The Method and Techniques of Chinese Enterprises’
International Credit Establishment
As an enterprise, pursuing benefit is the essence of its existence. It acts on instinct to pursue the best scheme and action in any possible situations in order to realize maximized benefits. Credit is the necessary premise to achieve this object. Therefore, it is necessary to set up an efficient system to reward credit and punish discredit, maximizing benefit to the one who keep credit and encouraging honest men to obtain advantages.
The CPC Central Committee and State Council are concern about the establishment of social credit system. Chairman Hu Jintao, emphasized in the group study of Political Bureau of the CPC Central Committee in 2005 that it is significant to insist on opening up as a principal national policy, to generally advance the level of opening up, to standardize market managing order and to soundly establish market credit system. Mr. Jiang Zhenghua, the Vice-Chairman of the Standing Committee of the National People's Congress, said that it can not build up a harmonious society without credit system; the establishment of market economy requires a perfect credit circumstance too. In the ceremony of “Business Thrived by Credit Month”, which is held by 10 departments and organizations including the National Office of Rectification and the Propaganda Department of the CPC Central Committee in September, Vice-Premier Wu Yi indicated in her address: “credit management is productivity and competition strength”. The development of century is not only an economic increase, but also a society evolution. It is an omni-directional promotion of human civilization. Enterprise credit has been part of social responsibilities. Honesty and credit has changed from a virtue to a necessity. Credit system as one of the important parts of market system will adjust economy spontaneously.
China’s entry to the WTO means a further pace of reform and opening up. It extremely promotes China to enter the global economy. Enterprises as the basic element of economy become the vanguard of this war. It is a sign of the beginning of a real international competition between Chinese enterprises and foreign enterprises. It is believed that it will bring tremendous opportunities and challenges for Chinese enterprises. In face of the new situation of great coexisted opportunities and challenges, the establishment of international credit should not only hasten its steps, but also join in international market based on a high entrance level. It is not acceptable to close the door by advocating “Chinese Characteristic”. The first step of establishing credit system should choose an international accepted pattern as for reference.
I. Promote the development of credit industry to ensure the enlargement of the credit transaction and continuous growth of the economy for our country
Development of economy and expansion of credit utilization are the solid bases that ensure credit industry’s emergence and growth. The development of credit service industry will further motivate the expansion of social credit and the increase of national requirement, thus promote the economy development. In the past 20 years, the economy in our country keeps in growing quickly for a long time. But the development level of credit industry is low and not suitable for the requirement of credit market, although there is a group of civil credit institutes. There are multiple reasons, such as small-scale or narrow business area, etc. They can not efficiently grasp the credit status of enterprises and customers because of dissymmetrical credit information. In order to evade credit risk, banks and other financial institutes set up a relative high credit entry threshold, while credit guarantees institutes are also reluctant to provide guarantee service. It restricts the expansion of credit development to a certain extent. At present, residents’ consumption structure of our country is at an upgrading stage obviously. The requirement of high expense such like house, automobile, communication device, education, holiday and travel are increasing continuously. It can be said that our country has the conditions to develop credit consumption in an extensive range. So it is necessary that credit agencies develop quickly to provide the society with comprehensive, actual and precise credit reports of customers and enterprises and enhance the information symmetrical level of the credit market.
II. Civil credit institute should become the main part of credit industry, while market-oriented operation should be the basic choice for credit pattern in our country.
Taking civil credit institute as the main part, the market-oriented operation mode should be the basic choice for credit development in our country. The reasons are as follows. First, credit industry of our country participating in international market should take the development of civil credit institutes as the foundation by using the international credit development experience for reference. It should expand market competition by the rules of commercial management, adopt market techniques in business operation, and provide society with objective and independent credit reports. Second, along with the expansion of economy development and credit scale, and deepening understanding of credit service’s function, requirement of credit reports for consumer will increase continuously. Not only banks and other financial institutes, but also commercial trade institutes and credit card issuing institutes will become the major demander of credit reports. So it is necessary to greatly promote the growth of civil credit institutes, because they have more credit information resources with target of providing credit information consultative service for the entire society and have more characteristics of market. Third, market-oriented operation and pressure from market competition will encourage civil credit institutes to develop new credit products endlessly and provide society with personal service and diversified over-value service. Fourth, it will be favorable to motivate all active factors including capitals and human resource in the society to the work of establishing credit service industry without large amount of investment from government by choosing civil credit as major market pattern. Fifth, civil credit institutes should not affiliated to any governmental departments. It will be appropriate to keep the independence and justice of the industry. Consequently related laws and regulations and administration systems should create advantages and equal market circumstance for the development of civil credit institutes as possible as they can.
III. Establishing civil credit system without excluding public credit registration system
It is necessary to establish public credit registration system with purpose of strengthening and completing financial supervision service, whereas not providing society with commercial credit information service. Regarding civil credit institutes as the main part and making market-oriented credit pattern as the choice is not to exclude establishing public credit registration institute in our country. It is very important for our country to establish public credit registration system with the purpose of strengthening and completing financial supervision system at present. Because on the one hand, our country is in the crucial period of turning from planned economic system to market economic system, financial system is not healthiness and has system risk and hidden troubles; on the other hand, the financial supervision system in our country is feeble, supervision department can not grasp comprehensive credit status of financial institutes, therefore can not make right judgment and decisions for financial operation and relevant financial policies. The purpose and function of the public credit registration system is to provide supervision department with precise timely credit data for the sake of completing financial supervision and evading credit risk. At the same time, it bears the function of communication between financial institutes, avoiding information separation and dissymmetry to some extent. Furthermore, our country has set up central bank credit registration consultative system in 1999, possessing certain organization background. But it has to be mentioned that the purpose of establishing public credit registration institute is to serve government financial supervision other than to provide society with commercial credit information. Thus they are not exclusively.
VI. Establishing and completing credit legislation system, creating favorable environment for the development of credit industry
Credit is the core of credit system establishment. Credit is the premise of development. It must be guaranteed by laws or regulations to open up credit information to the public. That opening up credit information (including faithful and faithless credit information) to the public comprehensively, authentically and continuously will bring convenience for both transaction parties to carry out mutual credit rating comprehensively and precisely so that to decrease transaction risk. Therefore, it is necessary to establish and improve credit legislation system to create better environment for the development of credit industry.
Taking experience of other countries as for a reference, it is the key point to realize the publicity of government credit information. In the way of enacting related acts, such as the “Freedom of Government Information Act”, government is enforced to open enterprises and personal credit information in the field of economy and social administration. As for other market entities (except for listed corporations), whether open credit information of their own or their counterparts to the third party is totally a voluntary behavior. It is not enforced in laws. In addition, it is also an important content to establish and perfect credit legislation system through the way of legislation, strengthening credit information protection especially the protection of personal privacy and enterprises’ business secret, and standardizing the procedure of collection and spread of credit information to avoid loss to the party.
According to the reality of our country, it has been a bottleneck for credit development that credit information is not able to open up to the society efficiently. At present, about 70-80% credit information spreads in different governmental departments. Most of the information is not opened to the society so that brings great waste and restrains credit establishment. Based on this situation, there are jobs in three aspects needed to be done. First, enacts the “Freedom of Government Information Act”. Insists on opening up government information to the public as a general principle and takes concealing information as an exception. It should be clarified both in the content and the method of the government information publicity. Second, enacts the “The Privacy Act” and the “The Business Secret Protection Act”, etc. to protect privacy and enterprises business secret. Third, builds up an encouraging atmosphere that market mainstay would open up credit information to the public voluntarily.
One of the important contents of enterprises’ international credit rating and promotion activity is to provide multiple forms and professional services of credit, credit rating, credit administration and consultation for enterprises’ international exchange according to widely used international routine and criterion. Especially professional process should be carried out to help enterprises collect and process credit information of their business counterpart so that to evade and distract credit risk. It will increase market opportunities for credit enterprises/person and cut-down transaction costs.
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