Importing from China: the benefits of using Chinese yuan
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Your business would like to have the lowest purchasing price possible, and the predictability of knowing how much you will pay for the goods in your own currency. It is the same issue for your Chinese supplier. They have most of their costs in yuan and therefore want to know how much they will receive in local currency.
When your company pays in USD or EUR, neither you or your supplier knows the exact price of the goods in your respective local currency. As a result, the supplier usually adds a currency margin that will make the purchased goods more expensive. The risk add-on is usually around 2-7% but it could differ a lot between suppliers.
If you are used to paying in USD or EUR, you only need to choose another currency to pay your invoice – no other changes to your business process is needed.
Invoices need to be denominated in CNY or RMB to be able to pay CNH (offshore CNY) into CNY accounts in mainland China.
Importers paying their suppliers in USD or EUR should investigate if they can get better prices by paying in Chinese yuan (CNH), as prices can be as much as 2-7 % lower when paying in local currency
Chinese authorities may stop cross border payments, and they may stop accepting CNH (offshore CNY) as a currency, meaning that CNH cannot be used for cross border payments into Mainland China.
We see the risk as minor as Chinese top officials many times confirmed China’s commitment to CNY internalisation to support global trade. Chinese authorities have stated that China support internationalisation of Renminbi and specially trade related payments. CNY has been included in the SDR basket on November 30, 2015. It represents 10.92% of the IMF’s Special Drawing Rights currency basket. This makes Chinese yuan the third reserve currency after the US dollar and Euro.Deadline passed
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