On Chinese Credit Management Development and Innovation in the Information Age Y

（College of Finance, Chongqing Technology and Business University. No.19 Xuefu Avenue , Nan’an District, Chongqing City, P.R.China.）

Abstract: In this information age, the credit management is characteristic of information, universality, technology and profitability. Although China's credit management started comparatively late, it has been developing very fast. In China we are innovating credit checking agencies, credit investigation and credit evaluation organizations, credit management institutions, and credit system and credit management system.

Key words: credit management; system improvement; government-oriented; credit management system

1Introduction

Credit management is one of the information services. In the information age, information has become a kind of productive forces, and almost all the transactions are carried out on the basis of information interchange and credit information sharing. Gradually heading for the credit reporting country, China lacks credit management experience. Therefore we need explore ways to develop and innovate credit management mode with Chinese characteristics.

2Characteristics of Credit Management in the

Information Age

When in the 1950s, with the advent of computers and their gradual popularization, the influence of information on the whole society has become growingly important. The amount of information, information dissemination speed, information processing speed and its application have increased geometrically, which marks the entrance of humans into the information age. Credit management refers to the particular skill to control credit risks when credit providers manage credit transactions scientifically. The main functions of credit management include risks identification, risks assessment, risks analysis, and on this basis, effectively controlling risks, and handling them economically and reasonably. Credit management involves the national credit management, financial institutions credit management, industrial and commercial enterprise credit management and consumer credit management. In the information age, credit management presents new features:

2.1.Informativeness

The purpose of credit management itself is to reduce the information asymmetry of both credit transaction parties, prevent the occurrence of credit risks, and obtain relevant information through various information channels, and provide important basis for credit rating and credit granting decision-making.

2.2Extensiveness

Extending gradually from traditional enterprise credit management to financial institutions credit management, and then to national credit management and consumer credit management, credit management has covered a wider and wider range, and credit management has extended from home to abroad. The rich network resources and information technology play a "detective" role for credit rating, business account dunning, bad loans management, etc.

2.3Technicality

Credit management itself is a technology, which requires a comprehensive use of modern management principles, network technology, information technology, mathematics mode, etc. For example, the application of neural network model to the credit risk management, and database technology to the credit reporting, and the archives management of credit information, etc.

2.4. Profitability

Credit management has its costs, such as information collection, data processing, the management of credit files, they all involve the necessary costs, and they form management costs. At the same time credit management provides special products, such as credit report, credit rating results, credit monitoring, etc., they bring income to credit management agencies, and eventually bring profit to credit rating agencies. Generally speaking, the credit management organizations of the government do not aim at profit, but commercial credit management agencies do.

3The Development of Chinese Credit Management Industry in the Information Age

The advent and development of credit management industry is the inevitable result and intrinsic need of the market economy when it develops to a certain phase. In any open market economy, sharp competition will inevitably lead to the formation of buyer's market. The means of competition between enterprises will inevitably change from the traditional quality, price, and service to the brand and the way to trade, the credit will become the main means of trade in place of currency, and credit transactions (credit sales) will become the mainstream.

Countries (the government), industrial and commercial enterprises, financial institutions, individuals (family), as credit activities participants, will more or less face credit risks in the information asymmetry state. As people realize credit risks more fully, the awareness of credit risks control increases, and accordingly professional credit management services arises. Chinese credit management started late, but after the financial crisis, our country’s scale of investment and bank loans have rapidly expanded, which have caused an increase in investment risks and bad bank loans. As far as the accounts receivable in volume or the annual growth rate, the areas of the accounts receivable and the amount of bad loans are concerned, it is urgent for China to speed up the credit system construction and credit service industry development.

Credit management industry is the result of the big social labor division after modern economic development, and an important part of the market economic operation mechanism. A sound credit management industry is the foundation for the subsistence and development of healthy social credit and credit activities. At present our country lacks a formation system and credit management industry. To respect and develop credit, we will speed up the construction and development of our country's credit management industry.

Credit management industry is divided into 10 professional branch.there are enterprise credit investigation, consumer personal credit investigation, assets survey, market research, the credit rating, factoring, credit insurance, business account management and after close, credit management consulting and credit management training, etc. The market survey belong is a collateral branch of the credit management industry. The first to five branch belongs the credit information of products. The sixth to tenth belongs credit management consulting service classes. From the market and the service object view, credit management market can be divided into financial market, the enterprise market and consumer market. The other according to industry management practices, the credit management industry also can be divided into financial and non-financial sectors, factoring and credit Insurance or credit Insurance belongs finance. Usually people will think it is he credit management industry as credit management software development, credit registry database development, credit professional network technology services. Currently, the branch market in our country are already appear. but between the different areas the development is not balanced, business level and the developed countries also have certain distinction.

4. Credit Management Innovation in the Information Age

4.1The innovation of the credit reporting agencies

In China, the number of professional credit reporting agencies keeps growing; we should make full use of all kinds of information channels to establish specialized and standardized credit reporting agencies and databases. Now in a sense all the banks, customs, industrial and commercial bureaus, tax bureaus, and public security bureaus have their credit databases. The question now is how to make the credit information they have already had and management more specialized and standardized. To this end, the government departments concerned should assemble experts in different circles to lay out guidelines for database management, and then all departments responsible for them make implementation rules according to the guidelines. All databases of different institutions are developed in the course of their operation or management and serve their own institutions. These databases have a clear tint of line business. However specialized and complete these databases are, they cannot reflect one’s true credit level if they are separated from each other. Therefore, it is necessary to make full use of the Internet, SPC technology, mobile communications, E-mail, chat tools etc. to collects credit information, build specialized and standardized credit report agencies and credit databases, and finally provide accurate credit information for credit information providers.

At the same time, credit management industry should be open to private and foreign investors, and they should be allowed to run businesses including insurance, consumer credit investigation, accounts receivable management (business account dunning) and credit insurance in order to meet the needs of our country’s enterprise and individual credit management, balance the development of our country’s credit management industry, and catch up with international credit management industry.

4.2Innovation of credit investigation and credit evaluation organizations

The experiences of developed countries show that a sound credit management industry includes dozens of lines of businesses. But in our country the current conditions do not allow us to develop it comprehensively. Some credit investigation and evaluation agencies have been in existence for about 20 years in our country and they have experienced ups and downs. Some of them have survived and grown stronger and stronger. But on the whole the development of credit industry has not been very ideal. The main reasons are: one is the immature social credit environment and weak awareness of credit; another is that less attention has been paid to managing credit agencies by the government; the third is the agencies themselves. With the social development and an increase in credit awareness, there is a growing demand for credit industry, and our government should seize the chance to vigorously reform and develop credit investigation and credit evaluation institutions.

4.3Credit management institution innovation

In the spirit and principles of open, equity, transparency, foreign counterpart companies have entered China‘s credit reporting market due to the vast domestic market. The national treatment to foreign companies enables them to have a sharp edge in capital, technology and experience. Immature Chinese credit management companies, especially credit reporting companies, are facing huge survival challenge. In addition to the credit management institutions run by the credit reporting administration bureau of the central bank, various lines of other credit agencies should set up credit management institutions, make full use of all information in different lines of businesses and form an all-round credit management system.

4.4. Credit management system and the system innovation

In both theory and practice, a sound social credit system is one of the basic rules of market economy and systems, and the objective basis for a good market economic order. With the improvement of our socialist market economy system, the credit system, as the most important soft environment for modern market economy, influences and determines the environmental development and evolution, while the loss of credit means the loss of the passport towards marketization and internationalization. Through innovating management mechanism, strengthening evaluation, supervision and system control, standardizing the behavior of related subject, we strive to prevent and control corruption at birth. Therefore, it is necessary to set up a credit management mechanism, in which the central bank plays a key role, the government administrative departments at all levels a secondary role, while all kinds of financial institutions closely cooperate, and form a credit management operation mode, which is guided by the government, and operated commercially, and perfect the credit management system, including the system of rules and regulations.

4.5Credit management and service mode innovation

Credit Checking means the investigation and evaluation for credit situation of individual and company. Under the market economy, The credit investigation is one important service of the credit risk management. It is the most common and most basic business.

How do we select the credit checking mode? Many people claim to select the marketization mode. But we must take the model that government leads market operation,at present.

From our existing experience, we have the following three models.the first is the Shanghai’s mode. This Mode is pushed by the government and market operating. The Scecend is shenzhen’s mode. This Mode is promoted by the city government, cooperating with the people's bank, and the relevant government departments as a member unit to establish shenzhen personal credit solicitation and personal credit rating system. The government does not direct investment, but by related the company planning, according to the market mechanism operation, provide service fee. The service object is within the first after phases, promotion. The operation of the supervision and administration of the company by each member unit of shenzhen of personal credit solicitation and supervision committee responsible for rating. The thirdis zhejiang’s model. Led by the government, the people's bank and government departments to, made up of the social credit construction leading group, a financial investment social credit service agency, concrete construction enterprise and individual credit information joint solicitation system. The credit information agency through the marketing operation mechanism of all members of the credit information between units of the Internet, the interchange and with each other. The government coordination related departments according to the credit information collection, the contents of the credit information data regularly by the credit information agency shape public information database, the credit information service agency to provide credit unit of member of the main information service.

From the national credit registry system, the central government should bear the leading role, local first promotion zhejiang model, This mode will be popularized on a national scale when the database is established. Then it is leading by the central government.

5Conclusion

Credit management needs developing and innovating. China's credit management can be said to be a "rising star". In course of building our socialist market economy with Chinese characteristics, the optimization of the credit environment and the all-round development of Chinese credit management industry can be achieved only by innovating the credit management mechanism and system, credit investigation and credit evaluation organizations, and credit rating agencies.