The Chinese central bank raised one-year bank loan interest in the first quarter this year to 6.39 percent. During the two-month delay in payment, Chinese exporters have to pay excessive loan interest for their buyers. "If they can get the money on time, they needn't pay excessive interest to the bank," Lu said. "But in a country where it is very hard to get finance, hardly any of the exporting companies have ever calculated the excessive bank interest they've paid."

Exporters on the alert

For Chinese companies, especially small and medium-sized ones, the lack of a risk management sense leads to countless trading problems. They are eager to do business, but know little about international credit risk.

After suffering large bad debts, those companies turn to Lu for help.

"Many of them are credulous," sighed Lu. "Some companies send their products merely upon receiving a phone call from overseas. In this way, it is hard to track down the debtors."

There are many causes of the bad debts. Lu stressed three. First, there are unavoidable cases, where the debtor has gone bankrupt. Second, some buyers set up shell companies and will get rid of debts as soon as they secure the commodities. The third is probably the most depressing for exporters. "Some buyers will start with a small order and pay on time to gain the trust of Chinese exporters," Lu said. "But after one or two years, when their business ties seem indispensable, the buyer will make a large order and then disappear without trace."

Lu suggested two ways to avoid bad debt.

First, it is vital to buy insurance for buyers' credit with an export credit agency. Currently, Sinosure is the largest insurer specialized in export credit insurance.

Second, at the first sign that a bad debt is going to occur, companies should immediately turn to professional debt collectors. "The sooner they place a claim, the more chances they have of recovery," said Lu. "In order to retain sound relationships with their clients, China's exporters tend to stall in hopes their trading partners will pay them back. Only when they realize their wishful thinking hasn't led anywhere, will they come to us."

"When we takeover those claims, the average default time often exceeds two years," said an exasperated Lu. "They have missed the best time to collect debts."

After receiving a claim from clients, Lu's debt collection division communicates with the debtor to investigate the cause for the default. "If amicable collections don't work, we will take legal action against the debtor with the consent of the creditors," said Lu. "Backed by our unique Sinosure Databank and SinoRating information, it is more efficient for us to track down debtors."

Lu's wishes

Currently, Lu and 12 of his team members are handling 567cases.

For most businesses, the bigger the market, the better. But for Lu's debt collection division, it's just the opposite.

"If our debt collection business continues to boom, the Chinese economy will suffer," Lu said. "We have a joke inside our team: Everyone wants his/her business to grow as large as possible, but we actually expect it to shrink."

Lu compared his job to a doctor. "We are just like doctors, always expecting to see fewer people get sick."

Working overtime is a common occurrence for Lu's team. Since they are functioning in an international environment, they must track down delinquent accounts in Europe and the United States, which often means working on European and American time.

Lu said in terms of profitability, the debt collecting business doesn't bring any profit. They follow the international principle "no cure, no pay."

"We can only make ends meet," said Lu. "However, we feel extremely satisfied and get a sense of self-achievement after winning a case and getting the money back for our clients."

In the long run, Lu hopes for the best.

"We'll know that the Chinese export market has finally matured and become sound when all the members of my team are left with no debts to collect."