Credit insurer Euler Hermes has revealed figures indicating why Hong Kong's exporters are increasingly insisting on letter of credit (L/C) terms (DC World News, 9 February 2014).

The credit insurer says that over half of the island's exporters experienced bad debts over the last year.

Credit crunch

Nearly 70 per cent of exporters suffered from late payment while those experiencing bad debts, on average, lost the equivalent of around U$25,000 each.

Many of the companies impacted by bad debts are small- and medium-sized enterprises.

China concerns

A substantial 83 per cent of the firms surveyed have had to cope with late payments while 69 per cent said they were concerned about a slowdown in China.

Despite the shift towards L/C transactions, Euler Hermes found that 56 per cent of exporters are trading on open account terms.

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