It’s a sign of how quickly RMB has become the new normal in cross-border China trade when a UK lingerie company with over 25 years’ experience in the market has taken less than two years to switch to settling its trade exclusively in the Chinese currency.
Royce has been sourcing bras and lingerie from Hong Kong and China since 1992, buying from well-established suppliers. Managing Director Bob Fleming has a pragmatic approach to RMB, having settled in Sterling and US dollars previously.
Like any business, we want to make things as easy as possible, whether it involves buying or selling.Bob Fleming, Managing Director
"Like any business, we want to make things as easy as possible, whether it involves buying or selling," he says. And with current supply bases in Shenzhen and Shanghai, the time seemed ripe to make the switch.
"It's only in the last couple of years that it has become easier to deal in the currency. I think partly because it has become more established internationally, but if it's easier [for suppliers] to deal in RMB and if we in turn get improved pricing, then all the better."
From October, RMB has Special Drawing Rights in the IMF reserve basket as one of the big five global currencies.
As a result, Bob needs to be very confident in the stability and the future of the Renminbi for his firm's purposes. "I'm no economist but it doesn't get to be a reserve international currency for nothing."
His advice to other firms? "Cost your goods at the right rate, then buy forward at the rate, as you would with any other major currency."
It's simply a logical extension of normal business practice for Royce, and there is no need to try and play complex currency games. "At least for our business," says Bob, "we need a stable platform in which to move. We've currently got the best of both worlds with better prices and a more stable currency."