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SkyMinder recently announced the conclusion of a redistribution agreement with top-quality Spanish provider, Informa SA. The agreement, signed on July 7, 2004, allowing SkyMinder clients to order Freshly Investigated Credit Reports on 2.3 million public and private Spanish companies directly online. Furthermore, clients familiar with SkyMinder's online credit content on French companies from ORT will be pleased to discover that they can now order Freshly Investigated Credit Reports from the same provider.

In addition to the trade shows announced in the last edition of the SkyMinder Newsletter, SkyMinder will also be a participating at:
- NACM Chicago - October 14 & 15, Las Vegas (NV), USA

For Uniqema, a global specialty chemicals company, to deliver on its promise "to create a competitive advantage" for its customers, up-to-the-minute business intelligence is of paramount importance. With customers ranging from cosmetics companies to rubber manufacturers, Uniqema needs to be in tune with the fast-moving industries in which they operate. This is why it turned to SkyMinder, a leading global online business information provider to give it the edge.

Uniqema was formed in January 1999 with the merger of five ICI Group businesses. Often, when visiting a potential client, or receiving a visit from a new supplier, it needs to carry out detailed research on the company in question.

John Harkin, Business Intelligence Manager at Uniqema finds that his first port of call is SkyMinder and that comprehensive business information is vital for formulating business plans and making risk-free decisions for the future. Peer companies and competitors are also an area of interest, in order for Uniqema to benchmark its own activity.

SkyMinder provides data, from a range of highly regarded sources and aggregates it into a ready to use, dossier-formatted report. The range and geographical reach of the information has perfect synergy with users who operate on an international scale. SkyMinder provides extensive online access to global business information on over 50 million public and private companies world-wide, with an exclusively aggregated on-line content on more than 30 million European companies. John Harkin explains: "We need to source information on companies across Europe, the US and Asia. SkyMinder has more in-depth information than some sites I have used and has comprehensive broker reports across all these areas."

Dedicated researchers at Uniqema gather information, which is then filtered down through the company to serve the different needs of the strategic business units and sales teams. As John Harkin comments: "The usability of the SkyMinder site is a key advantage for us. It is very straight-forward to log on, download information and distribute it to the relevant parties. Pricing is very clear, and it is possible to select the most relevant pieces of information from a wide choice. The system even enables you to see a sample of the material before purchasing, which means you know exactly what you are getting, and can assess costs accordingly.
SkyMinder's account display also allows me to monitor the our usage of the site and see at any time where and how the money is being spent."

Despite the ongoing growth of key economies in the Far East in recent years, professionals in the West still know only relatively little about credit information collection procedures there. Most credit professionals in Europe and North America have become very familiar with domestic credit reporting practices in recent years, especially as procedures have become more transparent and better understood. However, in the Far East, credit information collecting and reporting practices are still unknown ground for many professionals, and with the economy in that area attracting more and more overseas business, the ability to access and analyse quality credit data is fast becoming the key to beginning and conducting successful working relationships in the Asia Pacific region.

Compilation of credit reports
A business professional looking for a credit report on a company located in the Far East has a number of alternatives. Financial data is not hard to come by -but how should a credit manager choose which credit report agency to source Asia Pacific reports from? Is there any advantage in choosing an agency based in the Western world over one based in the East or vice versa? What criteria should be used to make the selection?

Traditionally, reporting practices and standards in the Far East may not be as transparent as one would expect from a Western agency. On the other hand, Eastern agencies without doubt have a fuller understanding of Eastern business operations and culture. According to Sebastian Young, director of international licensing at Taiwan-based Asian Company Profiles (ACP), and Adam Dupré, managing director of UK-based China Company Research Services - both SkyMinder partners - the key to selecting a quality agency is to find one with a global outlook, irrespective of where it is located.

Native credit reporting agencies in the Asia Pacific region usually employ local analysts (an innate appreciation of the local culture and business practices ) to take care of report compilation. The flip side of the coin is that if the report is being put together for a European or US customer, the Eastern analysts may not have the same appreciation for Western business culture. Says Dupré: "The operating basis of the Chinese economy, for example, is so different from economies in the West that it is not always easy for Chinese analysts to appreciate which aspects of a company's structure, condition and performance are of the greatest significance to Western businesses."

Sebastian Young believes that the extent of change taking place in the Far East is substantially greater than in the USA or Europe, and therefore requires a higher degree of monitoring throughout the year. Reports which are produced on an ad hoc basis by small firms without access to year-round monitoring systems and database - compiled information can lead to a misleading interpretation of a company's creditworthiness, says Young.

All things considered, professionals who are unsure of where to access their credit information are advised to seek a happy medium - an information provider with a sound knowledge of the Eastern business world, offset by Western reporting standards.

Availability of information
As could be expected, financial information is not always as available in Asian Pacific countries as it is in other parts of the world. In Hong Kong and Singapore, for example, only private limited companies and listed companies are required to file financial details with the Inland Revenue Department. In addition to this, all Singaporean companies are obliged to submit an annual return to the local registry to update any company changes such as addresses, new directors or shareholders. This information is made available to the public at low cost.

Table 1 (below) gives more detailed information on the levels of information disclosure in China and Hong Kong.

Companies that fail to file their financial information when obliged to do so are not uncommon, but incidence of this varies from country to country. "No official figures are available, but according to our experience, about 60-70 per cent of Chinese companies will deposit their financial data if required to do so, compared to more than 95 per cent of companies in Hong Kong," comments Ray Chan, manager of Worldbox Business Intelligence's Hong Kong office.

"Potentially, Chinese companies that fail to deposit financial information for three years running can be struck off by China's State Administration For Industry & Commerce, but these penalties are not always enforced," continues Chan. "In Hong Kong, companies risk penalties for not filing information, and the penalties are always enforced." This probably explains the higher percentage of Hong Kong companies who comply with the filing requirements.

Assuming that the credit manager or business professional has now selected a credit agency and obtained the required credit report, what should he or she be aware of? Generally speaking, financial information and credit reports should be treated with caution unless sourced from a trusted and well-known credit agency. There is always the risk that data may not have been analysed or subjected to auditing procedures that are considered to be standard procedure in the West, leading to doubts regarding data accuracy.

Payment terms
"Normal" payment terms vary between countries, however 30-90 days is the most widely accepted term for local business dealings, 60-180 days for overseas trade. Obviously, terms depend on industry sector, company size and company reputation. As in any country, long-standing, successful business relations between the parties can help to secure more flexible terms.

Westerners working with credit reports should also watch out for inaccurate financial statements. Companies, even listed companies, have been known to exaggerate profits in order to increase chances of obtaining mortgage approval or loans. On the other hand, fear of losing face in the industry may cause other companies to conceal company losses. In any case, falsified data can be hard to detect.

The concept of bankruptcy is not as common and well understood as it is in the Western world - China, for example, didn't introduce bankruptcy laws until 1998. No standard pan-Asia Pacific debt collection procedures exist, but in countries such as China, Hong Kong and Singapore, the first contact with a debtor is usually in the form of a warning letter, followed by a phone call and possible another warning letter. If these steps prove unsuccessful, the debtor could then be taken to court.

Country risk
Country risk should also be calculated before undertaking business in the Far East. Different types of risk exist - political, commercial and economic - and can be assessed by purchasing risk reports. If a specific country turns out to be rated as high risk, traders are advised to take steps to protect themselves. North Korea, for example, has been experiencing economical difficulties recently, which lead to last year's collapse of the local currency, the Korean Won. This, combined with the difficulty involved in collecting any form of credit information, has led most business people trading with North Korea to insist on a letter of credit issued by a non-North Korean bank or even payment in advance.

Sebastian Young highlights a variety of other issues relating to information gathering in the Far East. "Credit professionals should be aware of the dynamics of businesses in the Asia Pacific region and of the overall business structure," he comments. "Take into consideration the 'family element' of companies in the Far East and the resourcefulness of owners who seek non-bank financing. Equally, be cautious about the accuracy of financial statements and the way in which they are interpreted. Look carefully for an undisclosed affiliate or subsidiary in a neighbouring country which might turn out to be a major financial liability. As a rough guide, this should be the basis for analysis of companies and credit reports which should be produced to reflect these unique characteristics."

Credit reports on Far East companies are not hard to access, but credit managers and other business professionals must carefully examine the source of their business information to ensure a complete understanding of Asia Pacific's market dynamics and unique characteristics and therefore avoid unpleasant surprises.


By Kate Porter.
As seen in "Credit Risk International" (Aug-Sept 2003)