Corporate Payment Trend and Sectorial Risk in Asia Pacific
According to the survey of credit risks management in Asia Pacific by Coface, corporate payment experience in the region generally stabilised. Companies in Australia and China suffered more non-payment. The growth slowdown in China remains a concern for other economies in the region in 2014.
Corporate overdue payment stabilised in 2013
According to the survey, roughly 68% of the companies told us that they have faced overdue situation in 2013 (compared to 67% in 2012). Overdue situation has moved slightly toward the long-end with 14% of respondents reported their average overdue days more than 90 days, a slight increase of 1 % compared to 2012.
In our experience, companies with more than 2% of long overdue accounts against turnover could have liquidity problem and have high risk of non-payment to their suppliers. While only 30% of the respondents shared that long-term overdue (i.e. at least 180-days) has weighted more than 2% of their annual turnover in 2013, signalling an improvement compared to the 37% respondents in 2012. Such results point to a stabilized corporate payment experience in Asia in 2013.
2014 Outlook: the threat of a slow growth in China looms over the region
From the hawk’s-eye view, Asia’s economic growth momentum remained strong in the post-crisis era, with Coface’s forecast pointing to a 6.1% for 2014. Such momentum partly came from the dividend from economic bloom of the 2 biggest emerging markets – China and India – during the past decade; however, with growth outlook of these two countries notably lower than the long-term growth trend (China averaged 10.6% and India averaged 7.8% between 2000 and 2011).
The upturn in the advanced economies (1.9% forecast for 2014, after 1.2% in 2013) mainly US and European markets will benefit to export oriented economies in Asia like Hong Kong, Taiwan and Singapore. However, the decelerated growth of China expected at 7.2% in 2014 could impact most of the economies in Asia which have been relying on demand of China.