Jason Sandefur

In the wake of the U.S. subprime crisis, some Chinese fastener exporters reportedly are taking precautions before shipping to customers.
For example, Zhejiang New Oriental Fastener Co. has begun buying credit insurance for all export orders to guard against payment defaults.
“With the subprime crisis, each of our clients has become potentially exposed to unpredictable risks such as bankruptcy,” sales manager Xiang Guihong told Agence France Presse. “As late as last year we felt no need for such a practice. Now we understand that it will help our credit risk management.”
During the first five months of 2008 the company saw shipments to the U.S. drop more than 30%, largely due to the gloomy U.S. real estate market.
New Oriental, which once worked on 60-day credit terms, now requires U.S. clients to pay for the goods within 10 days after delivery.
“Steel makers and steel trading firms only accept cash for payments,” Xiang said. “Our working capital is so tight that if we had a large amount of account receivables, we’d run out of money needed to buy raw materials for new orders.” \ �2008 FastenerNews.com