Successful businesses are built on good faith, and honesty is any market’s basic principle. Yiwu, one of China’s busiest cities for trade, has beefed up its credit evaluation system for companies at home and abroad. But for Canadian merchant Fares Daou, who has worked there for over 20 years, he prefers doing business the old way.
“I don’t believe in credits. I believe in paying cash. Cash is power,” said Fares Daou, president of Chainex Limited, adding that, “If my client does not pay me, I don’t want to do business.”
Over the past years, Daou has seen Yiwu’s rapid growth from a little county with two hotels to an international trade city, but as much as the Canadian loves his second home, business is business. Cash up front - as he claims, is the better way with fewer headaches.
“If I want to give credit to another company, I will check the credit history of the company. If the history is good, then you’re okay. If the history of the company is not good, you will take chances of giving them credits.”
Last year, the city blacklisted more than 300 companies, putting limits on their financial aid and business ratings. 100 companies were also restricted from participating in bidding.
But for Chainex, one of the top 10 foreign companies on Yiwu’s red list, the government will provide them with longer work permits and prioritize their financial services.
“We are thankful for that, for this thing (award). The Yiwu government, they see the good people, investing, creating, and pushing (the economy),” said the Canadian businessman.
While Daou may never change his tried-and-true business methods, Yu Jiajia, his colleague of 10 years, said she’s optimistic about the system. She believes the establishment of a sound credit system will create a better environment for global traders.
“I think this can be a great opportunity for merchants in traditional foreign trade. There is a big potential for Yiwu to further improve its business environment. Although we are a late starter, I believe the city will quickly catch up with leading cities like Guangzhou and Shenzhen.”