Date
23 August 2017
Mainland companies have been the top source of bad debts for Hong Kong exporters for the fourth straight year. Photo: Bloomberg
Mainland companies have been the top source of bad debts for Hong Kong exporters for the fourth straight year. Photo: Bloomberg

Mainland firms top bad debt source for HK exporters

Mainland companies remain the top source of bad debts for Hong Kong exporters, according to a survey conducted the public opinion program of the University of Hong Kong released on Thursday.

The study, commissioned by debt collection service provider EOS Hong Kong, examines overdue payments and credit risks management of local exporters. It sees a margin of error of plus or minus 4.5 per cent with a 95 percent confidence level.

Among the 500 local exporters polled from May 20 to 30, 191 of them had experienced bad debts. Out of the 191 local exporters, 42 percent said mainland China was the main source of their bad debts, a drop from 44 percent in the same study conducted in the previous year. Still, it is the fourth year in a row that mainland companies have topped the survey.

The US market comes in the second as respondents said 8 percent of the bad debt originates from the country, down from 15 percent in the previous year. Europe’s bad debt proportion also drops to 5 percent from 8 percent. However, Japan’s bad debt has doubled to 4 percent.

Cobe Tsang, EOS Hong Kong managing director, said although China’s economy is showing signs of improvement, the number of bad debt cases is still high. He cautions local exporters to be more careful in choosing their buyers, Metro Daily reported Friday.

Tsang said Japan’s bad debt has worsened mainly because of its sluggish economy, and warned that the situation may deteriorate.

Meanwhile, 52 percent of the 500 respondents reported overdue loans. Although that’s a drop from 63 percent last year, the average number of days that debtors are in arrears has increased to 69 days from 50 days.

Tsang said the increase in the number of days that debtors have been unable to repay their loans is an alarming sign for local exporters. He suggested that the government or business groups set up a database on buyers’ credit ratings for local firms.

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JH/JP/CG

EJ Insight reporter

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