Earlier today, Panjiva, a supplier information management content provider that I've taken quite a bit of personal interest in of late, announced it was partnering with Sinosure to create a joint offering, Panjiva SinoScreen. This new product is designed to serve as a "diagnostic tool that will help you to quickly and inexpensively assess the health of your Chinese supply chain." But will it? I spoke with Josh Green, Panjiva's CEO and founder, and he told me that his new partner, Sinosure, was set up in 2001 as the monopoly provider for export insurance (essentially receivables insurance) for Chinese suppliers. Run by the Chinese government, Sinosure conducts supplier financial assessments of suppliers as part of the receivables insurance underwriting process. They base this assessment on government data sources as well as standard credit rating approaches (e.g., on-time payment for phone bills).
Sinosure then uses this data as one input to price receivables insurance for suppliers exporting outside of China. But anyone who has investigated the receivables insurance market -- something I did recently, by happenstance -- knows that the underwriting process is based largely on the credit information of the buying organization -- not the supplying one. Hence, I have some concerns over the thoroughness of the information that Sinosure might be collecting. Moreover, I quickly reached out to two friends on the ground in Shanghai yesterday -- both of whom have been involved in China sourcing and trading for years and are truly expert in the area -- and neither had ever heard of Sinosure, despite living and breathing the China sourcing and China exporting world everyday. That says quite a bit right there. So should customers consider this new joint offering from Panjiva and Sinosure to assess the risk of their supply base in China given the quality of the underlying credit information and non-reputation of Panjiva's new partner? Check back for Part 2 of this post tomorrow morning and I'll offer some further thoughts on the subject.