China's domestic trade has reached a scale of over 50 trillion yuan in retail sales and nearly 100 trillion yuan in production material circulation, with more than 180 million business entities. Yet behind these impressive numbers, textile and apparel companies have long struggled with extended payment cycles and difficult collections. On May 8, 2025, 17 national industry associations jointly released the 'Domestic Trade Transaction Guidelines (Trial)', targeting precisely these pain points.
Background
Guided by the Ministry of Commerce, the National Development and Reform Commission, the Ministry of Justice, and the Office of the Central Cyberspace Affairs Commission, the guidelines were drafted with direct participation from three key textile associations: the China National Textile and Apparel Council, the China Textile Commerce Association, and the China Chamber of Commerce for Import and Export of Textile and Apparel. The document specifies standards for contract formation, delivery and inspection, payment terms, and commercial behavior, aiming to 'build high-standard transaction norms and improve the standardization of domestic trade.'
The involvement of textile associations is no coincidence. Among the 180 million business entities, small and medium-sized enterprises dominate the textile supply chain—precisely those most vulnerable to payment delays. Public data from the China National Textile and Apparel Council shows that the average accounts receivable turnover days in the textile sector consistently exceed the manufacturing industry average, with some SMEs facing collection periods of over 120 days.
Industry Impact
The guidelines' core innovation lies in clarifying 'payment terms and settlement.' Traditionally, 'payment upon delivery' in textile trade often turned into 'payment three months after delivery'—or longer. Buyers leveraged market power to delay payments, while sellers feared losing orders and avoided pressing for collection. This imbalance effectively raised financing costs across the entire chain, forcing companies to rely on high-interest informal loans or short-term bank borrowing to fill cash flow gaps.
With the guidelines, the industry now has a reference framework for standardized payment periods. Although not legally binding, the document provides clear grounds for industry associations to mediate disputes and for companies to negotiate terms. For textile exporters, improved domestic collection efficiency can free up capital for export-related procurement and R&D.
Another notable aspect is the clause on 'standardizing commercial behavior.' The textile sector has long suffered from gray practices such as kickbacks and rebates, which distort price signals and allow substandard fabrics to enter the market through irregular channels. Widespread adoption of the guidelines could help cleanse the trading environment, giving quality-focused companies a fairer competitive edge.
For fabric buyers and brands, the guidelines offer protection as well as constraints. Standardized contract and inspection processes prevent suppliers from using 'industry practice' as an excuse for quality failures. Rights and obligations are now clearly documented, potentially reducing dispute resolution costs.