China’s Ministry of Industry and Information Technology (MIIT) has launched an online platform to handle complaints about automakers’ payment practices.

The goal is to help resolve issues by coordinating with relevant stakeholders.

This move follows commitments made in June by major automakers, including BYD, Chery, SAIC, and Xiaomi, to pay suppliers within 60 days.

The pledges come amid growing concerns over the impact of price competition in the automotive industry.

The ministry also plans to regulate payment practices to support the sector’s sustainable development.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Payment terms crisis reveals deeper auto industry challenges

The government’s new complaint system addresses a critical industry issue where some manufacturers were delaying supplier payments for over nine months.

BYD, despite its market success with 2.1 million cars sold in the first half of 2025 (half being pure electric), was criticized for payment delays averaging 275 days in 2023 1.

These extended payment terms create significant cash flow problems for smaller suppliers in the supply chain, threatening their viability and potentially destabilizing the entire ecosystem.

The Ministry’s intervention aligns with similar regulations in other industries to protect small and medium enterprises, including prohibiting non-cash payment coercion that further extends actual payment periods 1.

This regulatory step highlights Chinese authorities’ concerns about the automotive supply chain’s health as competition intensifies among the country’s more than 100 competing EV brands 2.

2️⃣ Chinese regulators working to prevent “Evergrande-like” auto industry crisis

The government’s initiative to standardize 60-day payment terms is part of a broader effort to prevent the auto industry from experiencing a collapse similar to what happened in the real estate sector.

Industry observers have compared the current auto market situation to the Evergrande crisis, with unsustainable competition potentially leading to widespread financial distress across the sector 3.