A survey of corporate credit risks management in Asia Pacific region was conducted in the fourth quarter of 2012 by Coface, a leading global credit insurance group. The survey revealed that corporate payment experience in the region generally worsened. Companies in Australia, China and India suffered more non-payment. Sectors of building & construction, IT, ISP & data processing, textile, clothing & shoes and household electric & electronic appliances are at higher risk. Companies in the region are less optimistic about recovery of global economy in 2013.

1. Corporate Credit Risk
Management in
ASIA PACIFIC
COFACE in Australia
Level 10, 68 York Street, Sydney
Level 18, 600 Bourke Street, Melbourne
Tel. 02 8235 8600 Email: au_info@coface.com
ww.coface.com.au

2. /
Who Is Coface?
 Coface is the 3rd largest credit insurer worldwide, offering
companies around the globe solutions for trade receivables
management.
 Direct subsidiaries in 66 countries and able to provide credit
insurance and credit management services in 97 countries via
CreditAlliance network.
 Each quarter, Coface publishes its assessments of country risk for
158 countries, based on its unique knowledge of companies'
payment behavior and on the expertise of its 350 underwriters.
 35, 000 clients in credit insurance worldwide
 The manager of the French government export guarantees.
3CORPORATE CREDIT RISK MANAGEMENT IN CHINA

3. /
Coface Global Offer in Credit Insurance
Availability in 97 Markets
3
This view shows the difference
between the countries where we
offer credit insurance directly and
countries where we offer credit
insurance by using partners or
fronters.
CORPORATE CREDIT RISK MANAGEMENT IN CHINA

4. /2012 Survey of Corporate Credit Management in Asia Pacific
Coface ’ s Presence in Asia Pacific Region
China (Shanghai, Beijing)
• Coface (Shanghai) Information
Services Co. Ltd.
South Korea (Seoul)
• Coface Services Korea Co.,
Ltd.
India ( Mumbai, Bangalore and
New Delhi)
• Coface India Credit
Management Services Pvt.
Ltd
Thailand (Bangkok)
• Coface Services (Thailand)
Co., Ltd.
Singapore – direct license
• Singapore Branch
Malaysia (Kuala Lumpur)
• Coface Services (M) Sdn
Bhd
Vietnam (Ho Chi Minh City)
• Coface Services Vietnam Co
Ltd
Australia (Sydney, Melbourne) –
direct license
• Australia Branch
Hong Kong (Regional Office) –
direct license
• Hong Kong Branch
Japan ( Tokyo, Osaka) – direct
license
• Japan Branch
Taiwan (Taipei) – direct
license
• Taiwan Branch
Indonesia (Jakarta)
• Coface Indonesia
Representative Office
4

5. 2012 Survey of Corporate
Credit Risk Management
in Asia-Pacific
1. Survey background
2. Corporate Credit Risk Management Practices
3. Overdue situation
4. Sector Analysis
5. Credit risk mitigation strategy
6. Summary & Coface Country Risk Assessment
52012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC

6. /
Survey Background
 Objectives:
 To understand the general status of corporate credit risk management practice
 To understand payment experience of companies
 To analyze trade credit risk of different sectors
 To compare the payment situation and credit risk management practices across the Asia-
Pacific
 About this survey:
 Survey took place from October to December 2012
 Total number of interviewed companies: 2,274 companies
 (Australia) 84 ; (China) 1021; (HK) 412; (India) 312; (Japan) 205; (Taiwan) 215; (Singapore –
1st year) 45
2012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC 6

7. 1
Survey background
72012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC

8. /
Profile of Interviewed Companies in Asia-
Pacific
8
2012
• Samples from different countries across the region and reflects the
industry concentration of each location
2012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC

9. /
Profile of Interviewed Companies in Asia
Pacific
9
 Sample sizes from SMEs to MNCs.
2012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC
40%
26%
12%
22%
APAC
less than 10
10 to 50
50 to 100
more than 100
0%
10%
20%
30%
40%
50%
60%
70%
80%
AU CN HK IN JP SG TW
Company size of interviewed companies
total estimated sales revenue (million EUR)

10. 2
Corporate Credit Risk
Management Practices
102012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC

11. /
62%
90%
80%
45%
86%
93%
76%
93%
86%
67%
76%
84%
94%
87%
82%
AU CN HK IN JP TW SG APAC
Offered credit sales to your customers in the past 12 months
Credit Sales – Popular in Asia-Pacific
11
 More companies offered credit terms in APAC in 2012
 Almost all Taiwanese companies continue offering credit terms to their buyers while less Hong Kong
companies offer credit sales in the region.
 Sharp rise of companies in Australia and India offering credit sales is observed
2012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC
20122011

12. /
50%
11%
29%
5% 5%
51%
13%
24%
6% 7%
0%
10%
20%
30%
40%
50%
60%
market competition your customers are
suffering from tight
liquidity and ask for your
credit facilities
you have more
confidence in your
customers
3rd party risk mitigation
in place (credit insurance
/ guarantee / sblc /
factoring)
others
Main reason of offering credit terms (APAC)
Main Reason of Offering Credit Terms
122012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC
20122011
 Market competition is still the main reason offering credit sales but more companies
express their buyers are suffering from tight liquidity. Even the confidence level decreases,
companies still need to offer credit terms in order to win more business

13. /
46%
31%
17%
4% 3%
44%
34%
17%
3% 2%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
30 days 60 days 90 days 120 days More than
120 days
Average credit terms offered during the last
12 months - APAC
Average Credit Terms Offered
 Average credit terms
maintains at 2011 level with a
small increase of companies
offering 60 days credit terms.
132012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC
20122011
73% 67%
51% 49% 42% 44%
34%
42% 48%
22%
Average credit terms offered by companies
30 days 60 days 90 days and more
 Companies in Japan and Taiwan are
most aggressive in offering long credit
terms (90 days or more) to their buyers

14. /
Weight of Credit Sales in Turnover
 Companies in Australia, Japan, Singapore and Taiwan tend to have more
credit sales businesses (76% to 100% of credit sales in total sales).
142012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC
20122011
59%
24%
20% 21%
58%
49% 48%
0%
10%
20%
30%
40%
50%
60%
70%
AU CN HK IN JP SG TW
% of credit sales of total sales during last 12 months
<30%
30%-75%
76%-100%
28%
38%
34%
31%
38%
31%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
less than 30% 30% - 75% More than 75%
APAC

15. 3
Overdue Situation
152012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC

16. /
Overdue Situation
 2% increase of companies experienced overdue (unpaid after due date as indicated in
the commercial contract) in 2012
 More companies in Australia, China and Taiwan report overdue
162012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC
APAC
Japan
(42%)
India
(56%)
Hong Kong
(57%)
China
(77%)
Australia
(83%)
Taiwan
(77%)
Singapore
(68%)

17. /
Overdue Amount Compared to Last Year
 14% more companies reported
their overdue amount increased
in 2012 compared to 2011, which
reflects a deterioration of general
payment situation in the region
 More companies in China, Hong
Kong, Singapore and Australia
reported their overdue amount
had increased in 2012.
172012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC
29%
26%
44%43%
23%
34%
0%
10%
20%
30%
40%
50%
increased decreased maintained
APAC
34%
56%
42%
24%
22%
43%
20%
0%
10%
20%
30%
40%
50%
60%
AU CN HK IN JP SG TW
Amount (dollars) of the overdue compared to last year
increased
decreased
maintained
20122011

18. /
Average Overdue Days
2012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC 18
36%
33%
17%
5%
4%
5%
36% 35%
15%
5%
4% 5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
less than
30 day
30-<60
days
60-<90
days
90-<120
days
120-<150
days
150 days
or more
APAC
 71% of companies keep their average overdue days below 60 days which is quite stable
compared to 2011.
 More than 85% of companies in Japan and Taiwan are able to keep their average
overdue days shorter than 60 days.
 Less than 70% of companies in Hong Kong, India and Singapore could keep their
average overdue days shorter than 60 days.
20122011
40%
35%
33%
31%
23%
14%
11%
29%
Singapore
India
Hong Kong
China
Australia
Taiwan
Japan
APAC
Percentage of companies with average
overdue days more than 60 days

19. /
47%
23%
17%
7%
6%
41%
22%
21%
8% 8%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
less than
0.5%
0.5% -<2% 2%-< 5% 5%-<10% 10% or more
APAC
Over 6 months Overdue in Weight of Turnover
>2% of overdue as % of total
annual turnover
AU 43%
CN 36%
HK 49%
IN 60%
JP 14%
SG 53%
TW 11%
APAC 37%
192012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC
20122011
 Debt aged more than 6 months overdue has high chance to turn into bad debt. Companies with more
than 2% of their annual turnover are overdue debt for 6 months or longer could have liquidity problem
and have high risk of non-payment to their suppliers.
 37% of companies carry more than 2% of their turnover unpaid for more than 6 months, an increase of
7% comparing to the result of 2011.
+7%

20. /
53%
20%
9%
7%
3% 3%
6%
0%
10%
20%
30%
40%
50%
60%
customer’s
financial
difficulties
customer’s
management
problem
fraud and lack
of morality (try
to avoid
payment)
commercial
disputes
External
Administration
or Insolvency
Changes in
company
structure
others
APAC
Main Reason of Overdue
202012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC
2011 2012
 Although customer’s financial difficulties is still the main reason of overdue, more companies express
their overdue is caused by management problem or fraud of their buyers.
 Due diligence of buyers should be enforced before offering credit

21. /
What caused financial difficulties of buyers
2012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC 21
60%
36%
15%
6%
15%
7%
5%
0%
10%
20%
30%
40%
50%
60%
70%
fierce
competition
impacting
margins
lack of
financing
resources
impact of rising
raw material
prices
heavy fixed
assets
investment
over inventory
level
rising bad debts
level
others
The main reason of overdue (under financial difficulties)
- multiple answers
 High competition is still the major reason contributing financial difficulties of buyers.
 Lack of financing resources also cause more companies into difficulties, particularly in India, China and
Australia.

22. 4
Sector Analysis
222012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC

23. /
Risky sectors in Asia Pacific
Most companies
reported overdue
Most companies
reported increased
overdue amount
Most companies
have average
overdue days > 60
days
Most companies
have more than
2% of their
turnover unpaid
for more than 6
months
Building &
Construction
4 3 2 1
IT/ISP & data
processing
5 1 2
Textile/ clothing/
shoes & other
apparels
1 5
Industrial machinery
& electronics
2 4
Paper & printing 2 3
2012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC 23
Ranking in Asia Pacific Region

24. /
Average Overdue Days (APAC by sector)
2012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC 24
21%
24%
24%
26%
26%
29%
29%
30%
38%
40%
41%
43%
textiles/clothing/shoes & other apparels
chemicals
industrial machinery & electronics
steel, iron & other primary metals
telecommunications & broadcasting
FMCG
household electric / electronic appliances
pharmaceuticals
transportation
paper & printing
building and construction
IT/ISP & data processing
Average overdue days
less than 30 days 30-60 days more than 60 days
APAC
29%

25. /
Overdue Ratio of past 6 months (APAC by
sector)
2012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC 25
20%
30%
33%
34%
35%
35%
36%
39%
40%
43%
45%
61%
paper & printing
chemicals
steel, iron & other primary metals
transportation
pharmaceuticals
FMCG
industrial machinery & electronics
textiles/clothing/shoes & other apparels
household electric / electronic appliances
telecommunications & broadcasting
IT/ISP & data processing
building and construction
The ratio of aged overdue debts over 6 months as a percentage of your total annual
turnover
less than 0.5% 0.5% - 1.99% 2% or more
APAC
37%

26. 5
Credit risk mitigation strategy
262012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC

27. /
Effective Ways to Act Against Overdue
272012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC
74%
10%
6%
7%
3%
2012
APAC

28. /
Use Of Credit Management Tools
 Trade credit insurance and credit
report are the mostly used credit
management tools .
 Japanese and Taiwanese companies
have a higher percentage of using
credit management tools, trade credit
insurance, factoring and credit reports
in compare with other markets.
282012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC
18%
12%
28%
16%
39%
4%
24%
15%
36%
19%
34%
2%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Multiple answers
58% 60% 63% 67%
76% 80%
100%
66%
Percentage of companies using credit
management tools

29. 6
Summary & Coface Country Risk
Assessment
292012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC

30. /
Summary
 Credit sales continues to grow in the region with significant increase in Australia and
India.
 Market competition is the major reason of offering credit sales. Lack of financing or
high financing costs makes buyers to request more credit from their suppliers to
finance short term capital, notably in China and India.
 Overdue situation in Asia Pacific region deteriorated in 2012 which could be
observed from the increase of companies reporting overdue and the increase of
companies reporting growth in overdue amount compared to 2011.
 The increase of companies with high overdue ratio in their turnover also reflects the
liquidity condition of companies in the region is not improving.
 The sluggishness of US and European markets continues to hit the export of Asian
markets which is the major reason of deterioration of corporate payment in 2012.
2012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC 30

31. /
Summary
 Non-payment in Australia, India and China increased significantly in 2012.
 The use of credit management tools increases from 61% in 2011 to 66% in 2012.
 Japan and Taiwan companies have the highest usage of credit management tools
(100% & 80% ). They also demonstrate the best credit control with the lowest
overdue in sales turnover and the shortest overdue days even though they offer
more and the longest credit terms compared to other countries.
 Building & construction, IT/ISP & data processing, textile/ clothing/ shoes & other
apparels, industrial machinery & electronics and paper & printing are the most risky
industries in the region.
2012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC 31

32. /
Views On Global and Local Economy
 Australian and Chinese companies are less optimistic on the recovery of global and local economy
 Companies in Hong Kong, India and Taiwan are most optimistic on global economy.
 Companies in India and Singapore are most optimistic on local economy.
 Most of the companies in the region are less optimistic of global recovery in 2013. Much hope are
given to local monetary policies, industry incentive program, local infrastructure projects and recovery
of property markets
322012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC
27%
18%
43% 46%
34%
42% 47%
31%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
AU CN HK IN JP SG TW APAC
Will the slowdown of global economy end in 2013?
> 50%
< 50%
32% 32%
38%
48%
34%
49%
42% 37%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
AU CN HK IN JP SG TW APAC
Will the slowdown of local economy end in 2013?
> 50%
< 50%
(tend to be
optimistic
about global
economy )
(tend to be
pessimistic
about global
economy)

33. /
Europe still in recession in 2013
2012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC 33

34. /34
Country Risk according to Coface
Available free at www.coface.com.au
 Country Risk measures the influence of a country macroeconomic and institutional
evolution on companies credit risk
 Country assessment
 Assesses the average risk of payment defaults by companies in a given country
 To rate countries, Coface combines economic and political prospects of the country, Coface payment
experience and business climate assessment
 This assessment has 7 grades: A1, A2, A3, A4, B, C, D
 Business climate assessment
 Assesses overall business environment and more precisely whether corporate information is
available and reliable and whether the legal system provides fair and efficient creditor protection
 This assessment has 7 grades: A1, A2, A3, A4, B, C, D
2012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC

35. /
Countries Assessments (as of Jan 2013)
Asia
Countries
Assessments
2013
GDP forecast
Australia A2 2.3
China A3 8.5
Hong Kong A1 2.2
India A4 6
Japan A1 0.7
Singapore A1 3.4
Taiwan A1 2
Malaysia A2 5
New Zealand A2 2.9
South Korea A2 3.9
Thailand A3 5
Indonesia A4 6.5
Philippines B 2.7
Viet Nam C 5.7
2012 SURVEY OF CORPORATE CREDIT MANAGEMENT IN ASIA PACIFIC 35

36. Contact
COFACE in Australia
Level 10, 68 York Street, Sydney
Level 18, 600 Bourke Street, Melbourne
Tel. 02 8235 8600 Email: au_info@coface.como@coface.com
www.coface.com.au
36CORPORATE CREDIT RISK MANAGEMENT IN CHINA
Coface copyright, conditions of use : You may copy and publish the information with the consensus of
Coface, provided that you do not make commercial use of it and that you indicate clearly that it originates from
Coface. The information is given without guarantee and does not bind Coface in any way.