In a move reflecting an industry-wide shift towards tighter financial controls, leading Chinese automakers, including FAW Group, Dongfeng Motor, GAC Group, and Seres Group, have collectively announced a commitment to settle payments to their suppliers within 60 days. This news comes as concerns about supply chain stability and financial health are growing in the automotive sector.
Industry analysts suggest that this initiative draws a parallel to the mobile phone industry, where the rapid downfall of handset maker Gionee serves as a cautionary tale. The collapse of Gionee, triggered by financial mismanagement in the past, left numerous suppliers unpaid, resulting in cascading losses and instability across the supply chain.
Gionee, founded in September 2002, saw its star rise quickly. By 2005, the company had established a presence in the market, famously capitalizing on the popularity, with star endorsements. The brand gained significant traction throughout the country thanks to such prominent marketing efforts.
By 2011, Gionee’s global shipments exceeded 20 million units, making it one of the largest domestic handset manufacturers. However, the advent of the full-screen era saw a decline in sales. This downturn strained the company’s finances, directly impacting payments to upstream suppliers.
By 2018, Gionee faced a crisis. Suppliers initiated legal actions, with company assets being pledged or frozen to protect creditor interests. With its financial lifeline severed and overwhelmed by debt, Gionee was forced to pursue bankruptcy proceedings, marking the end of an era for the once-dominant mobile phone manufacturer.
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