Meaning and Purpose of

Enterprises’ International Credit Rating and Promotion

2. History and Present Situation of Chinese Enterprises’ Credit

Confrontation between humans and risks has never stopped in the history. Solid credit system is the security of guaranteeing the healthy development of human society. Credit systems established on respective ethical basis all run smoothly in traditional Chinese and modern western society. However, Chinese society which is in the transition period encounters serious credit crisis. We know that in the simplex structure formed on Chinese tradition in which country and society closely combines, the core lies in courtesy but not rules. In China’s feudal society, one of the Three Cardinal Guides and Five Constant Virtues is credit. “Always True in Word and Resolute in Deed” is the basic requirement of society for human beings. Credit is not a serious issue in traditional Chinese society. Why this kind of credit can be guaranteed is that one is the ethical and acquaintance society with courtesy as the core and family as a social unit, the other is traditional middleman and guarantor system. One is credit security system with family as undertaker and supervisor, and the other is credit (compact) security system combined with face, human relations and middleman system. They constitute the normal running security system of social credit system. However, when Chinese economy enters into marketization, population begins to float frequently, social variance accelerates, and traditional Three Cardinal Guides and Five Constant Virtues, family functions, acquaintance society, and middleman system rapidly recede from the historic stage, while problems in our social economic communications come into being when a new credit system that fits for the market economic development hasn’t been set up timely. No matter whether we are willing or not, modernization and globalization bring us into a “stranger” society, whose features are high floatability and strange. In such a society, constraints of moral will be at a great discount, because nobody will punish those violative deeds. Many social structures and background knowledge that moral rely on have been collapsed. At the moment, as the society generally lacks of credit, it is in dire need of new behavior rules to coordinate the economic behavior of humans. China once called 2001 as the “Honesty and Credibility Year” for the sake of calling the return of credit.

Presently, the following problems mainly exist in Chinese enterprise credit:

1. Main bodies of economic activity default with each other. Main bodies of economic activity default loans with each other and credit sides default banks, and phenomena of tax evasion, refusal to pay tax among main bodies of economic activity can be found everywhere. It is estimated that in the end of 1989, the total volume of chain debts defaulted among China’s enterprises was about 124 billion RMB, and it increased to 200 billion RMB in 1991, 700 billion RMB in 1994, 1100 billion RMB in 1998. Analyzing from the increasing status of economic disputes involving default between enterprises presented in whole China, presently the debts that haven’t been worked off among main bodies of economic activity still have a tendency to increase.

2. Contracts are broken randomly and promises are not kept. Under the premise of not damaging country’s interest, infringing legal and social orders and invading others’ rights, contract is the presentation of clients’ true willing and freedom, and it should be under the protection of laws. Effective contract is the law set by clients to themselves, so clients should follow the contract. However, in realistic social life, contract-violating phenomena caused by breaking contract randomly happen from time to time.

3. There are many counterfeits and shoddy products. The scope of making and selling counterfeits and shoddy products, quality cheating, brand infringement and patent infringement of illegal producers has already permeated into each sector of production, sales, financing, lending and loan, and competition. Besides, economic disputes and various cheating cases involving finance increase at a large scale. No matter they are new products or famous brand products, there are counterfeits of them. Fake making can be found everywhere. It is hard for people not to worry about food, clothes and daily necessities. Therefore, after treatment, so –called “quality-assured meat”, “quality-assured rice”, “quality-assured oil” and “quality-assured salt” continuously emerge in the society. But, “the quality-assured” doesn’t mean the decrease of counterfeits and shoddy products. Conversely, it just shows that each consumer is living under the situation of “not quality-assured”.

4. Governmental credit and legal dignity are facing tests. Government is the main administrative department of social public affairs, and law is the last defense line of maintaining social order and supporting moral. When social members suffer losses because of credit-losing, they always turn to government or even laws. In the process of transforming governmental functions and deepening administrative reforms, many effective legal official documents cannot be executed effectively because of influence of transition of systems and illegal factors. Those who don’t keep moral should have been punished by laws, but they are always at large because it is hard to execute the official documents. Therefore, society is suspicious of governmental credit and legal dignity.

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