The Ministry of Industry and Information Technology (MIIT) and the State Administration for Market Regulation have issued a notice to standardize payment terms for automotive suppliers. The initiative aims to combat 'involutionary' competition and reduce financial pressure on small and medium-sized enterprises (SMEs) within the supply chain.
The guidelines establish strict timelines for acceptance: general production materials must be accepted within 3 working days, while components requiring vehicle installation verification must be completed within 5 working days. Payment terms must be clearly defined in contracts and cannot exceed publicly committed deadlines.
For SMEs, the MIIT encourages payment within 30 days, with a maximum limit of 60 days. The notice promotes the use of cash payments for SMEs, prohibiting the use of commercial bills or electronic accounts receivable vouchers when cash is not explicitly excluded in the contract.
To ensure compliance, automotive companies must submit payment reports twice a year, by the end of January and July. Third-party agencies will conduct annual evaluations and publish the results. Companies with large outstanding debts or frequent complaints will face government interviews and mandatory rectification.
