The 60-Day Promise: Two Months On, a Tale of Two Realities for Automakers and Suppliers
On June 1st, a revised “Regulation on Securing Payments to Small and Medium-sized Enterprises” came into effect, aiming to tackle the persistent issue of payment delays. With a new 60-day payment term as the official red line, over a dozen major Chinese automakers, including BYD, Geely, and Changan, publicly pledged to shorten their payment cycles, heralding what many hoped would be a turning point for the supply chain ecosystem.
However, more than 60 days after these public commitments, the reality on the ground reveals a stark contrast. Some suppliers report facing “soft resistance,” with automakers using tactics like intentionally delaying acceptance procedures or altering payment methods. In some cases, new contracts failed to even specify the “60-day term.” Conversely, other suppliers confirm that payment terms have genuinely improved, significantly easing their cash flow pressures.
This gap between promise and reality offers a multi-faceted look into the complex dynamics of implementing the 60-day payment rule. Is it all talk and no action, or is steady progress being made? The answer may lie within these conflicting accounts.
“You Lose if You Take It Seriously”: A Skeptical View
When the automotive media outlet Gasgoo (盖世汽车) recently launched a survey asking, “Now that 60 days have passed, how are automakers’ payment promises holding up?” one netizen bluntly commented, “You lose if you take it seriously.”
This sentiment captures a deep-seated skepticism. In the automotive supply chain, payment terms have never been a simple matter of promises. Automakers hold the power of the purchase order, and smaller suppliers, in particular, often face a difficult choice between accepting long payment terms or losing the business entirely.
A Gasgoo survey of nearly 200 suppliers across various sectors—from fasteners and electronics to interiors and powertrain systems—backs up this reality.
- Over 60% of suppliers reported that they had not signed supplementary agreements or new contracts that explicitly stipulated a “60-day payment term.”
- More than 70% stated they had experienced disguised payment term extensions from automakers within the last 60 days.
This means that even suppliers with a “60-day” contract aren’t safe. Automakers have employed various methods to bypass the rule, including:
- Vague Payment Start Dates: Intentionally delaying inspections, account reconciliation, or approval processes to push back the official start of the payment clock.
- Forced Non-Cash Payments: Compelling suppliers to accept commercial acceptance bills and other non-cash instruments instead of direct wire transfers.
One chassis supplier reported being “forced into consignment and made to accept bills.” An automotive electronics supplier noted that their average payment cycle remains “90 days plus a 6-month acceptance bill,” showing no improvement. Even when the official term was shortened to 60 days, some companies found it included a lengthy 2-3 month approval process followed by a 180-day bill.
A Glimmer of Hope: The Positive Movers
Fortunately, the picture isn’t entirely bleak. Positive news has also emerged over the past two months.
- Seres: “We have standardized 60-day payment terms in all supplier contracts.”
- Li Auto: “We have shifted to a 60-day term and pay almost entirely in cash via wire transfer, with very few acceptance bills.”
- Xpeng: “We are fulfilling our 60-day promise, and many suppliers have received notices to sign supplementary agreements.”
Gasgoo’s survey also reflected these positive signs. 24% of respondents said their average payment cycle had shortened, and around 37% confirmed they had signed “60-day payment” agreements with some or all of their automaker clients.
Several companies have gone public with detailed action plans, adding to their credibility.
- FAW (First Automobile Works): The “60-day payment” rule, with a clearly defined start time, is now written into new contracts. Furthermore, since June 2025, FAW has committed to paying 100% in cash to certified small and medium-sized enterprise (SME) suppliers.
- GAC (Guangzhou Automobile Group): While standardizing a 60-day term, GAC also established a mechanism to offer 30-day payments or prepayments to suppliers facing financial strain. The company also covers the full interest cost on any bank acceptance bills, making them equivalent to cash for the supplier.
The China Association of Automobile Manufacturers (CAAM) has confirmed that major state-owned, private, and new-force automakers are “all taking action,” boosting confidence that a real industry-wide shift is underway.
Change Takes Time: Challenges and Solutions for Automakers
Realistically, it is challenging for every automaker to meet the 60-day promise overnight. Complex supply chains, their own cash flow pressures, and the difficulty of amending long-standing contracts are all significant hurdles.
However, the actions of first-movers point toward viable solutions.
- Strengthen Contract and Process Management: Ambiguous practices like “settlement upon production line completion” must be eliminated in favor of clear, legally binding contract terms.
- Embrace Digitalization: FAW has built a system where suppliers can initiate payment requests online for automated processing. GAC uses a digital platform for full transparency, starting the payment clock automatically upon goods receipt.
- Benchmark Against Best Practices: There is a call to learn from foreign automakers like BMW, which often have more mature and disciplined systems for managing supplier payments.
The Need for Stronger Oversight
On July 9th, China’s Ministry of Industry and Information Technology (MIIT) launched an online portal for suppliers to report issues with automakers’ payment practices.
However, the Gasgoo survey found that over 90% of suppliers had not used this channel. The reasons were twofold: a belief that it would be ineffective, and a fear of retaliation from their powerful clients. The latter was the overwhelming concern.
This highlights the severe power imbalance in the supply chain and shows that a reporting hotline alone is not enough. Stronger government oversight is crucial.
In conclusion, the 60-day payment promise is a positive first step, but its implementation is a mixed bag. While pioneers are showing it can be done, many suppliers still face the same old struggles. For this promise to become a reality for all, it will require genuine commitment from automakers, coupled with robust and effective government regulation that protects the industry’s most vulnerable players from fear and retribution.
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