What Concerns Chinese Business Operators These Days by Tanaka Nobuhiko (Partner Brighton Human Co., Ltd.)
Perhaps the most vexing problem for Chinese business operators today is the problem of not getting paid. There have always been problems with late payment or failure to collect receivables for individual projects. However, the current problem is that there is a chain reaction creating a situation in which "I can't pay because I can't get paid." The author's brother-in-law runs a manufacturing company with about 70 employees in a certain city in Jiangsu province. The business is production and sale of equipment used in subways, high-speed railroads, wind power generation, etc., and the main customers are state-owned infrastructure-related companies. In China, it is customary to make a lump-sum payment of the year's unpaid bills when the Chinese New Year approaches each year. According to the author's brother-in-law, one of his company's major clients, a very large state-owned enterprise (a central enterprise), was supposed to pay his company about RMB 5 million at the end of 2022, but, as of New Year's Eve, only about RMB 1.6 million had been received. In all the years of doing business with that client, this was reportedly the first time this had happened, and they were very surprised.