PRESS RELEASE
Coface Asia Corporate Payment Survey 2024:
Overall improvement but worsening payment behaviour intextile and construction
Japan, June 5, 2024 - The Asia Corporate Payment Survey, conducted by Coface
between December 2023 and March 2024, provides insights into the evolution ofpayment behaviour and credit management practices of about 2,400 companies
across the Asia Pacific region. Respondents are active in nine markets (Australia, China,
Hong Kong SAR, India, Japan, Malaysia, Singapore, Taiwan and Thailand) and 13 sectors.
•••Overall, credit conditions are tightening, with payment terms decreasing to 64
days from 66 in 2022. In the meantime, the duration of payment delays
decreased from 67 to 65 days
Late payments were more frequent, with 60% of companies experiencing themcompared with 57% in 2022, but their average duration fell from 67 to 65 days.
Ultra-long payment delays have increased. Textiles and construction are themost affected sectors by these delays.
56% of companies expect the economic outlook to improve in 2024, althoughslowing demand and intense competition are major risks.

‘The year 2023 was one of normalisation from the pandemic, but the economic landscapecontinued to offer its share of challenges in the form of an elevated inflationary andinterest rate environment amid persistent geopolitical risks. The surveyed companiesexpressed the same concerns with about half of respondents citing slowing demand andover-competitive pressures as the two main risks to their company’s operations in 2024.
Coface forecasts economic growth in Asia Pacific to maintain at over 4% in 2024, withthe region still the fastest growing in the world.’ said Bernard Aw, Chief Economist for
Asia-Pacific at Coface.

Payment delays: Significant late payment rise in textile and construction
The share of companies surveyed reporting payment delays rose from 57% in 2022 to60% in 2023, with only China and Japan driving the rise, largely due to their tighter
payment terms. Meanwhile, all other markets covered witnessed a reduction in
payment delays reported, suggesting improved financial stability after the pandemic.
Excessive competition, slowing demand, slowdown in cash flow, and customers’
payment defaults are the main cited reasons for payment delays in the region.
Textile and Construction saw a significant increase in late payments reported. Textile
faced higher production costs and sluggish demand, and Construction suffered sluggish
China property sector and a high interest rates environment in most markets.
While the average payment delay duration dropped from 67 days in 2022 to 65 days in
2023, most markets covered saw a rise. Australia, Hong Kong and Malaysia saw thehighest increase, while only China, Taiwan and Thailand saw a decline. Japan had theshortest average payment delay at 50 days, and Australia had the highest at 83 days.
The duration of payment delays increased the most in the textile and agri-food sectors,
both by 11 days. Energy and pharmaceuticals saw the biggest falls, of 11 and 10 days
respectively. The construction sector still has the longest payment delay (76 days), andthe pharmaceutical has become the one with the shortest (57 days).
The proportion of respondents experiencing ultra-long payment delays (ULPD) over 2%of their annual sales has risen from 26% in 2022 to 29% in 2023. This 2% threshold
represents a very high risk of non-payment, given that 80% of these delays have never been
paid, according to Coface's experience. Singapore, Thailand, and Hong Kong lead theincrease in the proportion of ULPDs. Textile is the sector with the highest share ofrespondents reporting ULPDs, with an increase from 14% in 2022 to 40% in 2023, while
Construction and Metals both stand at a substantial 35%.
Companies are generally optimistic about future payment behaviours, with 30%
expecting improvement in late payment trends while the 18% expecting deterioration aremainly textile and retail companies.

Economic Expectations: Growing optimism despite demand risks
Asia Pacific (APAC) saw an improvement in economic conditions in 2023, thanks to thereopening of China's borders and its abandonment of zero-covid policies, as well as lower
inflation and a slower rate of restriction of monetary policies globally. Consequently, almost
half of our respondents (49%) signaled improved business activity compared to 2022,
while only 20% signaled a deterioration.
Looking forward, we forecast economic growth in APAC to maintain at over 4% in 2024.
This is consistent with our respondents' anticipations, as 56% expect their businessactivity to improve in 2024 with India and Thailand the most optimistic economies.

Sector-wise, Retail, and textile had the highest share of respondents anticipating aworsening of business activity, while confidence in the year’s business activity was thegreatest for wood, automotive, pharmaceutical, and agrifood.
Companies still reported several risks that could hurt their operations in 2024. Nearly halfof respondents cited slowing demand and over-competitive pressures, and nearly a third
highlighted higher prices for inputs and raw materials and higher labour costs as a key
operational risk.

MEDIA CONTACTS
COFACE JAPAN

Noriko Ogawa: +81354026195
noriko.ogawa@coface.com

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