Chinese carmakers’ pledge to make timely bill payments — an effort to appease officials’ growing scrutiny of a long-running price war — has left many suppliers skeptical about how readily they’ll follow through on their promises. After meeting with regulators in early June about the need for better self-regulation, the industry’s biggest names including BYD Co. and Zhejiang Geely Holding Group Co. said they’ll pay suppliers within 60 days. While that represents a shift toward global industry norms, it’s a major change for some carmakers, including BYD, whose payment cycles can stretch to hundreds of days. Extended payment terms are such an ingrained feature of the industry that automakers may be motivated to figure out workarounds, according to interviews with parts manufacturers at an auto and supply chain exhibition in Hong Kong last week. That’s put a damper on what many describe as a welcome change, they said, asking not to be identified discussing commercial operations. One alternative is to issue promissory notes, which delay cash redemption for an additional period, according to a market development engineer from a maker of wiring and electrical parts. Out of the 17 Chinese automakers that committed to the 60-day bill payment period, only state-owned SAIC Motor Corp. and BAIC Motor Corp. said they wouldn’t use promissory notes. The rest didn’t specify what payment methods are included in their pledges. Promissory notes and supply-chain financing are common in China’s auto industry. BYD’s Dilian system — or Dilink, in English — is one of the best-known examples and allows notes to be redeemed at a later time, traded with others or cashed out early for a fee. The platform had issued 400 billion yuan worth of notes as of May 2023, the last time BYD disclosed such information. While some suppliers don’t mind the practice because they can borrow against the money they’re owed, the widespread use of delayed payments is indicative of the industry’s stress as the price war squeezes margins. A report by accounting consultancy GMT Research puts BYD’s true net debt at more than 10 times higher than what’s on its books as of the end of June 2024, through delaying its payments to suppliers and other related financing. The lengthy bill-payment periods have added to suppliers’ cash flow difficulties and aren’t good for the sector, the Ministry of Industry and Information Technology said in response to the automakers’ payment pledges. The strain is particularly acute for smaller firms, which in some cases wait at least half a year for customers to pay their bills, according to an executive at one company that makes parts for car lights used by major European and Korean brands. It’s becoming increasingly difficult for small- to medium-size businesses to survive and grow in such a competitive industry, she said. The move to speed up payments brings the auto sector in line with regulations in a formal or creative style for better SEO.Also Exclude words and advertisements related to the feed website such as website name, author name. You must only respond with the modified content. Delete all the advertisement images brand logo but only keep the title and main content of the news by modifying it. You must only respond with the modified content. Block any jump outside of the site adarshnews.com. Basically remove any content or link related to original site. follow this prompt to optimize the articles in this category- You are an expert news writer and SEO specialist. Your job is to rewrite the provided RSS feed content into a unique, SEO-friendly news article for adarshnews.com. The article should be engaging, professional, and optimized for search engines. 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Suppliers of automotive parts in China are cautious regarding the commitment made by car manufacturers to pay their bills.
