Assessment of credit policy formulation and execution of China Qingdao Haier Co., Ltd.: Basis for credit standards, credit terms, credit collection policy

Abstract

This Special Paper is a study of the Credit policy formulation and execution of China Qingdao Haier Company. The literature study, in depth interview method was conducted last 2014-2015. By using the combination of theoretical research, this study analyzed by the of Qingdao Haier Co., Ltd’s credit policy formulation and application for the three dimension: structure process and results as basis for the standards, credit terms, and credit collection, and costumer departments. Furthermore, a questionnaire was used to determine the perception of these employees toward the credit policy of the company.

Specifically, this study aimed to:

1) Conduct a pre survey on the existing credit policy of China Qingdao Haier Co., Ltd which involves the sales department, accounting department, credit control department and costumers

2) Assess the credit policy formulation and Execution of China Qingdao Haier Co.,Ltd in the areas of credit standards ,credits terms and credit collection policy using SWOT analysis; and,

3) Come up with updated credit standards, credit terms credit collection policy for the company.

The respondents were 239 employees who were composed of: 142 sales employees, 57 accounting employees, 9 credit staffs, and 31 customers. Through this comprehensive area of respondents, it measured wide range variables of interest from all the elements of the given population well represented the different departments of the company.

The descriptive statistics used were the frequency, mean and percentage. Then inferential statistics used was the SWOT analysis.

Based on the analysis, Haier's comprehensive credit policy, credit standards, and credit terms are very strict. Haier's bad debt loss ratio is low in the industry. Haier's accounting receivable terms is one of the shortest in industry. Their credit collection is also good. In conclusion, Haier's post credit risk management capability is good for the Chinese industry.