Payments to China in Chinese Yuan
The Bank Of Ireland is driving the way forward for businesses in Ireland that wish to transact with the world’s second largest economy in its own currency: the Chinese Yuan. For decades, international investors and companies were unable to receive or make payments in the Chinese currency, this is no longer the case as the Yuan can now be booked as a Spot or Forward contract for all Bank Of Ireland customers.
Advantages for Chinese Importers
For companies who import from China, they can now purchase goods in Yuan. Buying goods in the local currency may potentially reduce the cost of said goods, saving money and giving greater price transparency throughout.
Advantages for Exporters to China
For companies exporting to China, they can now invoice their goods and receive payments in Yuan. Selling goods in Yuan will support international growth and will give the ability to minimise Foreign Exchange related to any Yuan costs incurred in the sales process.
Case Study: Irish to Chinese Businesses
An Irish retailer in the garden furniture business imports from a number of Chinese based manufacturing suppliers. They previously paid all invoices to China in the international trade currency i.e. US Dollars. This limited exposure by way of Forward contracts through Bank Of Ireland Global Markets.
During the said Irish retailer’s recent trip to meet suppliers, a Chinese company indicated that they had all their production and administrative costs carried out within China and as a result, it was simpler and safer for them to receive payments in their local currency. They enquired whether future invoices could be settled in Chinese Yuan, as a means of further business co-operation. This gave the Irish retailer an opportunity to negotiate on price, resulting in savings and in some cases, represented a significant discount from previous orders thereon.
The Irish retailer spoke candidly with Bank Of Ireland Global Markets on how they could benefit from this opportunity. Since nothing changes from the Irish retailer’s point of view, in relation to their Foreign Exchange exposure; they simply purchased Chinese Yuan instead of US Dollars, albeit, through the Bank Of Ireland Global Markets.
While the Chinese Authorities have certain restrictions around the trading of Yuan, the BOI experienced Treasury Specialists will guide its customers through each step of the process.
Making payments to China: if you wish to discuss this further, please contact your Bank Of Ireland Relationship Manager. Making payments or contact BOI Dealers on +353 (0)7662 44300
Visit Bank Of Ireland for more inforamtion.
The STAR Team