At the ongoing autumn session of the Canton Fair, China’s largest and longest-running trade exhibition, many Chinese exporters say that overseas buyers’ demands for extended payment terms are becoming one of their biggest challenges in maintaining profits.
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The pressure on small and medium-sized enterprises (SMEs) – across a range of industries – is particularly acute.
“A regular client suddenly demanded 90-day post-shipment payment because other suppliers offer longer terms,” said Kevin Huang, a lighting exporter at the fair in Guangzhou. “If we don’t comply, we risk losing the order.
“SMEs have to front-load material, production and shipping costs. If cash is tied up for three months or more, orders could easily turn into a possible loss.”
The trend stems from the combined effects of tighter overseas liquidity and rising inventory pressures in a more complex global macroeconomic environment for Chinese exporters – a sector that remains a key driver of the world’s second-largest economy.
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