Sending payments to China just got better
Western Union Business Solutions recently conducted a survey* to understand how U.S. businesses can benefit by sending local currency payments to their Chinese suppliers. The findings produced an extremely optimistic outlook for international business, the most significant being the large sums of money that can be saved by simply adjusting how your company sends payments to China.
Pay in Chinese renminbi and save
1 in 5 Chinese exporters admit to adding fees or surcharges on invoices to account for foreign exchange risk with the average fee being 3%. U.S. businesses importing goods from China are paying billions in extra costs because of reluctance on the part of those U.S. businesses to settle transactions in the Chinese currency.
An opportunity to improve trading relationships: Chinese companies prefer local currency
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According to recent data, almost 40% of surveyed Chinese companies expressed a desire to receive payments in their home currency due to convenience and reduced FX risk exposure. However, many of these companies never ask for payment in local currency as they believe that it is inconvenient for their trading partners to obtain Chinese renminbi. In fact, 42% of those who prefer to receive payment in the Chinese renminbi have never asked for payment in their home currency. By being viewed as the most reluctant and least willing to settle in Chinese renminbi when compared to businesses in Europe, U.S. companies may be missing out on an opportunity to create goodwill and loyalty (and dollar savings) by making the international payment process easier for their Chinese suppliers.
The Chinese government now permits settlements in Renminbi
In a big step towards internationalization, businesses in mainland China havebeen given permission by the Chinese government to settle invoices, either incoming or outgoing (send and receive), in the Chinese renminbi. The relaxation of policy and the encouragement offered by the Chinese government has created a unique opportunity for both U.S. and China-based businesses to reduce costs, increase profits, and streamline payment processes.
Why send Chinese renminbi payments through iMoneywire?
iMoneywire, powered by Western Union Business Solutions is a dedicated provider of foreign exchange services. We focus on improving your international payments process and help you develop a risk management strategy to reduce costs, protect profits, and compete globally. By paying locally, we can help your company expedite the transfer, lessen the burden on administrative staff, and receive export related tax rebates.
Our commitment is to develop a solution built around your unique business needsand provide the assistance you need to make the best business decisions. Just a note that the law also allows the Chinese to settle in the Chinese renminbi. So, if companies want to make it easy for their clients to pay them,they can bill in the renminbi.
*All results are based on survey information gathered by Kadence International on behalf of Western Union Business Solutions in November 2011.
This article has been prepared solely for informational purposesand does not in any way create any binding obligations on either party. Relations between you and iMoneywire shall be governed by the applicable terms and conditions. No representations, warranties or conditions of any kind, express or implied,are made in this article.