An increasing number of companies polled in China (+22%) have reported facing cash flow challenges due to poorer payment practices of their B2B customers.
The 2023 Payment Practices Barometer survey for China was conducted between the end of Q2 and the beginning of Q3 2023, and findings should therefore be viewed with this in mind.
Key takeaways from the report for China
Cash flow issues spark stronger credit management action
- 22% more Chinese companies than last year reported cashflow challenges due to poorer B2B customer payment practices. Temporary liquidity issues were was the primary cause of payment slowdowns, while the pharmaceuticals sector saw financial distress and insolvency of B2B customers as significant factors.
- To mitigate liquidity risks stemming from poorer B2B customer payment practices, 51% of Chinese companies delayed supplier payments, invested in invoice followup, and improved credit control procedures. This resulted in a reduced rate of late payments, now impacting 37% of B2B invoices on average. Bad debts remained stable, affecting 4% of all B2B invoiced sales.
Cautious optimism amid concern over global economic downturn
- The major concern for Chinese companies during the coming months is the impact that global economic uncertainty could have on international market stability. Persistent high inflation potentially disrupting the financial stability of B2B customers is another worry, while competitive pressures are a particular anxiety in the chemicals sector.
- A mixed verdict was found about prospects for demand in the year ahead. 46% of companies polled in China are optimistic there will be an increase in sales, especially in the chemicals sector. 54% expect no change or a drop in demand.
The Atradius Payment Practices Barometer is an annual survey of business-to-business (B2B) payment practices in markets across the world. Its findings can give valuable insights into the current dynamics of corporate payment behaviour in B2B trade. It can also help companies doing business, or planning to do so, in the markets polled to identify emerging future trends in the payment practices of B2B customers.
Interested in finding out more?
For a complete overview of the 2023 survey results for China, please download the full report available in the related documents section below. The Statistical Appendix to the regional report is also available for download in the section below.
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