Market Economy

Consummated social credit system is the basis of constructing a harmonious society.

Credit is sense of responsibility of keeping promise and sense of moral of being responsible for its own behaviors. It is the character of one person, one enterprises even one country, and it is also the symbol of social advancement. Purpose of credit construction is to enable social citizens to keep promise and make credit keepers prosperous and credit losers wane.

Market economy is firstly credit economy. Credit is the headstone of market economy. In realistic social market economy of fierce competition, enterprises’ credit is irreplaceable and essential. Enterprises’ credit is also essential and valuable “intangible assets” of each enterprise to base itself upon the society. It is the lifeline of enterprises’ existence and development.

However, in the current market economy construction of China, credit becomes an essential resource. The whole economic society is facing the severe test of the crisis of deficient credit resources. Credit-losing behaviors such as debt demanding, debt abolishing, chain debts, fake making, fake sales and cheating, etc. can be found everywhere, which not only causes panic of consumers and constrains the normal transaction activity of enterprises, but also causes anxiety of cash transaction because even banks suffer loan loss for losing credit. Deficiency of credit has already greatly blocked the development of China’s market economy and the implementation of the development strategy of “Bringing in” and “Going Global” of Chinese enterprises.

“Business cannot be prosperous without credit”. Necessity and pressure of constructing enterprises’ credit becomes more significant along with the construction of China’s market economy. To enhance credit consciousness and advocate honesty and credibility has been the main concern. Whether enterprises’ credit can be established or not directly influences the process and success of China’s market economy construction and determines the sustainable development of Chinese economy.

According to the magazine of Canadian Glebors Global Financial Reports and other media, losses caused by deficient credit and violating economic order in market transaction of Chinese enterprises have accounted for 20% of China’s GDP, and the direct and indirect economic losses are as high as 585.5 billion RMB each year, which equals to 37% of China’s annual financial revenue. GDP will decrease at least 2 percentage points due to this. It is estimated that various losses caused by low quality of products or fake making and sales are as high as 200 billion RMB. Execution rate of enterprises’ contracts only accounts for 30% of the total number of contracts, and the defaulting phenomena among enterprises is rather serious. Statistic material shows that accounts receivable which haven’t been received by 170,000 Chinese enterprises account for 38% of sales volume--------- as high as 1.5 trillion RMB, it is 9 times of the profit volume. Increased financial expenditure because of that is around 200 billion RMB each year. Relevant defaulting among enterprises causes increase of debts and tightens enterprises’ interest burden. 170,000 enterprises will pay 900 million interests more each year. The bad debt rate of some Chinese enterprises is even as high as 40%, much higher than the average level 0.4% of European and American enterprises.

Mr. Zeng Peiyan, Vice Premier of the State Council, once pointed out that commerce is the gear wheel of economy. Commercial credit can be transferred to each sector of economy and it can directly influence the mass consumers, so commercial credit is profound and its influence is wide. Honesty and credibility are huge “intangible assets” of enterprises. It is the passport of enterprises in market economy and also the lifeline concerning life and death. Losing credit may get some temporary advantages, but it is the overdraft of enterprises’ life. Only by keeping credit can enterprises live long. To construct enterprises’ credit well is not only good for enterprises’ own development, but also beneficial to the smooth running of the whole national economy. It is a crying need to accumulate enterprises’ credit wealth, elevate enterprises’ credit consciousness, improve Chinese enterprises’ credit status and raise the ability of utilizing credit products and level of credit management. Deficiency of credit is the deficiency in the management of China’s market economy. To reestablish credit has been the main concern of Chinese enterprises, and honesty and credibility will directly influence Chinese enterprises’ competitiveness.

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