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Late payments in the electronics, clothing and accessories sectors hit a three-year high at the end of last year, although overall payment and default conditions remained stable, according to credit insurer Coface.

The company said sales figures for the Christmas period in the United States and Europe were not as good as expected, which may have delayed payments from  buyers there.

'The clothing and accessories sector always carries payment risks as it is so dependant on volatile consumption patterns,' said Xavier Farcot, the head of Coface's risk and claim department.

'There may also be some residual financial instability among garment exporters to the US  and Europe from uncertainty during quota negotiations,' he added.

The insurer, which surveyed 1,507 companies from October to December last year, said late payments in the two sectors increased  to 21.39 per cent from 19.6 per cent in the third quarter of last year, and 8.53 per cent for the same quarter in 2004.

For the electronics sector, the increase in delayed payments stood at 14.18 per cent from 3.99 per cent last quarter, and 8.27 per cent from the corresponding period in 2004.

This was mainly due to keener competition in the industry and lower margins.

The study also revealed that payment defaults in the clothing industry rose from 20.37 per cent to 22.08 per cent, the highest figure since the first quarter of 2003.

Mr Farcot warned companies to be aware of the payment performance of customers in these areas since the two sectors were vital to Hong Kong's export interests.

With 25.8 per cent of respondents reporting late payments over the past six months, compared with 27.1 per cent for the same period of 2004, Mr Farcot said steady payment conditions were shown last year.

Payment defaults over the past six months were 5.1 per cent, slightly up from 4.5 per cent last quarter.

Favourable signs such as a decreasing unemployment rate, an improving property market and economic growth in China have led to a slight drop in late payments and defaults among Hong Kong buyers.

'We anticipate that the levels of late payments and defaults will maintain their downward trend in the first half of 2006,' Mr Farcot said.

There were lower levels of late payments from buyers from China and the US, at 7.5 per cent and 6.1 per cent respectively, the research added.



Company late payments reach three-year high