China sets up platform for auto suppliers to report auto makers over late payments

China's industry ministry says it would now accept complaints online to help small suppliers and ensure automakers follow rules

China’s auto industry continues to face pressure from a prolonged price war that began in early 2023, prompting concerns among suppliers about delayed payments.

In response, the Ministry of Industry and Information Technology on Wednesday launched an online platform to allow suppliers to report major automakers that fail to make timely payments.

The platform targets automakers that extend payment terms beyond 60 days in procurement contracts, delay inspections without valid reasons, or compel smaller suppliers to accept non-cash payments such as commercial paper.

Seventeen Chinese carmakers pledged in June to pay suppliers within 60 days after a wave of complaints from materials providers, including steelmakers. The pledges followed new government rules introduced in March, requiring large companies to settle most supplier payments within 60 days, effective from June 1.

Despite the regulation, suppliers raised concerns about loopholes, including whether payments must be made in cash or if commercial paper is allowed, and about the criteria for starting the 60-day countdown.

Commercial paper, commonly used in China’s property sector, allows buyers to delay payment by issuing a written promise to pay at a future date. Although usually set to mature within one year, suppliers often sell the paper at a discount in the secondary market.

The ministry said it would now accept complaints through the online platform to support small and medium-sized suppliers and ensure that automakers follow the rules.

The move comes as tensions rise between automakers and suppliers amid continued pressure to cut prices in a highly competitive market.

Monitoring Desk
Monitoring Desk
Our monitoring team diligently searches the vast expanse of the web to carefully handpick and distill top-tier business and economic news stories and articles, presenting them to you in a concise and informative manner.

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