Recently, many foreign trade people have been troubled by the "destroyed orders" of buyers, and many enterprises have been affected by the "destroyed orders" of buyers, which will affect the normal operation of enterprises and even face the risk of bankruptcy.

In order to prevent the occurrence of such incidents, today I will share two cases with you, and talk about how to effectively avoid risks when enterprises face the problem of "the buyer cancels the order before export".

The so-called "destroyed order" refers to the fact that the buyer paid a certain deposit after placing an order, but eventually cancelled the order for various reasons.

Case number one:

A textile export company received an order last year for customized products, and the customer is also an old customer, so the customer proposed to pay only 20% of the deposit, and the exporter felt that there was no problem.

After the goods are ready, the customer has been delaying the delivery. After all, the sea freight was too high at that time. The exporter also considers the old customer and agreed to temporarily store it in the warehouse, and then choose the time to ship it when the freight rate drops.

In this way, 1/3 of the goods have been shipped out this year. The exporter saw that the freight rate has dropped recently, so he urged the customer to hurry up to ship the goods. It's the best time to sell, and they can't sell it when they get it, so now they don't want it.

At this time, the first two exporters are big, and the deposit is only 20%. This batch of customized products is not easy to resell. In the end, maybe they can only find a domestic anchor to bring the goods and deal with them at a discount.

Case 2:

A Chinese company signed a sales contract with a Russian buyer in 2019. Since the other party was an old customer, after the buyer placed an order, the company immediately organized overtime production of raw materials before the Spring Festival in mid-January 2020.

After the Spring Festival in 2020, affected by the domestic new crown epidemic, the Russian buyer suddenly cancelled the order unilaterally using the epidemic as an excuse. At this time, the company still had the customer's finished or semi-finished products worth more than 210,000 US dollars in the warehouse and production line waiting for export. This situation caught the company by surprise. In a hurry, they thought that the short-term comprehensive insurance of China Credit Insurance had expanded to cover the risk of "before shipment" orders, so they reported the case to the China Credit Insurance Corporation.

After receiving the case, SINOSURE used the "green channel for claims settlement", launched the quick claim settlement procedure, and promptly paid the company about 380,000 yuan in compensation for the loss of finished and semi-finished products in the warehouse and on the production line, making up for the loss of the company to the greatest extent.

In the current epidemic and inflation, it is not uncommon for export companies to cancel their orders. In fact, these situations do not distinguish between new customers, old customers, large customers and small customers, and even for some customers who have no business ethics, this is a way for them to transfer risks. a means.

Why do you say that?

This kind of operation of destroying orders occurs from time to time in the current chaos of the shipping market, and the category with fierce competition is the hardest hit, because some big customers even do it intentionally.

Why do they do this?

1. When the shipping schedule is uncertain, epidemic prevention and control, and production are chaotic, the major customer only pays a small deposit, but he orders from multiple companies, whoever can ship first will pay the final payment, especially when the Southeast Asian factories fully resume work After that, buyers have more choices.

2. Under the current background of inflation, large customers may also use this method to test the market. If the market environment is good at the time of shipment, or the exchange rate is reasonable, then the balance should be paid normally to receive the goods. If the market is cold, or the local currency of the importing country is large If it falls, then simply don't buy the goods. Although the deposit is lost, the loss can be controlled within a certain range.

In short, for the buyer, he only needs to pay a lower rate of deposit to pass on the high risk, so why not do it.

Due to the superposition of various factors this year, the global inflation and CPI have skyrocketed, and many countries have also cancelled cash subsidies during the epidemic. For overseas consumers, one is that they have no money, and the other is that the price has risen so much that they cannot buy it. As a result, consumer confidence has plummeted, which will inevitably make importers reduce their purchasing plans.

In addition, buyers in some countries may really do it as a last resort. For example, the country's foreign exchange reserves have bottomed out, and foreign exchange controls have been implemented. They cannot exchange dollars to pay for the goods, and that is the only way to destroy the single.

Therefore, please pay attention to the following orders: 1. Increase the deposit ratio; 2. Keep an eye on the customer market!

Besides, is there a relatively safe solution?

There really is!

Business friends who are worried about the risk of ruining the order must know about "pre-shipment insurance".

As early as 2020, the State Council issued the "Opinions on Further Stabilizing Foreign Trade and Foreign Investment". The "Opinions" proposed to increase fiscal, taxation and financial support. Better play the role of export credit insurance, and actively protect the risk of order cancellation before shipment.

Then, the original short-term comprehensive insurance additional insurance pre-shipment insurance has been upgraded to better serve customers.

Pre-shipment insurance introduction

Pre-shipment insurance is an additional insurance of short-term comprehensive insurance, which is a part of short-term comprehensive insurance. It can extend the coverage of short-term comprehensive insurance to the production and procurement stages before shipment, and provide exporters with the whole process from the entry into force of the contract to the recovery of the payment for goods. Risk protection guarantees the risk of loss of various costs invested by enterprises for signed orders.

The starting point of protection of the pre-shipment insurance is the date when the export contract takes effect, and the termination date is the starting date of the main insurance liability, that is, the date of shipment of the goods.

If the buyer cancels or suspends the contract due to commercial or political risks before the goods are shipped, for the exporter that has purchased or organized the production of the products originally ordered by the buyer, the pre-shipment insurance product can compensate the exporter for the inability to export. For direct losses, the compensation ratio shall not exceed 90% of the loss amount.

It is suggested that export enterprises and export enterprises should pay more attention to the fulfillment of their obligations under the contract in extraordinary times, sort out their own production and operation capabilities and confirm the cooperation degree of upstream and downstream cooperative enterprises as soon as possible, arrange production plans according to the specific agreement of the trade contract, and check related trade. Whether the contract can still be performed as scheduled, and whether there is a risk of default. Strictly control product quality and service, actively seek solutions for links that may be indirectly affected by the epidemic, and maintain good communication with customers and suppliers.

In the case of disputes between the two parties, if the buyer refuses to continue to perform the contract or requests to rescind the trade contract, the exporter should also require the buyer to provide evidence to support its claim, including but not limited to: the official announcement of the buyer's country prohibiting the acceptance of Chinese export goods The buyer's sales target or the buyer's country consumer has expressly refused to accept the goods from China, or has a tendency to refuse to buy the goods from China, evidence that the buyer will continue to receive the goods will lead to losses, etc.

Special note: The above information is for reference only, export enterprises are requested to make independent judgments according to the specific situation in practice.