Why I can't buy Minion toys with Chinese yuan

Wed Jan 6, 2016 7:55am EST
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By Patrick Graham

BASILDON, England (Reuters) - British businessman Tony Brown is ready to pay in Chinese yuan for the cuddly toys and other funfair stall prizes he buys from a handful of Chinese factories. But they just don't want it.

He thought using the local currency for the purchases, worth several million pounds every month, would be a selling point with his Asian partners, a sign of good faith and presumably easier to do.

They would rather have dollars.

This is a familiar experience for hundreds of small and medium-sized British companies which deal with Chinese factories and firms. It also jars with the big headlines over the past year proclaiming the emergence of the yuan as a major currency, and London as its main international trading hub.

"We have tried but there is no appetite," says Brown, who has 19 years of experience in working closely with Chinese suppliers.

Flows among some of the major banks and speculative financial investors have surged, and the yuan is an increasingly heavily used trading currency in Asia. But its visibility in the day-to-day economy in the West is next to nil.

Some of the thousands of British managers who regularly deal with China say this is due to the difficulty of changing established practices, the Chinese firms' need for dollars to pay off debt and other international dues and a lack of faith in the current value of the yuan, now in the throes of its second major devaluation since last August.

"Historically they desperately wanted dollars and it has just continued. We've had discussions about paying in local currency. But they just have limited exposure in yuan so they would rather have dollars," said Brown.   Continued...

A bank clerk counts Chinese yuan banknotes at a branch of Industrial and Commercial Bank of China in Huaibei, Anhui province, June 8, 2012. REUTERS/Stringer