Your Asian Buyer Might Be a Zombie
More than a fifth of corporate debt across 10 Asian economies now sits with companies that can't cover their interest bills. If you sell to buyers in that region on open terms, some of them may be in that group, and the invoices you send them don't show it.
That's the headline from the IMF's latest Global Financial Stability Report, published Tuesday and reported by the Financial Times. The IMF found that across 10 Asian economies, including China, India, Thailand, Indonesia and South Korea, zombie companies account for 21.4% of outstanding corporate debt. In 2008 it was under 10%.
The IMF defines a zombie company as one whose earnings have not covered its interest payments for at least three years. That's not a bad quarter. That's a business living on borrowed time.
How zombies stay alive
They stay alive because the banks let them. The IMF says that in most cases these companies survive on bank forbearance, with loans rolled over rather than written down. Recognizing a loss eats a bank's capital. Rolling the loan keeps the books looking fine for now.
So it's no surprise the weaker banks are the bigger producers. In Asia, banks with tier one capital below their country's median had 16% of their loans with zombie firms. Better capitalized banks had 12%.
The debt load behind all this is big. The IMF says corporate credit in Asia averaged 107% of GDP at the end of 2025, up from 81% before the 2007 financial crisis. The global average today is 93%, and the emerging market average is 99%.
The IMF put it plainly: "This rising share of corporate debt is increasingly concentrated in firms that cannot service it."
It also ran the numbers on what happens if that debt meets the hazard and recovery rates typical of companies in sustained distress. Almost 23% of the zombie debt in those 10 economies would have been written off or restructured as of 2025.
China is where analysts are most worried
The IMF didn't single out countries. Other research the FT cites points at China.
Natixis analysts found that among listed Chinese companies, the share whose revenue wasn't enough to cover interest payments rose to 12.5% in June 2026, up from about 6% in 2019. The global rate is 6.5% and has barely moved since 2018. China's National Bureau of Statistics says 29.33% of companies with annual operating revenue of Rmb20mn or more were losing money in August, up from 20.8% five years earlier.
The Dallas Fed flagged "zombie lending" in China last December, with banks rolling over bad loans to unprofitable companies rather than taking the loss. It compared the pattern to Japan in the 1980s and 1990s. Japan wasn't in the IMF's latest numbers.
Why this matters if you export to Asia
A zombie buyer doesn't look like a distressed buyer. It keeps operating. It keeps ordering. It may even pay on time for years, because its bank keeps the lights on.
The problem is that its survival depends on someone else's patience. When a bank finally stops rolling the loan, or a regulator pushes banks to clean up their books, the end can come quickly. The supplier with a large open receivable is usually the last to know.
That's the risk for US exporters selling into China, India, Korea and Southeast Asia. Payment history alone can tell you a buyer is fine right up until it isn't. A buyer that's never been late can still be one that hasn't earned its interest in three years.
A few things we'd watch:
Buyers in sectors where state support has driven growth but not profit. Natixis points to advanced industries such as semiconductors in China.
Requests for longer terms, bigger lines or payment plans. Those often show up before a missed payment does.
Concentration. One large Asian buyer carrying a big share of your receivables is a very different risk from a spread of smaller ones.
Where trade credit insurance comes in
This is the kind of risk trade credit insurance is built to handle. Carriers like Allianz Trade, Atradius and Coface track buyers across many suppliers and markets, and they set and review credit limits on each named buyer. When an insurer cuts or cancels a limit, that's information you can act on before you ship more product, not after.
Cover also protects the receivable itself. If a buyer goes insolvent or stops paying, an insured loss is a claim, not a write-off.
We don't expect the IMF report to change much overnight. Zombie companies can last a long time. But the longer they last, the more debt piles up behind them, and the harder the landing when the support stops.
If you're shipping to Asian buyers on open terms, now is a good time to know which ones you'd want limits on, and to get those limits in place while the buyers still look healthy.
Talk to Impello.
Sources: Financial Times, "Asia warned over zombie companies," October 13, 2026; IMF Global Financial Stability Report, October 2026.