China emerged as one of the first economies to recover from the pandemic. However, the global operating environment presented multi-faceted challenges in 2021 including lockdown impacts, reduced domestic demand growth, subsiding policy support, and reduced investment and export demand given strong economic recovery. As a result, the Working Capital Index deteriorated in 2021. The Cash Index improved with a similar trajectory to S&P 1500 companies as investment activities picked up and companies looked to sustain growth momentum through more aggressive cash deployment.


Summary of findings

Working capital and cash conversion cycle takeaways

The working capital index deteriorated by 4 points and returned to pre-pandemic levels for four reasons:

The Cash Index improved 8 points as companies more strategically deployed cash:

The Cash Conversion Cycle declined by 2 and is significantly higher for Tier 2 sized companies

Chinese companies generally hold higher cash levels than their U.S. counterparts

Industry improvement opportunities

  • true

    Raise operational efficiencies to keep their competitive edge

  • true

    Oil and Gas downstream
    Prepare business models for a world with greater global clean energy consciousness

  • true

    Optimize financing resources given sophisticated operating environment

  • true

    Auto and auto parts
    Focus on internal funding and WC structure optimization to prepare for liquidity challenges

To learn more about how we can support your business, please contact your J.P. Morgan representative.