Sinosure explained: what China’s export credit insurer means for African importers

If you buy goods from China, you may have heard a supplier say, “We can give you 60 days to pay if Sinosure approves you.” Or you may have read that a dam, a fleet of buses or a factory in Ghana was “Sinosure-backed”. So what is Sinosure, and why should a small importer in Ghana care?

What Sinosure is

China Export & Credit Insurance Corporation, known as Sinosure, is China’s state-owned export credit insurer. It began operating on 18 December 2001 and is a member of the Berne Union, the global association of export credit and investment insurers.

Its job is to support Chinese trade and investment abroad. It does this by insuring Chinese exporters, banks and investors against the risk of not being paid, whether because a buyer goes bust, simply fails to pay, or because of political events such as currency restrictions or war. It is by far the largest export credit insurer in the world: according to Sinosure, the business it insured passed US$1 trillion in 2024.

The key point: Sinosure protects the Chinese side, not you

This is the part most people get wrong. When a Chinese supplier uses Sinosure, the supplier is the one insured. You, the buyer, are not covered at all.

If you do not pay, Sinosure pays the supplier most of the money owed (up to 90 per cent on its standard short-term cover) and then takes over the debt. From that moment, the party asking you for payment is no longer a factory you have a relationship with. It is a Chinese state insurer, working through its own agents and lawyers.

How it helps a small importer: payment terms

Most Ghanaian importers pay Chinese suppliers in one of two ways: a 30 per cent deposit with the balance before shipping, or 100 per cent upfront. Either way, your cash is tied up for weeks before you sell a single item.

With Sinosure cover, a supplier can afford to ship on open account, meaning you pay 30, 60 or 90 days after shipment. Because the insurer carries most of the risk, the factory is willing to wait.

But there is a condition. Before the supplier can ship to you on credit, Sinosure assesses your company and approves a credit limit in your name. That limit is the most the supplier can have outstanding with you under cover. If there is no limit, or it is used up, the supplier will usually ask for payment upfront again.

To set a limit, the insurer looks at your company registration documents, financial statements, trading history and how you have paid suppliers in the past. Brokers who handle these applications report that the check can take up to about three weeks and that first limits are often modest, growing as you build a record of paying on time.

The real cost of “free” credit

Payment terms are rarely free. Many suppliers add a mark-up to the price when you pay later. The insurance premium itself is usually a small fraction of the invoice, so most of any mark-up is the supplier’s charge for waiting.

To compare it with a loan, turn the mark-up into a yearly rate: mark-up % × 360 ÷ number of days.

Example (figures for illustration): Kwame imports tiles and bathroom fittings. His supplier quotes US$20,000 if he pays before shipment, or US$20,600 if he pays 90 days after shipment. The extra US$600 is a 3 per cent mark-up. Over 90 days, that works out to 3 × 360 ÷ 90 = 12 per cent a year.

Kwame then compares that with what a bank or lender in Ghana would charge him to borrow US$20,000 for three months. If the supplier’s credit is cheaper and he can be sure of selling the stock before the due date, the terms make sense. If not, he is better off paying upfront.

This is a simplified comparison to help you decide, not an exact annual percentage rate (APR). It ignores compounding, bank charges and exchange-rate movements. Sinosure’s cover levels and approval times also vary by buyer and supplier.

What happens if you do not pay

• Your limit is cancelled. Once the supplier reports a possible loss, the limit in your name is withdrawn.
• Your record follows you. Sinosure keeps a very large database of companies. A default with one supplier can make it hard to get terms from other Chinese suppliers too.
• The supplier loses room to negotiate. After a claim is filed, the factory usually cannot quietly agree a discount or a new payment date with you without risking its own insurance.
• The debt is pursued. Collection can run through agents, lawyers, courts and arbitration.

Watch out for quality disputes. Many importers hold back payment when goods arrive damaged or wrong. Under an insured deal, holding back payment can simply be treated as non-payment. Settle quality questions before the due date, in writing, and use inspection or a letter of credit for first orders or risky goods. Our guide to buying from China without getting burned walks through these steps.

Sinosure and big projects in Ghana

Sinosure also insures banks that lend to buyers abroad, often governments, so they can purchase Chinese equipment and construction work. This is called buyer’s credit insurance, and it has been part of several Ghanaian deals:

• In 2003, a Bank of China buyer’s credit loan to the Government of Ghana for city passenger buses was insured by Sinosure, according to AidData.
• For the Bui hydroelectric dam, AidData reports that Ghana bought a buyer’s credit insurance policy from Sinosure covering a China Eximbank loan, at a reported cost of US$25 million.
• On the private side, Stanbic Bank arranged a EUR 10.71 million Sinosure-covered facility for Keda Ghana Ceramics to expand tile production. The bank described it as the first Sinosure-backed corporate (non-government) deal in Ghana.

One lesson from these deals: the insurance is not free. Its premium is often paid by the borrower and adds to the total cost of the project, which is worth remembering whenever a deal is described as “Chinese-financed”.

Is it right for your business?

Sinosure-backed terms can suit an importer who:

• has a registered company with proper accounts;
• orders regularly from the same suppliers;
• has a good record of paying on time; and
• is confident of selling the goods before the payment date.

They are a poor fit for a first order with a new supplier, for goods where quality disputes are likely, or if you are not sure you can pay on the due date.

Start this week

1. Ask your main Chinese supplier whether it uses Sinosure and would apply for a credit limit on your company.
2. Prepare your company registration documents, your last two years of accounts and a list of suppliers you have paid on time.
3. Turn any price mark-up for payment terms into a yearly rate and compare it with local borrowing.
4. Agree in writing how quality problems will be handled before you accept credit terms.
5. Never change a payment date informally by chat or phone. Get any new date agreed in writing.

EDOKAN Africa is not a bank, lender, insurer or export credit agency, and has no connection with Sinosure. This article is general information, not financial or legal advice.