China opens online complaint portal to enforce automaker payment promises

<p> The initiative comes in the wake of growing backlash from upstream industries, including steelmakers and parts manufacturers, as a cutthroat price war—sparked in early 2023—continues to strain cash flows across the auto sector.<br></p>
The initiative comes in the wake of growing backlash from upstream industries, including steelmakers and parts manufacturers, as a cutthroat price war—sparked in early 2023—continues to strain cash flows across the auto sector.

China’s Ministry of Industry and Information Technology (MIIT) has launched an online complaint platform for automotive suppliers, aimed at tightening enforcement around timely payments by automakers. The move comes as tension simmers in China’s automotive industry over delayed payments, particularly impacting small and medium-sized vendors.

In a statement on Wednesday, the ministry said it will accept complaints from suppliers if major automakers violate commitments to pay within 60 days — a pledge made by 17 Chinese car manufacturers last month. The new platform allows suppliers to report delays caused by unjustified postponements of product inspections or acceptance certificates, extended payment periods beyond 60 days, and instances where suppliers are pressured into accepting non-cash payments, such as commercial paper.

The reason behind the action?

The initiative comes in the wake of growing backlash from upstream industries, including steelmakers and parts manufacturers, as a cutthroat price war—sparked in early 2023—continues to strain cash flows across the auto sector.

While the Chinese government introduced new rules in March mandating most payments to be settled within 60 days, effective from June 1, suppliers have raised concerns about potential loopholes. These include ambiguities over the definition of the payment period’s start date and whether payments must be in cash or can be made through commercial paper.

Commercial paper, widely used in the real estate sector, allows firms to defer cash payments by offering future-dated promises of payment. Though it helps preserve liquidity, it often places smaller suppliers under financial stress, especially when they are forced to sell the paper at a discount in secondary markets to meet cash flow needs.

By offering a formal grievance redressal mechanism, the MIIT aims to ensure that large carmakers comply with payment norms, providing critical relief to the smaller players that form the backbone of China’s automotive supply chain.

  • Published On Jul 10, 2025 at 11:19 AM IST

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