On September 15, the China Association of Automobile Manufacturers (CAAM) launched the "Initiative for Standardizing Accounts Payable Practices Among Suppliers to Automobile OEMs." This initiative aims to bring uniformity to procurement contracts between OEMs and their suppliers, encompassing key areas such as order confirmation, delivery and acceptance processes, payment and settlement procedures, and contract length.

Central to this initiative is the enforcement of the "Regulation on Ensuring Payments to Small and Medium-sized Enterprises." It strictly forbids large enterprises from leveraging their market dominance to the detriment of suppliers' interests, fostering instead a collaborative and mutually beneficial ecosystem.

Key stipulations include:

• Both contracting parties (referred to as Party A and Party B) are required to confirm order dates and other pertinent details via purchase orders.
• Party B is obligated to deliver goods as stipulated, with Party A completing acceptance within three working days, in principle.
• Payment terms for Party A shall commence from the date of successful delivery and acceptance by Party B, with a maximum duration of 60 calendar days.
• For non-small and medium-sized enterprises (Party B) providing continuous supplies, reconciliation may occur within a specified period, subject to mutual agreement, with payment terms commencing from the reconciliation date.
• In the absence of an agreed unit price for supplies, Party A is required to make an advance payment based on a certain percentage of the unit price from the most recent supply contract or the development fixed point (designated supplier) unit price.
• The initiative encourages the use of cash or bank acceptance bills for payment. For small or medium-sized enterprises (Party B), exclusive use of cash or bank acceptance bills for payment is advocated.
• Both parties are encouraged to forge long-term and stable cooperative relationships, with contract durations extending no less than one year.