GuidesSuppliers4 min read
Paying a factory in China in yuan instead of dollars
Your supplier prices in dollars because they carry the dollar risk. Offer to pay in yuan and ask what that is worth.
By the Kelvern payments desk ·
Most factories in mainland China invoice overseas buyers in US dollars. It is a habit, and it suits the banks. It does not always suit you, and it may not suit the factory either.
Why the dollar price has a cushion in it
A factory that quotes in dollars but pays its workers, rent and raw materials in yuan is exposed to the dollar–yuan rate between the quote and the payment. Most build a cushion into the price to cover that risk, often 1% to 3%.
When you pay in yuan, the factory’s risk disappears. The cushion can too, if you ask.
You convert once instead of twice
Paying a yuan-priced cost in dollars means two conversions: your pounds to dollars at your bank, then dollars to yuan at theirs. Each one has a margin. Paying in yuan directly means one conversion, at a margin you can see.
How to raise it with your supplier
Ask for the next quote in both currencies. If the yuan price is not lower than the dollar price at today’s rate, ask why. Most factories with export experience have a CNY bank account that can receive international payments; your supplier will know if theirs can.
What to check before the first payment
- The supplier’s bank name, branch and SWIFT code, and that the account can receive CNY from abroad.
- The exact name on the account, in the characters the bank holds it in.
- A small test payment before the deposit on a large order.
Kelvern holds and pays yuan on the Trade and Volume plans. The calculator shows GBP to CNY with example rates.
