China firms plagued by payment delays, with big cash-flow risks, survey finds
- The average corporate-payment delay fell last year as companies offered longer credit terms, according to survey by Coface between December and March
- Construction projects faced the longest payment delays, even as Beijing eased restrictions on financing for the sector following a years-long crackdown
Many Chinese companies are still struggling with overdue payments, despite modest improvement following Beijing’s reopening of borders that ended nearly three years of zero-Covid controls, according to a new report.
Coface, a global trade credit insurance group, said on Tuesday in its latest China Corporate Payment Survey, involving 1,000 Chinese companies, that the average payment delay fell from 86 to 83 days in 2022.
That duration was also below the five-year average of 87 days.
“In the face of tight liquidity and mobility restrictions that disrupted payment processes, Chinese business showed greater flexibility in giving credit terms,” said the report, based on research conducted between December and March.
We are considering suing the official department for the arrears but … many local government departments do not repay the arrears on time
Longer credit terms contributed to fewer incidents of payment delays last year, Coface found, as 40 per cent of the polled companies reported overdue payments, down from 53 per cent a year prior.