Several leading Chinese automakers — including BYD, GAC, FAW, Dongfeng, Seres, Geely, Changan, Xpeng, GWM, and Xiaomi — have announced their commitment to pay suppliers within 60 days. This move aligns with China’s new regulation, effective June 1, 2025, which aims to ensure timely payments to small and medium-sized enterprises (SMEs).
Previously, payment cycles in the automotive industry were much longer. Companies like BYD and Geely averaged about 127 days to settle payments. Others, such as SAIC Motor, Great Wall Motor, Seres, and Li Auto, extended to around 160 days. Some firms like Nio delayed payments up to 195 days, while Changan exceeded 200 days.
Between June 10 and 11, many major automakers — both state-owned and private — issued statements confirming their compliance with the new regulation. GAC Group was the first to announce its commitment, followed by FAW, Dongfeng, Seres, Geely, and Changan. BYD released its statement early on June 11, and Xpeng — one of the leading EV startups — also confirmed it would follow the new rule.
These companies stated that shortening payment periods would help improve cash flow for suppliers, especially SMEs, and enhance the overall efficiency of the supply chain. At the same time, their announcements reflect a willingness to comply with stricter government oversight. This includes supervision from key regulatory bodies such as the Ministry of Industry and Information Technology (MIIT), the State-owned Assets Supervision and Administration Commission (SASAC), and the National Development and Reform Commission (NDRC).
The new regulation mandates that government agencies, institutions, and large enterprises pay SMEs within 30 days of goods or services being delivered. If specified in a contract, this may be extended to a maximum of 60 days. The regulation aims to protect SMEs from excessively delayed payments and prohibits the use of commercial paper or non-cash instruments that could postpone the actual transfer of funds.
Although the rule is specifically designed to protect SMEs, some companies — including BYD and Geely — have chosen to apply the 60-day limit to all suppliers, regardless of size. This reflects a voluntary commitment to higher standards. However, some automakers have yet to issue statements, likely as they assess operational and financial implications before adopting the same policy.
Analysts believe the 60-day payment rule will soon become a new industry standard in China’s automotive sector. For suppliers, especially smaller ones, faster payments can ease cash flow pressure and reduce reliance on external financing. For automakers, however, shorter payment cycles may require stricter cash flow management and revisions to financial strategies.
China’s Ministry of Industry and Information Technology (MIIT) has voiced full support for the initiative and confirmed that it will oversee automakers to ensure they uphold their commitments. The ministry also pledged to help foster long-term partnerships across the supply chain — from upstream to downstream — in order to strengthen collaboration among large, medium, and small enterprises, drive innovation, and enhance the resilience and stability of the industry.
Source: CarnewsChina
