The average payment delay in China fell to 64 days last year from 83 days in 2022, lower than 74 days for Hong Kong companies, 70 days for Malaysian businesses, 64 days for firms in Thailand and 66 days for companies in India.
The delay in China, though, was still higher than 63 days in Singapore, 53 days in Taiwan and 50 days in Japan, the survey showed.
The annual payment survey, covering over 2,400 companies in the Asia-Pacific region, was conducted between December and March.
It showed 60 per cent of companies in the region reported overdue payments last year, higher than 57 per cent in 2022.
However, the report found overall improvement in terms of payment delays, with the exception of textile and construction sectors.
“Private business owners like me are struggling because the entire industry, from upstream and downstream, is facing overcapacity,” said Guangdong-based textile equipment integrator Yao Ke.
Revenues this year are expected to double to more than 300 million yuan (US$41.4 million) from a year earlier, but 40 million yuan in accounts receivable – money owed for goods or services that have already been provided – and several months of payment terms hint at a potential cash flow risk.
The risk of a break in the capital chain is also high
“There are only two ways to play the game: either forgo profit and significantly lower prices to maintain cash flow to keep the factory running, or provide widespread credit sales to increase orders,” he added.
Yao has already reduced the price of his products by up to 15 per cent compared to last year, while he has also offered some regular customers a maximum credit period of 120 days.
“These companies with growing performance actually have high risks because they are definitely offering credit sales on a large scale to increase orders, but the risk of a break in the capital chain is also high,” said Peng Biao, a textile and clothing supply chain specialist.
Peng said that most Chinese textile manufacturers are more cautious with payment terms, preferring to control the payment period between 30 days and 45 days for foreign customers, and between 60 days and 90 days for domestic customers, even if it means taking less or no new orders.
The Ministry of Industry and Information Technology is seeking public opinion on revisions to the Regulation on Ensuring Payments to Small and Medium-sized Enterprises, vowing to tackle “chain debts”.
In the draft amendment, large enterprises are required to make timely payments to small businesses, while large listed companies are required to disclose information of overdue payments to small and medium-sized enterprises in their annual reports.
Data from the National Bureau of Statistics showed that in the first three months of the year, the cost per 100 yuan of business revenue for large-scale industrial enterprises with annual revenues over 20 million yuan stood at 85.18 yuan, representing a year-on-year increase of 0.16 yuan.
The average collection period for accounts receivable, meanwhile, stood at 67.3 days, representing a year-on-year increase of 3.8 days.
At the end of March, the accounts receivable for large-scale industrial enterprises had reached 23.33 trillion yuan (US$3.2 trillion), representing a year-on-year increase of 8.2 per cent, while the inventory of finished products stood at 6.26 trillion yuan, representing an increase of 2.5 per cent.