Core Viewpoint - The article discusses the ongoing issues in the automotive supply chain, particularly focusing on the extended payment terms imposed by large parts manufacturers on smaller suppliers, despite recent commitments from automakers to shorten their payment periods [3][4]. Group 1: Payment Terms and Industry Dynamics - A recent lawsuit highlights the contract disputes between a mold company and a joint venture parts manufacturer, revealing underlying issues related to payment terms and cash flow for small enterprises [3]. - Automakers have received praise for their commitment to a 60-day payment term, but the larger issue lies with major parts manufacturers who impose even longer payment terms on smaller suppliers [3][4]. - For instance, Huayu Automotive, a major parts supplier under SAIC, has an accounts payable turnover period of 163 days, while Dongfeng Technology has a turnover period exceeding 196 days [4]. Group 2: Impact on Smaller Suppliers - The accounts payable turnover days do not equate to the contractual payment terms, indicating that actual payment cycles can be significantly longer, affecting the cash flow of smaller suppliers [4]. - Larger parts manufacturers, such as CATL, have been able to maintain a favorable accounts receivable turnover period of around 60 days, while their own accounts payable turnover days exceed 258 days, further straining smaller suppliers [4][5]. - The article suggests that these large manufacturers are leveraging their negotiating power to impose harsher terms on smaller suppliers, exacerbating the financial strain within the supply chain [5]. Group 3: Call for Transparency and Fairness - The article advocates for greater transparency in payment policies from large manufacturers, similar to the commitments made by automakers, to foster a healthier competitive environment [5]. - It emphasizes that while extended payment terms may seem like a financial strategy, they should not undermine fair competition and the integrity of the supply chain [5]. - The article questions whether large parts manufacturers should also take responsibility and clarify their payment practices to ensure fairness across the industry [5].

Core Viewpoint - The commitment from 17 automotive companies to a "60-day payment term" has sparked discussions, but suppliers remain skeptical about the actual implementation and potential delays in payment [2][3][4]. Group 1: Payment Terms and Supplier Concerns - The 60-day payment term is seen as a positive signal for fair industry practices, yet suppliers are concerned about the vagueness of the commitment and the potential for continued cash flow issues [3][4]. - Many suppliers face high debt levels and financing costs due to prolonged payment terms, making cash flow security a critical concern [3][4]. - The payment method involving "acceptance bills" complicates the situation, as these bills typically take six months to be honored, effectively extending the payment period beyond 60 days [4][5]. Group 2: Ambiguity in Payment Calculation - Suppliers are uncertain about the starting point for the 60-day payment term, questioning whether it begins from the invoice date or the product delivery date [6][7]. - Delays in the acceptance and invoicing process can lead to extended payment timelines, undermining the intended benefits of the 60-day term [6][7]. - The potential for companies to manipulate acceptance criteria to delay payments further complicates the situation, as suppliers may face additional hurdles in receiving timely payments [7]. Group 3: Regulatory Framework and Industry Standards - The revised "Regulations on Payment of Small and Medium Enterprises" effective June 1 mandates that large enterprises must pay small and medium enterprises within 60 days of delivery, with specific conditions outlined for payment terms [8][9]. - The regulations prohibit the use of non-cash payment methods, such as commercial bills, to extend payment periods, emphasizing the need for clear contractual agreements [9][10]. - Experts suggest that the industry should establish self-regulatory norms to ensure compliance with these regulations and address the complexities of payment practices [10][11].

Core Insights - The Chinese automotive industry has maintained its position as the world's largest producer and seller for 14 consecutive years, leveraging new energy vehicles to lead the global transformation of the automotive sector [2][3] - A significant number of small and medium-sized parts suppliers are facing severe cash flow issues due to extended payment terms imposed by major manufacturers, leading to a silent "accounting war" [2][3] Group 1: Payment Terms and Regulations - Major automotive manufacturers are extending payment terms, pushing many suppliers to the brink of financial collapse. The State Council introduced the "Regulations on Ensuring Payment to Small and Medium Enterprises" in 2020, which was revised in March 2023 to strengthen payment responsibilities and improve regulatory mechanisms [3][4] - The revised regulations will take effect on June 1, 2025, providing hope for small and medium enterprises, although many remain skeptical about their enforcement [3][4] Group 2: Impact of Long Payment Terms - Long payment terms are exacerbated by practices such as "consignment," where suppliers must build warehouses near manufacturers, leading to increased inventory costs and cash flow issues [4][5] - The average payment cycle for suppliers can extend to 10 months, significantly increasing the financial burden on small and medium enterprises [5][8] Group 3: Comparison Between Domestic and Foreign Enterprises - Domestic automotive manufacturers typically have payment terms ranging from 90 to 120 days, while foreign joint ventures generally maintain shorter terms of 45 to 60 days. However, even foreign companies are beginning to adopt longer payment terms [6][10] - Suppliers working with foreign companies often experience better payment conditions, including upfront payments and quicker settlements, contrasting sharply with domestic practices [11][12] Group 4: Industry Challenges and Future Outlook - The prolonged payment terms are leading to systemic risks within the supply chain, as evidenced by the bankruptcy of several companies due to cash flow issues [5][13] - The current payment environment is detrimental to the competitiveness of small and medium enterprises, hindering their ability to invest in research and development [13][14] - There is a call for stricter enforcement of regulations and innovative supply chain financing solutions to alleviate the financial pressures faced by suppliers [13][14]