Chinese photovoltaic (PV) companies are increasingly facing risks related to overseas accounts receivable, with some concerns indicating that the situation is worsening. According to reports from *Morning Post*, Chaori Sun has taken measures by purchasing short-term export credit insurance through China Export & Credit Insurance Corporation (CITIC Insurance), and has engaged in short-term debit transactions with international buyers.
Meanwhile, a reporter from the same publication learned that JA Solar, a major PV company based in Shanghai, received a payment of $4,509,900 from CITIC Insurance due to delayed payments from overseas clients. This was the largest compensation paid to the company so far. The firm also expects to receive an additional $5 million in compensation for another trade credit insurance claim, covering exports made between August and October 2011. Altogether, this could result in a total payout of up to $10 million from CITIC Insurance for JA Solar’s overseas receivables risk.
Over the past few years, China's photovoltaic industry has grown rapidly, establishing a complete manufacturing system. However, overcapacity and heavy reliance on foreign markets have created operational challenges. With Europe and the U.S. struggling with slow economic recovery, debt crises, and “anti-dumping†policies, many Chinese PV firms now face heightened risks of default or insolvency from overseas buyers.
CITIC Insurance, established in 2001 with a registered capital of 27.16 billion yuan, plays a crucial role in supporting China’s foreign trade. It offers various types of credit insurance, including short-term, medium- and long-term export credit insurance, as well as domestic credit insurance. The company helps mitigate financial risks for exporters by providing coverage against political and commercial risks.
Since 2009, CITIC Insurance has been actively involved in supporting the PV industry in Shanghai. By early 2010, it had formed partnerships with several local PV firms, incorporating their export operations into its credit guarantee system. Medium and large-scale PV companies with 100MW capacity or more have all been covered under this framework.
In July 2011, JA Solar exported a €6 million PV module shipment to Germany’s Sinosol, which was insured by CITIC Insurance. When Sinosol failed to pay due to cash flow issues, CITIC stepped in and compensated JA Solar with $4.859 million. The company continues to track the debt and hopes for full repayment.
According to JA Solar, the compensation helped stabilize its cash flow at the end of 2012, contributing to a significant increase in available funds. The company is still working with CITIC to recover the outstanding debt from Sinosol.
The European Union, once China’s largest market for solar modules, has seen a decline in subsidies since 2011, leading to reduced demand and increased financial strain on Chinese exporters. Many EU-based PV companies are now experiencing systemic liquidity issues, and some have even gone bankrupt.
CITIC Insurance reported that in 2012 alone, it paid out $7.554 million in claims to Shanghai-based PV firms and recovered $10.288 million in overdue receivables. To manage such risks, experts recommend that companies conduct thorough credit assessments and rely on policy insurers like CITIC for risk mitigation.
Looking ahead, CITIC Insurance is also exploring ways to support domestic and overseas PV power plant investments. The company provides long-term coverage for political and financial risks, with compensation rates reaching up to 90% of the investment amount. These efforts aim to help Chinese firms navigate complex global markets while reducing exposure to trade barriers and geopolitical uncertainties.
In 2012, CITIC Insurance’s insured amount in North America reached $48.19 billion, a 28.1% increase compared to the previous year. Despite a stable performance in the U.S. market, the weak economy and rising trade protectionism pose ongoing challenges. Similarly, in Europe, the sovereign debt crisis led to slower order growth and higher claim payouts.
Overall, as the global PV industry faces mounting pressures, the role of institutions like CITIC Insurance becomes even more critical in ensuring the stability and sustainability of China’s renewable energy sector.
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