Tension in the Middle East is making China suppliers wary about accepting orders from the area. While exports have not been affected significantly, cautious makers are insuring goods against cancellations and delays.
At the height of the financial downturn, many suppliers in China turned to emerging markets, including the Middle East, to help boost sales. The same companies are now concerned the tumultuous political situation in the area may have a negative impact on their export business. Many of them are now buying credit insurance against possible losses.
The China Ceramics Industry Association noted 30 percent of orders to makers in Foshan, Guangdong province, from buyers in the Middle East were cancelled early this year. This included goods that were already loaded for shipping. The Middle East accounts for more than 15 percent of Foshan's ceramics exports.
In March, Fuzhou Fedtex Garment Co. Ltd received a request from one of its buyers to change the destination port in Yemen to avoid any potential conflicts there. To protect against cancellations, and shipping delays, the company insured products that were bound for the Middle East. The cost for insuring the goods is between $0.05 and $0.07 per piece, and is added on to export prices.
Sinosure is said to be the only company in China that insures products to be shipped to countries with political or economic turmoil. Suppliers could recover as much as 90 percent of their goods' declared value if these are insured. Sinosure claims to have disbursed more than 200 million yuan ($30 million) as compensation to some companies that have construction projects in Libya.
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