China’s Renminbi Conundrum
December 10, 2009
• Allen T. Cheng
When government officials last year authorized Sassin International Electric Shanghai Co. to bill its exports in renminbi instead of dollars as part of a trial program aimed at boosting international use of the Chinese currency, company executives were delighted. The Shanghai-based maker of low-voltage circuit breakers exported the vast majority of its $50 million in sales in 2008. Invoicing customers in renminbi could save the company banking fees and eliminate the risk of currency losses. “We look forward to the day when renminbi is widely used globally,” says David Dong, director of international sales at Sassin.
Dong is still looking. Several months after Sassin gained that authorization, back in July 2009, the company hasn’t issued a single invoice in renminbi and doesn’t know when it will. Tight restrictions on the renminbi program as well as other constraints on what foreigners can do with the currency have severely limited the ability of the 365 companies authorized under the program to actually take advantage of the liberalization measure. For instance, China allows the companies to issue renminbi invoices only to customers in the Chinese-controlled territories of Hong Kong and Macao and the ten member states of the Association of Southeast Asian Nations. Sassin, however, exports primarily to companies in Europe, Japan and the U.S. “So far we haven’t issued any invoices in renminbi, but we hope to do so someday,” says Dong. ....