BYD shifts away from in-house payment system, sources say

China’s BYD has told some suppliers it wants to stop using in-house financial notes to pay them, people briefed on the matter said — a seismic shift away from a practice that helped power its rise but has been criticised for disadvantaging its parts makers.

- (REUTERS)

BYD, one of the world’s biggest electric vehicle makers, now wants to use commercial paper or bank notes to pay suppliers rather than promissory notes issued on Dilian, an electronic platform it launched in 2018, the people said.

Reuters was unable to learn the scope of the shift and the sources, who declined to be named due to the sensitivity of the topic, did not provide a reason for the change.

But a brutal price war in the Chinese auto industry has battered parts suppliers who have complained about increasingly long periods before being paid and pressure from automakers to cut prices. That in turn has prompted authorities to issue new rules that seek to greatly shorten payment times and improve industry practices.

China-focused Auto Business Review also reported last week that BYD has, over the past two weeks, started to move away from Dilian notes to bank notes or commercial paper.

BYD said in a statement to Reuters that its Dilian system falls within regulatory guidelines, and it has sped up payments to suppliers this year, but it did not address queries about the move away from in-house notes. Banks that partner with BYD did not respond to requests for comment.

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China's central bank, which regulates commercial paper and bank notes, declined to comment.