Sinosure: The Tool Importers Use to Unlock Supplier Credit in China

It’s a fact of life that China has become the world’s factory, the source of much of the manufactured goods consumed around the globe today. For countless thousands of importers, Chinese-made goods have become big business, but many of these importers face one core problem: securing credit from suppliers.

By default, the import-export trade works on the basis of prepayments. The buyer agrees to a purchase from a supplier, transfers payment, and waits for the goods to arrive. The problem with this is that the buyer’s cash flow is tied up in its least liquid form: inventory. While the importer awaits the production and arrival of the goods they purchased, the capital available for further purchases is constrained. This limits the importer’s ability to scale their business, and eventually importers realize that choosing a supplier is not only about price and quality – in the end it also becomes about payment terms.

Getting credit from a supplier isn’t easy, and this is understandable. Cross-border transactions pose a risk to exporters. Often – especially in the case of smaller businesses – the supplier has no way to evaluate the risk of a particular buyer. There may not be data available on the buyer’s financial health, and equally importantly, the supplier has no mechanisms to enforce payment in a foreign country for goods that have already been shipped. Exporters aren’t banks, and they typically don’t have the ability to assess a foreign buyer’s creditworthiness.

Additionally, cross-border trade comes with a degree of political risk. Global events in recent years have highlighted this reality, with disruptions plaguing supply chains during the pandemic, and more recently, as a result of military action that has exploded in various parts of the world. Most Chinese suppliers don’t have the werewithal to maneuver through these unpredictable environments.

Yet suppliers generally do want to provide credit. China’s export market is a crowded field, with many products being produced by hundreds of manufacturers. In such an environment, it can be difficult to stand out, and even more difficult to secure repeat business from importers. Being able to offer buyers payment terms is an important retention tool for suppliers; it creates an obvious competitive advantage.

Some suppliers have enough scale to handle this themselves: Exporters like BYD and Huawei are large enough to run internal credit assessments and manage debtor portfolios. But that’s not the case for most the hundreds of thousands of exporters operating in China – hence the requirement for prepayment. For these suppliers, in order to offer credit to buyers, they need a way to transfer the risk of doing so.

Fortunately, like many other export-driven economies, China has an institution designed to do just this: Sinosure, a.k.a. China Export & Credit Insurance Corporation. Launched in 2001, its primary function is to insure exporters against the credit and political risk that comes with cross-border payment terms.

Suppliers who wish to offer credit to buyers will register with Sinosure, and when a new buyer comes along, Sinosure will evaluate that buyer and set a credit limit for the maximum amount that Sinosure will insure for that buyer. The supplier can then extend credit to the buyer up to the limit, knowing that Sinosure will cover much of the losses in case of payment default or bankruptcy by the buyer, or disruption caused by global events such as military action or civil unrest.

Typically, suppliers insured through Sinosure will offer 90-day payment terms. And while Sinosure is an insurance product for exporters, the main beneficiary is the importer. They have received unsecured supplier credit, with no bank involvement and no collateral – just a direct relationship with supplier. In the best case, an importer can pay for their shipment after selling it wholesale or retail – a monumental improvement to cash flow that the importer can take advantage of to scale up their volume or otherwise invest in the growth of their business.

It’s hard to underestimate just how important a function Sinosure carries out in China’s export economy. One could say it’s the grease that keeps the whole machinery running smoothly. In 2024, Sinosure insured more than 227,000 Chinese exporters with around USD $1 trillion in coverage. Sinosure – and other, similar export credit agencies worldwide – are part of the core infrastructure of global trade.

So, you may ask yourself, why is this key aspect of the import-export business not better known among importers? While Sinosure’s existence is hardly a secret, it does seem to be “hidden” within the merchandise trade economy. There are a number of reasons for this. For one, Sinosure markets its insurance products to Chinese exporters, not importers the world over. Suppliers, as a rule, don’t openly advertise their use of Sinosure, so it even happens that when importers are offered payment terms, they don’t know that Sinosure is the entity making it possible. Sinosure is part of the “invisible infrastructure” of global trade.

But for importers, Sinosure enables credit terms that would otherwise be impossible to attain. Many importers are asset-light, meaning they have little (other than inventory) that they could put up as collateral if they went to a lender for credit terms. And even if they did have collateral, banks are hesitant to extend credit for purchases made in markets where they don’t operate: They have no way of evaluating the reliability and creditworthiness of a Chinese supplier. For this reason, most banks won’t lend to importers for purchases of goods from abroad. That leaves importers with limited credit options.

In that light, it’s easy to see why and how Sinosure plays a key role in enabling international trade – and in indirectly offering importers a tool for growing their business.

Even for smaller importers (perhaps especially for smaller importers) Sinosure has proven to be a crucial backbone for business growth. Without coverage from Sinosure, many of the exporters selling to Amazon retailers wouldn’t be willing to extend credit to online retailers.

One such example is Designelle, a U.S.-based Amazon retailer of consumer products. Designelle had been having trouble attaining a credit limit from Sinosure, so the company reached out to Axton Global, a consultancy that specializes in helping importers get set up with a credit limit from Sinosure. Axton Global identified the problems – among them a discrepancy between Designelle’s corporate name and its trading name – and provided Sinosure with the necessary documentation to attain a credit limit.

In the case of NeoSolar, a Brazilian provider of photovoltaic solar energy solutions, securing a credit limit from Sinosure resulted in 90-day credit terms from three Chinese suppliers and 45-day terms from another. The company went from having zero credit for its purchases from China to a $2.9 million credit limit.

This isn’t just a “nice-to-have” add-on to an importer’s business: it can change the game entirely. To scale their business, importers need depth of inventory, they need to the ability to carry out planning cycles (forecasting demand, aligning supply and scheduling procurement and shipments), and, maybe most of all, they need flexibility in their working capital. The advantage of a Sinosure credit limit is that it can help with all these elements.

A Sinosure credit limit creates a strategic advantage for importers. Having that credit limit is a “verification signal” – a sign that the importer has been seriously vetted by a Chinese institution that is willing to vouch for creditworthiness. Suppliers are more likely to see such an importer as being transparent and reliable.

That gives the importer leverage they otherwise wouldn’t have had in negotiating terms. They can potentially negotiate improved pricing and/or production priority. Being vetted by Sinosure has its privileges.

All this becomes even more important in the increasingly fragmented and unpredictable global trade environment. Rapidly changing tariff rates, unpredictable trade policy changes and supply chain-disrupting regional wars have come together in recent years to create a perfect storm of uncertainty for importers and exporters alike. The ability to secure insured credit terms from suppliers adds a layer of flexibility and resilience to the import-export business that is particularly valuable today.

Ultimately, Sinosure isn’t just insurance: It is a fundamental part of the trade system behind Chinese exports, and importers who want to be a significant part of this system shouldn’t treat a Sinosure credit limit as optional. It should be seen as a strategic tool that can establish strong, predictable business relationships, give importers an advantage in the market, and mitigate some of the uncertainties of international trade today.

Businesses that understand and use Sinosure can relieve some of their capital pressure and gain opportunities for business growth that otherwise wouldn’t exist. If you’re an importer who has been buying on prepayment terms, now is the time to look into Sinosure.