Fewer Taiwanese companies had problems with overdue payments than their Asia-Pacific peers last year, thanks to a conservative business strategy that limits them mainly to transactions with existing clients, French credit insurer Coface SA said yesterday.
About 70 percent of companies in the region reported having problems with credit collection, the highest in three years, Coface’s annual survey, which polled 2,695 companies in eight countries, showed.
Of the total, 37 percent reported average increases of 2 percent in overdue amount from a year earlier.
In comparison, only 48 percent of Taiwanese companies had problems with late payments last year, down from 56 percent in 2013 and 77 percent in 2012, the survey showed.
“While a stable domestic economy plays an important part, Taiwanese firms also tend to do business with familiar clients,” a Taipei-based Coface official said.
Taiwan’s overdue incidence was the second-lowest in the region after Japan, which had 43 percent, the survey showed.
While Taiwanese companies’ conservative strategy lowers default risks, it also precludes aggressive expansion, especially in unfamiliar territory, the official said.
Only 10 percent of Taiwanese firms reported payments that were overdue by more than 90 days, compared with 15 percent for the region, while 15 percent of local firms have ultra-long overdues valued at more than 2 percent of turnover, lower than the regional average of 15 percent, the survey said.
While Coface expects payments to improve in Taiwan, Singapore, Japan and Australia this year, Hong Kong, China, India and Thailand might face more challenges due to an economic slowdown and difficulty winning financial support, Hong Kong-based economist Rocky Tung (董一岳) said.
In China, the percentage of companies that had problems with overdue payments remained high at 70 percent last year, the survey said.
The Chinese economy’s high leverage, high cost of financing and low profitability for certain industries cast a shadow over the country’s economic outlook, the report said.
Coface is cautious on industries affected by overcapacity issues such as iron, steel, cement, shipbuilding, coal mining and printing.
In Hong Kong, overdue payment has become more common and longer in terms of duration, Tung said.
Soaring property prices and downward pressure on Hong Kong’s retail market — as a result of slower tourism growth — could mean headwinds for the economy in the special administrative region, the survey said.
“The strength of the Hong Kong dollar and unfavorable policies make the city less appealing as a travel destination,” Tung said, referring to more stringest rules for Chinese tourists.
Tourism-related industries in Hong Kong will be the first to feel the impact and department stores will also be negatively affected, the economist said.
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