Introduction of the new Failure Score for companies in China

Reading time 2 minutes | Written by Henrica Westhoeve | 22 July, 2024

News

Since July 22, 2024, we have introduced a new Failure Score for companies in China. This improvement helps to better assess the financial health of companies in China and predicts the likelihood that a company will (forcibly) cease its activities within 12 months.

Chinese vlaggen

What is the new Failure Score?

The Failure Score is designed to provide a more powerful and predictive tool for evaluating the financial health of companies in China. This score predicts the likelihood that a company will stop or go bankrupt, giving you a more reliable basis for credit decisions. The Failure Score replaces the previous EMMA score, which mainly identified unstable or unreliable companies. The new Failure Score, developed based on the global standards of Dun & Bradstreet, offers predictive accuracy and comprehensive insights.

Interesting read: Everything about our Failure Score

Key features of the new Failure Score:

  • Improved predictive performance: This score offers strong predictive performance, allowing you to manage risks better and make well-informed credit decisions.
  • Extensive coverage: The Failure Score is available for approximately 1.4 million companies in China, significantly expanding assessment capabilities.
  • Replacement of the EMMA score: The new Failure Score replaces the EMMA score. While EMMA provided guidance by identifying companies likely to face severe operational problems, the Failure Score offers a forward-looking prediction of the likelihood that a company will (forcibly) cease to exist.

Which companies does this new score apply to?

This score is applicable to every company in China, with the following exceptions:

  • Companies whose data was last updated more than two years ago
  • Branch entities
  • Non-business entities
  • Companies that are no longer active
  • Sensitive entities
  • Companies that are not registered in mainland China

How do you get the most out of the new score and manage it effectively?

To fully utilize the new score, the following documents are available as reference materials:

  • Understanding China Failurescore (English): This document provides an in-depth explanation of the modeling methodology, availability rules, and score performance.
  • FAQs (English): Here, you'll find answers to frequently asked questions about the new Failure Score, helping you better understand its implications and applications.

While adjusting your processes to the new score, be sure to make use of the Failure Score Performance Table. This table can be found in the document Understanding China Failure Score to accurately interpret the risk levels associated with the Failure Score.

We believe that this improvement provides a valuable, future-proof contribution to risk management and credit decisions. For questions regarding this score, please feel free to contact us.

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Henrica Westhoeve

Marketing Content Officer

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