Chinese Bill Collectors

Running after unpaid debts in China becoming difficult - Coface

"The payment experience in China is getting worse. Last year was a very bad year," with more than 56 per cent of companies surveyed reporting an increase in payments overdue; a new record, the report's author and Coface's Asia-Pacific economist Rocky Tung said.

...SMEs paid upwards of 15 per cent to 20 per cent annualised interest for financing, which was already "not sustainable" for many businesses operating off low single-digit margins, said Tung, who sees strong correlation between late payments and the level of non-performing loans in China's finance system.

The percentage of debt in arrears between 90 and 120 days nearly doubled to 10.1 per cent last year as a result of a tighter credit market and falling commodity prices, said Tung. Some 29.8 per cent of the 882 companies surveyed said that payments overdue by 180 days - the point at which the majority will never be honoured, says Tung - accounted for more than 2 per cent of their annual sales.