China's SAMR introduces new rules to advance the classified management of enterprises' credit risks.

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It aims to monitor enterprises' credit risks effectively, and to identify, warn against and respond to the risks early.
China Finance and Banking
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On January 13, 2022, the State Administration for Market Regulations (SAMR) issued the Opinions of the State Administration for Market Regulations on Advancing the Classified Management of Enterprises' Credit Risks to improve regulatory efficiency, accuracy and effectiveness of regulations.

It is aimed to effectively combine the management of enterprises' credit risks and regulations in the professional fields and establish a classified regulation mechanism for enterprises by the end of 2023. Efforts will be made for the market regulation system to fully implement the classified management of enterprises' credit risks in about three years to monitor and warn against enterprises' credit risks effectively and try to identify, warn against and respond to the risks early.

Market regulation authorities collect information on enterprises' credit risks in time through the national enterprise credit information publicity system. Such information mainly includes enterprise registration, filing, equity pledge registration, intellectual property pledge registration, administrative licensing, administrative punishment, inclusion in the list of companies with abnormal operations and the list of severely dishonest entities, sampling and inspection; food and drug safety regulations, special equipment safety regulations, industrial product quality safety regulations, infringement and counterfeiting control, price enforcement, anti-monopoly and anti-unfair competition enforcement, consumer protection, measurement, standards, inspection and testing, certification and accreditation; sampling and inspection and the list of severely dishonest entities.

The classified management of enterprises' credit risks refers to the process of determining the likelihood of enterprises being illegal and dishonest based on the information on various credit risks and dividing enterprises into four levels by risks: low credit risk (level A), average credit risk (level B), reasonably high credit risk (level C), high credit risk (level D). Based on classified credit risks, the regulators can determine the target and frequency of regulations based on enterprises' credit risks. The regulators may reasonably lower the proportion and frequency of random inspections for level A enterprises.

They may passively inspect them, as necessary as the case may be, except for complaints and reports, problems identified through big data, referral of case clues, and as otherwise provided for by the laws and regulations; for level B enterprises, the regulators may randomly inspect them regularly; for level C enterprises, the regulators may give special attention and appropriately increase the proportion and frequency of random inspections; for level D enterprises, the regulators may implement strict regulations, significantly increase the proportion and frequency of random inspections and actively carry out on-site inspections, when necessary.

For food, drugs and special equipment and other vital areas directly related to the people's work and property safety, public safety, as well as potential risks or high social risks, the regulators should overall plan for the prevention and control of industry risks and the classified management of enterprises' credit risks while implementing key regulations per the existing rules.

As the classified enterprises' credit risks are dynamically adjusted, enterprises should pay attention to their credit accumulation, operate by law, lower their credit risks, and improve their market reputation and competitiveness by actively correcting dishonest acts, eliminating any adverse effects, and reshaping good credit.

Acclime may provide relevant consultation and solutions to lower its credit risk level if an enterprise is found to have any of the said credit risks.

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