Core Viewpoint - Major automotive companies in China have committed to a payment term of no more than 60 days for suppliers, which is expected to enhance the cash flow of small and medium-sized enterprises in the supply chain and promote a healthier industry ecosystem [1][2]. Group 1: Industry Impact - The commitment to a 60-day payment term is seen as crucial for building a collaborative and win-win development ecosystem between vehicle manufacturers and parts suppliers, which is essential for sustainable industry growth [1]. - The automotive industry has historically faced long payment terms, with an average accounts payable turnover of 182 days, significantly exceeding the international standard of 90 days, leading to cash flow challenges for suppliers [2][7]. - Shortening payment terms is anticipated to alleviate financial pressure on suppliers, allowing them to invest more in research and development, thus driving industry innovation and upgrading the supply chain [2][3]. Group 2: Company Responses - Companies such as Huahan Co. and Yuli Technology have expressed that the reduction in payment terms will positively impact their cash flow and operational efficiency [3][4]. - Several listed companies have reported that the new policy will enhance the efficiency of capital flow within the supply chain, reduce financial costs, and improve overall business operations [4][5]. - Some companies, however, indicated that their exposure to the automotive parts business is minimal, and thus the impact of the new policy may be limited [4][6]. Group 3: Challenges Ahead - Analysts have pointed out that breaking the inertia of long-standing payment practices will be challenging, as some companies previously maintained payment terms exceeding 170 days [7]. - The complexity of payment models and the lack of a robust credit system in the industry may hinder the effective implementation of the new payment terms [7]. - There may be discrepancies in understanding the new payment terms between suppliers and automotive companies, particularly regarding the timing of when the 60-day period begins [7].