Payment Delays Put Chinese Firms Under Pressure

Payment Delays Put Chinese Firms Under Pressure

Chinese companies are giving their customers more time to settle invoices than their regional peers, but are still waiting longer for overdue payments. The trend is putting increasing pressure on corporate cash flows amid weak demand and intense competition.

Payment terms offered by companies in mainland China averaged 81 days, compared with 70 days across Asia-Pacific, according to Coface’s APAC Payment Survey 2026 published on Thursday.

Despite the more generous terms, 86 percent of Chinese firms experienced payment delays. While this was slightly below the APAC average of 91 percent, overdue invoices in China took an average of 73 days to settle, five days longer than the regional average.

Payment Conditions Deteriorate

The situation has worsened over the past year. Some 35 percent of respondents reported that payment delays had become more frequent, while 26 percent saw an improvement. At the same time, 33 percent said delays had become more severe, compared with 27 percent reporting an improvement.

Looking ahead, 40 percent of Chinese companies expect payment conditions to deteriorate over the next 12 months. Only 20 percent plan to tighten the payment terms they offer customers.

Coface attributed the pressure to factors including trade and tariff uncertainty, persistently weak demand and intense price competition in several Chinese industries.

The findings are also reflected in broader economic data. Accounts receivable at China’s industrial enterprises rose 8,1 percent year on year at the end of June 2026, according to official data cited by Coface. The average collection period increased to 71,7 days from 70,9 days a year earlier.

«Intense competition is pushing Chinese suppliers to offer longer payment terms to secure business. Yet they then wait significantly longer than regional peers for overdue settlements,» said Junyu Tan, regional economist for North Asia at Coface.

Fewer Defaults, But Bigger Losses

Chinese companies reported fewer customer defaults than their regional peers. Only 16 percent experienced at least one default during the past 12 months, compared with an APAC average of 45 percent.

However, when customers did default, the financial impact was greater. Defaulted receivables represented 11,2 percent of total accounts receivable among Chinese suppliers, compared with 10 percent across APAC.

The impact was particularly pronounced in the wood and chemicals industries, where around 20 percent of receivables were written off as defaults.

Wide Differences Between Sectors

Risks varied considerably between industries. Automotive suppliers recorded relatively low levels of payment delays and defaults. Some 29 percent reported late payments and only 5 percent experienced a customer default.

Coface linked this partly to commitments by 17 major automakers to keep supplier payment terms within 60 days. However, it cautioned that intense competition and pressure on margins remain.

At the other end of the spectrum, all respondents in the construction and real estate sector as well as agriculture and food production reported late payments.

The chemicals industry recorded both the longest payment terms and the longest delays, reflecting weak final demand, excess capacity and higher input costs, according to Coface.

Relationships Can Mask Warning Signs

Business relationships also play a significant role in how Chinese companies deal with payment problems. Some 63 percent of respondents said long-standing relationships influenced their tolerance of late payments, while 83 percent said relationship considerations could sometimes outweigh financial warning signs.

«Long-standing relationships are an important part of doing business in China, but they should be supported by timely financial information, clear credit limits and agreed escalation triggers,» said Mark Qian, country manager and CEO of Coface China.

The findings suggest that payment delays are becoming an increasingly important issue for Chinese companies even as outright defaults remain comparatively uncommon. With 40 percent expecting conditions to worsen over the coming year, pressure on working capital could remain a concern.