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Improve Mechanisms to Address Delayed Payments by Large Enterprises to Small and Medium-Sized Enterprises (No.281, 2021)


By Ma Shuping & Dai Qiujuan, Research Team on “Business Environment”, Enterprise Research Institute, DRC

Research Report, No.281, 2021 (Total 6346) 2021-9-23

Abstract: A prominent problem facing small and medium-sized enterprises (SMEs) currently is the delayed payments and cash arrears. China has adopted measures for addressing the delayed payments within a given time limit, which has largely promoted the development of small and medium-sized enterprises. The delayed payments by large enterprises that enjoy a dominant position over SMEs are in fact infringements on the interests of the latter, whereas the current work for clearing debts has not yet touched upon these areas. The mechanism for addressing delayed payments by large enterprises to SMEs needs to be improved. The current problems include inadequate regulation on delayed payments by large enterprises, insufficient supervision of the existing laws and regulations on the delayed payments by large enterprises, and the sluggish law enforcement capabilities of related departments for promoting the development of SMEs. China can refer to the experience of Japan and establish a long-term governance mechanism by focusing on refining the system. The policy options include addressing the delayed payments by large enterprises under the anti-monopoly law system, strengthening law enforcement through anti-monopoly agencies and enriching the measures for law enforcement.

Keywords: delayed payments by large enterprises, governance mechanisms, anti-monopoly, small and medium-sized enterprises, experience of Japan