Global Observation: Export Credit Risk Tips Under The Escalation Of Conflict Between Russia And Ukraine

Since February this year, the situation in Russia and Ukraine has taken a sharp turn, causing widespread concern around the world. The latest news shows that the talks between Russia and Ukraine began at 12:00 local time on the 28th. As the current situation is not clear, if the situation in Russia and Ukraine further worsens, it will increase the impact on the economic and trade activities between export enterprises of our province and Russia, Ukraine and even the world. In this regard, China export credit insurance company Zhejiang Branch made the following risk tips and suggestions:

Related risk tips

1. Pay attention to the risk of financial market fluctuation

As the latest sanctions against Russia, western countries, led by the United States and the European Union, issued a joint statement to prohibit Russia's major banks, including SBER bank and VTB bank, from using the swift international settlement system. Sanctions, if implemented, would mean temporarily cutting off most of Russia's trade and financial flows with the world. With the spread of extreme panic and risk aversion, capital outflow from emerging markets and pressure on exchange rate depreciation rose sharply. The Russian Central Bank announced on the 28th that it would raise the benchmark interest rate to 20%. Series of financial market fluctuations will directly affect the willingness and ability of importers to pay.
2. Pay attention to the logistics risk of shipping suspension

The war has affected shipping services and intensified the tense situation of international shipping. At present, the Black Sea and sub speed sea area of Ukraine and Russia have been added to the high-risk areas. The ports in the waters are the main export hub of grain and coal. Once facing blockade, it will have a significant impact on trade. Under the L / C transaction, the documents can not be sent to the bank and cannot be negotiated. Under the non L / C payment mode, the telex release of the bill of lading will further lead to the rejection of the goods, and the goods are difficult to be returned or resold after entering the customs, and the buyer's risk of abandonment is increased.

3. Pay attention to the risk of rising cost of some raw materials

In the face of the obvious deterioration of the situation in Russia and Ukraine and the expansion and upgrading of western countries' sanctions against Russia, the global market reacted violently and the risk aversion sentiment was significant. The prices of gold, oil, natural gas and agricultural products went up. In view of Russia's share of non-ferrous metals such as aluminum and nickel, once Russian Aluminum and nickel enterprises are subject to sanctions, the risk of global aluminum and nickel supply will rise. Therefore, for the export enterprises in our province, the indirect impact of the increase of raw material cost and logistics cost caused by the conflict between Russia and Ukraine deserves attention.
Relevant suggestions
　　1. Pay close attention to the changes in the situation and suspend the development of new business in Uzbekistan
Affected by the conflict between Russia and Ukraine, a series of commercial risks may increase, such as goods rejection, buyer's default on payment and buyer's bankruptcy. At the same time, in view of the short-term uncertainty of the situation in Ukraine, it is suggested that the export enterprises suspend the new business in Ukraine, and pay close attention to the follow-up of the situation in Ukraine.
　　2. Comprehensively sort out the orders in hand and project implementation progress of Russian and Ukrainian buyers
It is suggested that export enterprises comprehensively sort out the orders in hand and project implementation progress of Russian and Ukrainian buyers, pay attention to the risk situation of partners in real time, maintain full communication, timely adjust the contract terms such as the time of shipment of goods, delivery place, payment currency and method, force majeure, etc., and do a good job in risk prevention.
　　3. Evaluate the distribution of raw material purchasing quantity in advance
Considering that the situation in Russia and Ukraine is likely to escalate, which may lead to price fluctuation of some raw materials, it is suggested that enterprises assess the impact degree, prepare for price fluctuation in advance, and arrange raw materials in advance.
　　4. Cross border RMB settlement
In view of the current situation of sanctions against Russia in the international market and the direct impact on the future transactions with Russian buyers, it is suggested that export enterprises should adopt cross-border RMB settlement for Russian business.
　　5. Pay attention to the collection of payment for goods and strengthen the contact with Zhejiang SINOSURE

It is suggested that export enterprises should pay close attention to the progress of the situation, do a good job in collecting loans, and at the same time, use export credit insurance as a policy financial tool to avoid political and commercial risks and ensure the safety of export foreign exchange collection.
For the export enterprises that have been insured, please actively contact with all agencies of Zhejiang SINOSURE. In case of any risk change, contact our customer manager in time, and report the possible loss or apply for claim within the time limit stipulated in the policy. For the export enterprises that have not yet been insured, they can contact for risk and insurance consultation at any time.