70% of companies in Asia Pacific report overdues in 2014: China, India, Hong Kong and Thailand to face more challenges in 2015

PARIS - The annual survey by credit insurer Coface of Asia-Pacific economies questioned 2,695 companies in eight countries - and 70% of those surveyed had experienced overdue accounts in 2014 - the highest level in three years. In addition, 37% of respondents reported that overdue amounts increased in 2014, up by 2% since the previous year.

Although the region’s general overdue situation deteriorated, a marked improvement on all indicators was witnessed in Australia. Taiwan and Singapore also experienced improved payments in 2014, in terms of length of average overdue and weight of ultra-long overdues.

In Japan, although more overdues and longer overdue periods were reported by companies in 2014, the weight of ultra-long overdues remained the lowest among countries in the region, while insolvencies and business closures also remained at low levels.

Companies in China, Hong Kong, India and Thailand face more challenges.

In China, the percentage of companies experiencing overdue payments in 2014 remained high, and Coface’s  risk policy remains cautious on industries affected by overcapacity issues - such as iron, steel, cement, shipbuilding, aluminium, glass for construction, coal mining, paper and printing.

In Hong Kong, overdues became more common and longer in terms of days. Going forward, the highly expensive property market and downward pressure on Hong Kong’s retail market (resulting from less dynamic growth in tourism) may lead to headwinds for the economy.

In India, overdue situations became more common in 2014. Coface underwriters reported that corporate overdue payments in India deteriorated in 2014, with huge increases in overdues from companies across all sectors, headlined by companies directly or indirectly related to the construction industry (such as infrastructure). Partnership and proprietary owned companies were the key victims negatively affected by the situation.

Thailand’s business environment was weak in 2014, as shown by the number of companies that were dissolved. This means that corporate payment risks are high. Coface noted a marked deterioration in payment experience, particularly for sectors related to household electric/electronic appliances, chemicals, building materials and steel. www.coface.com  (ATI).