Shanghai steps up oversight of delayed payment practices hurting suppliers


Gu Jun, deputy secretary general of the municipal government and director of the city’s development and reform commission, told a press conference on Thursday that a task force had been set up to ensure money owed to vendors would be paid promptly.

“Supervision will be strengthened to avoid delayed payments,” he said. “We will guide state-owned businesses to properly handle their debt repayments as they fine-tune their supply-chain management.”

The remarks came after Shanghai published its latest action plan to build a world-class business environment.

Dubbed the “dragon head” of the Chinese economy, Shanghai is regarded as a gateway city for foreign businesses and capital entering China. Its efforts to monitor payment practices stem from a nationwide campaign to weed out malpractices that have hurt manufacturing industries from carmaking to property construction.

Powerful manufacturers like electric vehicle assemblers often delay payments to suppliers of auto parts to free up cash for price wars, creating hidden, interest-free debts. For suppliers, however, longer payment cycles can cause cash-flow problems.
Powerful manufacturers like electric vehicle assemblers often delay payments to suppliers of auto parts to free up cash for price wars. Photo: AFP
Powerful manufacturers like electric vehicle assemblers often delay payments to suppliers of auto parts to free up cash for price wars. Photo: AFP
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