03 June, 2020 Resources

Payment delays will increase further because of covid-19

China payment survey 2020

Coface’s 2020 China Corporate Payment Survey looks at the payment behaviour of over 1,000 companies in China in late 2019. The data was compiled in the fourth quarter, which means that the figures do not take into account the impact of the COVID-19 pandemic on the Chinese economy. Notwithstanding this caveat, our survey shows a deterioration in payment behaviour in 2019, which ultimately does not bode well for Chinese companies in the context of weaker activity in 2020. Coface expects growth to fall to 1.0%, the lowest level in 30 years, so given the historic correlation between economic activity and payment delays, we anticipate a sharp deterioration in 2020.

Average payment terms remained stable at 86 days in 2019. However, the percentage of respondents offering average credit terms exceeding 120 days increased to 23% in 2019, up from 20% in 2018 and 12% in 2017. In practice, 50% of respondents offered maximum payment terms exceeding 120 days. Payment delays also deteriorated, with the proportion of companies experiencing payment delays that exceed 120 days increasing to 37% in 2019 from 31% in 2018. More ominously, the proportion of respondents experiencing ultra-long payment delays (ULPDs, over 180 days) that exceed 10% of their annual turnover increased to 27% in 2019, up from 21% in 2018. When these constitute a large proportion of total annual turnover, a company’s cash flow may be at risk, which is worrisome in case of exogenous shocks like COVID-19.

Coface expects an increase in bond defaults and insolvencies amongst sectors that experienced a build-up in cash flow risks in 2019. The sectors with the highest proportion of ULPDs accounting for more than 10% of annual turnover are construction (30%), transport (30%), energy (29%) and automotive (28%). ICT recorded the highest increase in payment delays on the back of US-China trade war disruptions, deteriorating by 12 days to reach 102 days. While all sectors are exposed to these risks, sectors that entered the crisis from a position of strength have better chances than those who did not.

In fact, companies may be in a weaker position to withstand the impact of the COVID-19 shock relative to last year, with 40% of respondents admitting that they did not use any form of credit management tool to mitigate cash flow risks in 2019, while only 17% of respondents declared using credit insurance.

Want to know how Coface can help your business know more and grow more?

Get in touch About us

Related resources


Grow your business safely

Focus on sustainable growth. This is indisputably a tough time for business. Experts believe it will take years for the economy to recover from the shock of the pandemic and lockdown while there is continued uncertainty

02 December, 2020

View Resource


The COVID-19 pandemic has contributed to a unique set of circumstances weighing on the world economy, notably in terms of political risk. Julien Marcilly, Coface’s Chief Economist, presents some of our predictions for 2021,

27 November, 2020

View Resource

Country & Sector Risk Barometer: Q3 2020 Quarterly Update

Similar to last quarter, the uncertainties surrounding the forecasts presented in this barometer are very high. They are primarily linked to the global health situation: since June, the pandemic has continued to gain momentum.

01 October, 2020

View Resource


Keep your finger on the pulse with CofaNews

Sign up to CofaNews for the latest industry and economic news, exclusive invites and lots more.