Chinese companies bear losses caused by unrest in Ukraine

Beijing/Kiew – In crisis hit Ukraine, the country’s economic woes are not only impacting Europe’s economies, it’s also wreaking havoc on Chinese companies that have operations in the country.

Song Feng is the head of a private colour plate company in China’s Shandong Province. Song’s company signed a 3 million U.S. dollar contract with an Ukrainian company last July and it should be an important deal. But the political unrest in Ukraine has brought Song losses instead of profits. Song says that’s because his Ukrainian partner can’t pay him for the goods he delivered due to tight liquidity in Ukraine.

“My company is at the edge of bankruptcy. The unpaid amount is too big for our company. We can’t afford such a loss,” Song said.

Some other Chinese companies are experiencing the same problems in Ukraine as Song’s. Fluctuations in the Ukrainian economy are also creating high cash flow risks for some companies.

“Our pressure is huge. We still need to pay debts to banks. Besides, our suppliers ask us to prepay for the goods we sell overseas. Without customers’ payment, it is hard for us to make the business run,” said Yan Hongbing from Zhenjiang Xinnuo Trade Company.

The China Export and Credit Insurance Corporation says that in the first quarter, it paid more than 130 million U.S. dollars in claims. About 90 percent of the company’s losses were caused by overseas business risks. Source: Xinhua