I attended a conference this morning put on by the Hong Kong Trade Development Council. The conference featured a number of speakers in the financial arena and one of the key topics was the internationalization of the Chinese currency, the RMB.
In the past, it has not been possible to make or take payments in RMB. You could only pay or receive payment in Euros or dollars. It is now possible to open a “corporate non-resident account” in Hong Kong or China; by doing so you can receive payments in RMB with no restrictions. You can pay for goods as well but only if the company in question is on an approved government list.
As they spoke, he question that came to mind was: "Ok, but why would I want to pay in RMB?" The answer, according to Mr. Kok-Chi Tsim, Managing Director, Commercial Banking International, JPMorgan Chase Bank N.A., is as follows:
If you are an importer you can increase transparency. It appears that Chinese companies add a percentage when dealing in foreign currencies. By getting a quote in RMB you can see if you are being charged more and may be able to get a better cost in the Chinese currency.
You can also secure longer agreements. The Chinese are more likely to extend a price over a longer period of time if they do not have to be concerned with currency fluctuations.
If you are an exporter, you can expect to have a stronger potential to make sales and profit. He says that the Chinese are more comfortable paying for goods in their own currency.
Essentially, I was told that the fundamentals of dealing in the Chinese currency are the same as in dealing with the Euro or other European currencies. I asked and was told that Global Toy News readers can learn more about all of this by clicking here – The Internationalization of the RMB.
If you are currently making or receiving payments in RMB please let us know your experience.