China exporters at risk as buyers delay paying
Firms are facing growing cashflow problems as overseas customers seek longer settlement terms and wage rises and the yuan add to pain
The credit risks faced by exporters are mounting even as trade data suggests a spike in mainland exports since the beginning of the year.
Local manufacturers complain that it is taking much longer to collect bills as the appreciation of the yuan and rising costs add to the pressure on overseas buyers, especially those from Europe, who have increased the settlement period from one month to three months.
Stanley Lau Chin-ho, vice-chairman of the Federation of Hong Kong Industries, said 40 per cent of his European customers, who make up around a third of his clientele, are demanding more time to settle their bills.
"The cash flow is slowing as our products get more expensive due to yuan appreciation and as wages increase," Lau said.
"They help us shoulder a part of the appreciation, but in return they want extension on the payment period. Buyers from Europe are particularly more insistent on longer settlement periods."
A survey of more than 1,600 enterprises from the mainland, Hong Kong and Taiwan found that overdue payments have increased for 42 per cent of Hong Kong enterprises and 56 per cent of mainland businesses, against 20 and 42 per cent respectively a year ago.
