The Ministry of Industry and Information Technology and the State Administration for Market Regulation of China have issued a new policy to standardize payment terms between automotive manufacturers and their suppliers. The directive aims to address issues such as excessively long payment cycles and unfair payment practices that affect the stability of the supply chain.
Under the new rules, payment terms must begin upon the delivery and acceptance of goods or services. General production materials must be inspected within three working days, while parts requiring vehicle installation verification must be inspected within five working days. If payments are delayed beyond the agreed period, manufacturers are legally required to pay interest.
The policy prohibits automotive companies from forcing suppliers to accept non-cash payment methods like commercial acceptance bills or supply chain notes. It encourages the use of cash payments and requires that if non-cash methods are used, the costs of discounting must be clearly defined in the contract.
Special protections are introduced for small and medium-sized enterprises (SMEs). Manufacturers are encouraged to pay SMEs within 30 days, with a maximum limit of 60 days, and are urged to use cash for all payments to these companies. These requirements extend to the subsidiaries of large automotive firms.
To ensure compliance, the government will implement a monitoring system involving corporate self-reporting, third-party evaluations, and government oversight. Companies are required to submit payment reports twice a year. Those with significant payment delays or high volumes of complaints may face interviews and mandatory rectification measures.
