Protection of SMEs protection of economic vitality

A revised regulation ensuring payments for small and medium-sized enterprises, which will take effect on June 1, is expected to strengthen protection for the legal rights and interests of SMEs.

The regulation specifies the responsibilities of all parties concerned, detailing the role of departments at the national and local levels responsible for the comprehensive management of SME promotion, as well as the duties of relevant departments such as the National Development and Reform Commission and the Ministry of Finance in ensuring payments to SMEs.

In terms of supervision and complaint handling, the regulation specifies the responsibilities of county-level or higher governments and their relevant departments.

In addition, it stipulates that in case of severe delays in payments to SMEs, necessary restrictions will be imposed on government agencies and public institutions. Large enterprises will face restrictions in areas such as fiscal funding support, investment project approvals, financing access, market entry, qualification assessments and commendations.

Moreover, there will be penalties for specific individuals. Besides, the regulation clarifies legal liabilities for acts such as retaliation, abuse of power or dereliction of duty by staff members of government agencies, public institutions and large enterprises in matters related to SME payments.

Notably, the regulation clearly stipulates that large enterprises must make payments to SMEs within 60 days of the delivery of goods, projects or services. And in cases where disputes arise but do not affect other parts of the deal, payment for the undisputed parts must be paid promptly.

In reality, some large enterprises often impose unreasonable transaction terms on their SME partners and frequently delay payments after contract fulfillment.

From this perspective, the revised regulation imposes stricter constraints on them, particularly on State-owned enterprises, government agencies and public institutions.

The revised regulation, if well implemented, can help channel more funds into SMEs, increasing employee incomes and subsequently boosting market consumption.