The scale of China's domestic trade has become too large to ignore, but the lack of rules is costing textile enterprises dearly in transaction costs. In 2025, total retail sales of consumer goods exceeded 50 trillion yuan, the circulation of production materials approached 100 trillion yuan, and the number of market entities surpassed 180 million. Behind these figures lie countless daily orders flowing through the textile supply chain. However, chronic problems like long payment terms, difficult collections, and non-standard contract execution have never been truly resolved, only magnified by scale expansion.
On May 8, 17 national industry associations and chambers of commerce jointly released the 'Domestic Trade Transaction Guidelines (Trial),' with guidance from four ministries including the Ministry of Commerce, the National Development and Reform Commission, the Ministry of Justice, and the Office of the Central Cyberspace Affairs Commission. The China National Textile and Apparel Council (CNTAC) and the China Textile Commercial Association are among the signatories, signaling that textile industry transaction rules will be incorporated into a unified national domestic trade standard framework.
Background: From Unwritten Rules to Written Standards
For years, the textile industry has suffered from 'goods delivered, payment delayed' practices. Fabric suppliers hold up yarn mills, garment factories hold up fabric suppliers, and when the cash chain breaks, it triggers a domino effect. In 2024, the average accounts receivable turnover period in textiles exceeded 90 days, and for some SMEs, it stretched beyond 150 days, far above the manufacturing average.
The Guidelines clarify key aspects such as transaction contracts, delivery and inspection, payment terms, and business conduct. While not legally binding, the backing of 17 national associations and policy support from four ministries means companies can cite these standards in contract negotiations, and courts or arbitration bodies may reference them as industry practice when resolving disputes.
For textile enterprises, the most immediate change is the introduction of a 'reasonable range' for payment terms. Previously, buyers could delay payments with little consequence; now the Guidelines require explicit payment deadlines and default penalties in contracts, and encourage the use of factoring, credit insurance, and other financial tools to mitigate risk.
Industry Impact: A Tourniquet for Triangular Debt
The triangular debt problem in textiles stems from information asymmetry and a weak credit system. A weaving mill owner in Shengze told the editorial team that he faces unpaid invoices worth hundreds of thousands of yuan annually, often settling at a discount to avoid lengthy litigation.
The Guidelines will impact the industry in three ways. First, standardized contracts reduce transaction friction—unified delivery and inspection criteria minimize disputes over product quality. Second, normalized payment terms ease cash flow pressure for SMEs, whose profit margins typically hover between 3% and 5%. Third, business conduct clauses (e.g., prohibiting false advertising and malicious price undercutting) promote fair competition.
Crucially, CNTAC and the China Textile Commercial Association's participation ensures the textile sector's voice is heard. These associations cover the entire chain from chemical fibers, yarns, and fabrics to garments and home textiles, and their industry data and member feedback were instrumental in making the Guidelines practical.
Practical Advice
For Buyers - Integrate the Guidelines' contract templates into your procurement processes to avoid legal disputes from contractual gaps. - Prioritize suppliers that publicly commit to following the Guidelines, using this as a creditworthiness indicator. - Negotiate optimized payment terms with suppliers and leverage factoring or supply chain finance to shorten actual collection cycles.
For Exporters - Exporters pivoting to domestic sales should study the delivery, inspection, and payment clauses carefully, as domestic trade rules differ significantly from export practices. - Use the Guidelines as a reference when negotiating with domestic buyers, especially on payment terms and default penalties. - Monitor upcoming training sessions or compliance certifications from associations to build domestic trade compliance capabilities early.
The release of the Guidelines is only the beginning. The real challenge lies in translating these standards from paper to factory floors and trading desks. The Texcircle will continue to track implementation across industrial clusters and provide practical insights for enterprises.