Motorola (China) - Credit Control

Motorola (China) Electronics Ltd. is a division of Motorola, Inc., a global leader of integrated communication and embedded electronic solutions. When the senior operations controller of Motorola (China) returns from several weeks of sick leave, he is met with a weighty problem. The company's accounts receivable, which usually run at terms of no more than eight weeks, have been grinding along at a term of about 13 weeks during the manager's absence. The question is: what can the operations officer do to bring accounts receivable back under control, given the already challenging set of constraints within the Chinese credit climate? With no formal credit system in place for businesses in China, and with tight governmental controls on several other areas of finance in the country, the issue of triangular debt - individuals owing money to small businesses that, in turn, owe money to large businesses - is a huge problem in the Chinese marketplace. No credit information is available to banks and businesses that are trying to establish some form of credit system for their customers. Delinquent debts and defaulted bank loans are common, and an atmosphere of suspicion surrounds any credit transaction. The operations controller's challenge is to establish an action plan that is immediate and effective, and that navigates around some of the roadblocks that present constant challenges to business in China.