Chinese Automakers Commit to 60-Day Supplier Payment Rule

At least eight major Chinese automakers, including top players BYD (SZ:002594), Chery, and Geely, have announced compliance with new regulations requiring faster payments to suppliers. The companies began issuing public statements since late Wednesday, pledging to settle invoices within 60 days of receiving goods or services.

This industry-wide move comes in response to a new government mandate that took effect on June 1. Under the regulation, large enterprises in China must pay suppliers—covering commodities, engineering, and service providers—within 60 days to enhance financial liquidity and ease cash flow pressure across supply chains.

The initiative is part of Beijing's broader effort to support small and medium-sized enterprises (SMEs), many of which are key suppliers to the automotive sector. These businesses often face delayed payments, which strain operations and limit growth. Timely settlement by major manufacturers is expected to improve the overall health and stability of the auto industry’s ecosystem.

BYD, China’s leading electric vehicle maker, was among the first to publicly confirm adherence to the rule, followed by other state-backed and private automakers. The proactive response reflects growing regulatory pressure and a shift toward more transparent and equitable supplier relationships.

China's auto industry is a critical pillar of its economy, and ensuring supplier stability is viewed as essential to maintaining production resilience, especially amid ongoing global supply chain challenges. The 60-day payment mandate also aligns with international best practices and is expected to foster greater investor and stakeholder confidence in the sector.

By adhering to this regulation, Chinese automakers aim to not only comply with national policy but also demonstrate corporate responsibility and strengthen their long-term partnerships across the supply chain.