May I Using CNY Payment to China Supplier ?
Publisher:wanglh | post time: Monday, February 01, 2010May I Using CNY Payment to China Supplier ?
Background - using CNY for China trade and business
-China is major production base in the world (export)
-CNY is not international currency
-however, a non-China company cannot keep RMB in bank account - especially outside of China
-and China is becoming a stronger consumer of western product and services (importer);
-as CNY raise in value, and fluctuate in value, it is worthwhile for both buyer and seller to use RMB for business;
-however, a non-China company cannot keep RMB in bank account - especially outside of China;
CNY bank account is possible for hong kong company in hong kong
-Hong Kong is granted special status by China government to allow Hong Kong company to keep RMB bank account in Hong Kong;
-purpose is to facilitate China business;
How can do it :
n a Hong Kong company can open multi-currency bank account with hong Kong HSBC
n with simple extra application procedure, can open also a RMB account in Hong Kong
n when the Hong Kong company needs to pay RMB to China
l it ensures the China company is a "qualified company" in China to receive RMB from Hong Kong
l then, gives instruction to Hong Kong HSBC to transfer RMB to China company;
l and instruct the bank from which bank account balance (HK$, US$, Euro .. etc.) to deduct the money
l the company can enter into contract with HSBC to hedge the exchange rate;
when the Hong Kong company needs to receive CNY from China
a) the China side money payer will clear the procedure in China;
b) and the money will reach Hong Kong company CNY account in Hong Kong;
c) the Hong Kong company can keep the money in CNY or convert to other currency;
Important
a) when the Hong Kong company needs to withdraw or transfer CNY balance in its CNY account, it needs to convert into other international currency first;
b) CNY keeping in CNY account can be used for investment purpose of RMB product (such as CNY bonds in Hong Kong);
c) the mechanism does not allow converting CNY for value speculation purpose;
US$1 to RMB in since 2005
Annoucement by People's Bank of China
Administrative Measures on Settlement of Cross-border Trade in CNYon a Trial Basis (Chinese).
Issuing Authority : People's Bank of China, Ministry of Finance, Ministry of Commerce, General Administration of Customs, State Administration of Taxation and China Banking Regulatory Commission.
Date of Issuance : 1 July 2009.
Effective Date : 1 July 2009.
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