Long payment terms and difficult collections have long cast a shadow over China's domestic textile trade. On May 8, 2025, a collective response arrived in the form of the 'Domestic Trade Transaction Guidelines (Trial)', jointly issued by 17 national industry associations under the guidance of the Ministry of Commerce, the National Development and Reform Commission, and other government bodies. Associations directly tied to the textile sector—including the China National Textile and Apparel Council, the China Textile Commerce Association, and the China Textile Import and Export Chamber—were among the signatories, underscoring the depth of the industry's pain points.
Background: A Massive Market with Outdated Rules
China's domestic trade has reached staggering scale: retail sales of consumer goods exceeded 50 trillion yuan in 2025, total circulation of production materials approached 100 trillion yuan, and the number of business entities surpassed 180 million. Yet the rapid expansion has outpaced the development of standardized transaction rules. The textile sector is a glaring example: fabric procurement often involves vague inspection criteria, delayed payments stretching 60 to 90 days, and endless disputes over returns. Small and medium enterprises are particularly vulnerable, sometimes collapsing under a single unpaid invoice.
The Guidelines target four critical areas: contract formation, goods delivery and inspection, payment terms and settlement, and regulation of commercial conduct. For textile companies, this signals a shift from a culture of oral agreements and industry customs toward written contracts and standardized processes.
Industry Impact: Easing the Cash Flow Crunch
The textile supply chain is capital-intensive and acutely sensitive to payment cycles. From yarn suppliers to weavers, dyers, and garment makers, each tier faces mismatched payment terms. Upstream raw material suppliers often endure 60- to 90-day payment delays from fabric mills, while mills themselves are squeezed by apparel brands' rolling payment schedules. By requiring explicit payment milestones and default penalties in contracts, the Guidelines give suppliers stronger legal leverage in negotiations.
Standardization of delivery and inspection procedures is equally transformative. Past disputes over fabric quality—often stemming from ambiguous standards—frequently led to prolonged payment delays. The Guidelines mandate that contracts specify inspection criteria, timeframes, and dispute resolution mechanisms, significantly reducing the risk of non-payment due to quality disagreements. For companies transitioning from export to domestic sales, these rules provide a clear compliance framework.
Practical Recommendations
For Buyers - Immediately revise procurement contract templates to incorporate the Guidelines' requirements on payment terms, default penalties, and inspection procedures. Replace vague terms like 'net 30 days' with explicit schedules. - Prioritize suppliers who accept standardized transaction terms in your vendor evaluation process, reducing supply chain risk and fostering a culture of compliance.
For Export-Oriented Companies - Use the Guidelines as a compliance tool when negotiating with new domestic clients. Presenting a standardized contract draft signals professionalism and locks in favorable payment conditions from the start. - Monitor the China National Textile and Apparel Council for potential industry-specific implementation rules, and train your sales and legal teams to embed these standards into your domestic trade operations.
Conclusion
The 'Domestic Trade Transaction Guidelines (Trial)' is not a law, but it represents a collective industry response to a chronic market dysfunction. For the textile sector, resolving the payment term problem will not happen overnight. However, with this document, companies now have a benchmark to bring to the negotiation table. The real change lies not in the rules themselves, but in breaking old trading habits. Those who embrace standardization first will gain an edge in capital efficiency and customer trust.