Core Viewpoint - The revised "Regulations on Ensuring Payment to Small and Medium-sized Enterprises" will take effect on June 1, 2025, prohibiting large enterprises from imposing unreasonable payment terms on SMEs and delaying payments for goods, projects, and services [2] Group 1: Industry Response - Major automotive companies, including China FAW, Dongfeng Motor, SAIC, Changan, BAIC, GAC, and BYD, have committed to standardizing supplier payment terms to within 60 days as a response to the new regulations [2][3][4] - The automotive industry is uniting under the consensus of "value chain win-win," with companies optimizing internal procurement and financial settlement processes to ensure timely payments [3][4] - The commitment to a 60-day payment term is seen as a significant step towards alleviating cash flow pressures on small suppliers and promoting healthy collaboration within the industry [4][10] Group 2: Regulatory Context - The government has emphasized the need to address issues such as delayed payments and high operational costs for enterprises, with a focus on improving the payment cycle for SMEs [7][8] - The average accounts payable turnover days in the Chinese automotive industry is reported to be as high as 182 days, significantly exceeding the international standard of 90 days [7] - The revised regulations aim to strengthen the payment responsibilities of large enterprises and enhance supervision and management of payment processes [8][12] Group 3: Industry Challenges and Expectations - The automotive supply chain is under pressure, with some companies previously extending payment terms to suppliers, which has led to increased financial strain on upstream suppliers [8][11] - There are concerns that while the new regulations and commitments are positive, some companies may still find ways to circumvent these obligations, necessitating strict oversight [11][12] - The automotive industry is hopeful that the implementation of the 60-day payment term will foster a more sustainable and collaborative environment, reducing internal competition and price wars [9][10][12]

Core Viewpoint - Multiple Chinese automotive companies have collectively committed to shortening payment terms to suppliers to within 60 days, marking a significant shift in the industry's approach to supplier relationships and financial practices [4][5][38]. Group 1: Industry Response - On June 10-11, 2025, several automotive companies, including China FAW, Dongfeng Motor, GAC Group, and others, announced a unified commitment to reduce payment terms to suppliers to 60 days or less [4][5]. - This collective action is notable in an industry characterized by fierce competition and individualistic strategies, contrasting sharply with previous practices where companies pressured suppliers for price reductions [4][5]. - The Ministry of Industry and Information Technology praised this initiative as a positive response to national calls for corporate responsibility and a step towards a collaborative ecosystem between manufacturers and suppliers [4][5]. Group 2: Legislative Context - The commitment aligns with the revised "Regulations on the Payment of Small and Medium-sized Enterprises," effective June 1, 2025, which mandates payment within 30 days for government purchases from SMEs, with a maximum of 60 days if otherwise agreed [8][10]. - This regulation indirectly addresses long-standing issues in the automotive sector, where extended payment periods have placed significant financial strain on suppliers [10][11]. Group 3: Current Payment Practices - Historically, payment cycles in the automotive industry have been excessively long, with companies like BYD and Geely averaging 127 days, and others like Changan reaching up to 205 days [11][12]. - In contrast, international companies like Tesla and Toyota maintain much shorter payment cycles, with Tesla averaging around 60.36 days and Toyota around 54.84 days [13][14]. Group 4: Supplier Challenges - Suppliers often face a power imbalance in negotiations, leading to extended payment terms and various payment methods that do not provide immediate cash flow [23][24]. - The reliance on commercial acceptance bills instead of cash payments exacerbates the financial burden on suppliers, as these bills can incur additional costs when discounted [19][20]. - The automotive supply chain has been under pressure, with suppliers required to finance their operations while waiting for payments, often leading to significant cash flow challenges [26][30]. Group 5: Future Implications - The new 60-day payment term could provide relief to suppliers who have historically endured long payment delays, but there are concerns about whether companies will adhere to this commitment [39][40]. - There is a risk that companies may shift more responsibilities onto suppliers to ensure their own financial stability, potentially increasing the burden on smaller suppliers [42][45]. - The industry is moving towards a more sustainable and cooperative relationship between manufacturers and suppliers, although challenges remain in balancing the needs of both parties [45].

Core Viewpoint - Multiple automotive companies in China have committed to limiting supplier payment terms to no more than 60 days, responding to government efforts to address "involution" in the industry [1][12][13]. Group 1: Company Commitments - On the evening of October 10, companies including FAW, Dongfeng, GAC, and Seres announced their commitment to a 60-day payment term for suppliers to enhance cash flow efficiency and stabilize the supply chain [1]. - Shortly after, Geely announced a similar commitment to unify supplier payment terms to 60 days, emphasizing its role as a leading enterprise in promoting high-quality development in the automotive industry [1]. - Changan Automobile followed suit, stating that its subsidiaries would also adhere to the 60-day payment term, highlighting the importance of corporate social responsibility [3]. - BYD announced its commitment to the same payment term, aiming to drive high-quality development in the Chinese automotive industry through innovation and management optimization [6][7]. - Chery Group also joined the initiative, reinforcing the collective movement among automotive manufacturers [8]. Group 2: Regulatory Context - The commitments from these automotive companies align with the upcoming "Regulations on Payment of Funds to Small and Medium Enterprises," which will take effect on June 1, 2025, mandating a 60-day payment term and prohibiting non-cash payment methods [13]. - The Ministry of Industry and Information Technology has emphasized the need for comprehensive measures to address "involution" in the automotive sector, indicating a strong regulatory push to improve the business environment [15][16]. - The recent statements from various government departments reflect a concerted effort to combat unfair competition and promote healthy industry development, particularly in the context of the ongoing economic transition in China [16].