Panjiva Partners With Sinosure for Supply Risk (Part 1)
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.
- Jason Busch
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.
- Jason Busch
While I could quibble with some of the details of your argument, you make several important points with which I am in total agreement. For instance, you are absolutely right that investing in relationships is crucial -- as is consistent tracking of one's own experiences with a supplier. Use of third party data is a complement to -- not a substitute for -- these activities.
And, obviously, I think your conclusion about Panjiva SinoScreen in part 2 of your post is spot on: "for $5,000 you probably can't go wrong if you have 20+ suppliers in China that you'd like to profile... After all, a business class ticket from the US or Europe and a stay in a Western style hotel to visit a single supplier will probably cost you more than the price of admission to profile a number of suppliers."
I should also note that I understand your skepticism about the quality of data coming from China. There are two reasons why we find Sinosure data more compelling than most... First, they bring to the table a wide variety of data sources, including data that would be difficult to "fudge." For instance, Sinosure has access to export data. This data can provide real insight into a company's overall health -- and, importantly, this data can be sanity-checked by comparing it with, say, U.S. import data. ( This, in fact, is the type of triangulation that's possible with Panjiva SinoScreen. Check out a sample at http://panjiva.com/assets/Panjiva-SinoScreen-Sampl... )
Second, as you noted, Sinosure is using their data and analysis to inform their own decision-making. You are right to raise questions about just how severe the consequences will be for Sinosure if their analysis is wrong, but I like the fact that they are consumers of their own analysis -- something that can't be said for most sources of data on Chinese companies.
Nevertheless, I return to a key point: no one data source is perfect. That's why Panjiva is providing multiple data sources to our customers, and why we will continue to hunt down and integrate additional data sources. Questions? Love to hear them. Email me directly at josh@panjiva.com.
Josh Green, CEO, Panjiva