"Made in China" - Developing Trend - Quotations in RMB, not US$

[yuemax]

Hi all,

Over about the last six months, I've seen it more and more that Chinese suppliers are quoting in RMB, and not US$ anymore. They are hedging their pricing as the US$ slips, and as the RMB gradually strengthens.

For our caps business, they still quote US$, but give us a weekly updated price on pending samples and orders. Scary how fast the dollar is slipping (I get paid in US$, and every month it's less and less

Just be aware of this, if you have quotes in $, that on PO time, or final payment time, things might be very different (esp if the quote is older than a few months!).

Cheers
Max

[Andre Nell]

Hi Max , i have a sourcing , QC and logistics partner in Hangzhou China, he is South African living in China for the past 10 years , i think this forum will help as we all experience similar issues from China , Lets hope the Rand stays strong it is good for imports , Cheers Andre

[robinsonwang]

Hi all,

Over about the last six months, I've seen it more and more that Chinese suppliers are quoting in RMB, and not US$ anymore. They are hedging their pricing as the US$ slips, and as the RMB gradually strengthens.

For our caps business, they still quote US$, but give us a weekly updated price on pending samples and orders. Scary how fast the dollar is slipping (I get paid in US$, and every month it's less and less
Max

Would this be a block for you to buy goods from China?

[Dave A]

Probably not a block, but certainly a change that's worth being aware of. It's very problematic when a supplier changes prices without any notice, especially when it's unexpected and you've commited to a price to a client already.

[yuemax]

Hi DaveA,

Yes, it really can throw a spanner in the works.

If you are in it for the long run (importing, that is...), it may be good to register a Hong Kong LTD entity - it edges you that much closer to mainland China's legal system.

Any and all contracts need to be both in Chinese and English. Chinese courts will not entertain an English only contract. Be sure that the proper people on the supplier side sign and CHOP the contract (not the tea-lady - don't laugh, I've heard of this as a tactic to void contracts!).

L/C is safe option regarding payment amounts, as the banks are in it from the beginning, and the supplier is bound by this.

For high-value orders, hedge your currency.

Cheers
Max

[Blurock]

Changing to RMB is an indication of the closer ties between RSA and China. Not altogether a bad idea as the RMB is more stable and imports with long lead times may not be adversely affected by currency fluctuations. I am told that there is also a 10 - 15% saving on the conversion rate.

Has any of our importers had experience in this regard?

[wynn]

For years I have argued that the 'Dollar $' was a paper currency and just because the US was the single largest importer world wide didn't make the dollar allmighty.
Foreign exchange should be tied to a currency basket, that that should stabalise exchange rates!! just because RMB is stable at the moment doesn't mean it will stay that way.

[yuemax]

Foreign exchange should be tied to a currency basket, that that should stabalise exchange rates!! just because RMB is stable at the moment doesn't mean it will stay that way.

Over the last few months, there has been a gradual "slide" in the RMB - there's no way it'll move dramatically in any given direction - the central government here would not ever allow that, due the impact on manufacturing, and also China's US$ bonds they have been buying.

I can see them diversifying and buying more EURO's and other currencies.

Cheers
Max

[wynn]

Over the last few months, there has been a gradual "slide" in the RMB - there's no way it'll move dramatically in any given direction - the central government here would not ever allow that, due the impact on manufacturing, and also China's US$ bonds they have been buying.

I can see them diversifying and buying more EURO's and other currencies.

Cheers
Max

In todays M&G
Chinese whispers
In mainland China, the Shanghai Composite Index dropped 2.3% to 2 383.49 while the smaller Shenzhen Composite Index lost 2.9% at 1 010.46. The government announced that growth declined to 9.1% in the three months through September, down from 9.5% the previous quarter.

[Dave A]

Down to nearly 9% growth - they must be miffed

[yuemax]

Down to nearly 9% growth - they must be miffed

LOL, yeah, considering the new Maserati my neighbor just bought - they're really against the ropes...

[Sparks]

Look on the bright side, if prices keep going up for them we will hopefully see less sub-standard imports flooding our market.

[Blurock]

China has its problems just as other countries. Time magazine had an article on a looming property bubble in China due to unbridled development and a slowdown in demand.

If you think the sub prime bonds or Euro crisis was daunting, then wait for this one. It will turn the world upside down. Hope the Chinese Govt can manage such a bailout and prevent a total monetary collapse.

[yuemax]

China has its problems just as other countries. Time magazine had an article on a looming property bubble in China due to unbridled development and a slowdown in demand.

If you think the sub prime bonds or Euro crisis was daunting, then wait for this one. It will turn the world upside down. Hope the Chinese Govt can manage such a bailout and prevent a total monetary collapse.

For Chinese consumers, it's mostly cash-based. It's almost impossible to get car financing - we paid cash for our car - really bummed me to have to fork out for that...

For the property side, it's becoming more and more difficult to get a bond here. If it's your first/only property, the requirement is about 25-35% cash deposit, and the bond is 15 - 20 years. If it's your second property, the deposit is much higher, or in some instances, the banks will decline a bond.

To keep things cool, from time to time, provincial governments either raise the deposit %, or temporarily suspend issuance of bonds. In Shenzhen for example, I've seen some properties priced similar to Hong Kong - scary stuff!

Cheers
Max

[wynn]

At that rate it could snowball to 2% over a year, that would set the cat among the pigeons