Supply Chain

Samsung Adopts Renminbi

Using the Chinese currency in transactions could enable the global smartphone maker to negotiate supplier discounts.
Katie Kuehner-HebertMay 19, 2015
Samsung Adopts Renminbi

As part of its treasury management practices, smartphone maker Samsung Electronics in March started trading the Chinese renminbi directly with the South Korean won, converting its trading flows between China and Korea into renminbi and settling transactions between its headquarters and Chinese subsidiaries more efficiently.

The company has also implemented a global renminbi netting solution provided by Citgroup, which “brings significant opportunities for more effective liquidity management and working capital optimization.”

A Corporate Treasurer article Monday said that Samsung has come under some pressure from falling smartphone sales in China, so dealing directly in renminbi gives it an opportunity to negotiate price discounts with mainland companies.

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“Samsung’s decision is also widely seen as way to encourage other Korean corporates to participate directly in the renminbi market,” Corporate Treasurer wrote. “Steelmaker Posco is also reportedly considering direct renminbi exchange in order to fund onshore projects.”

However, Standard Chartered economist Kathleen Oh told the publication that there was still “some way to go,” as only 0.8% (around $2 billion) of all Korea-China trade is currently settled in renminbi, with the rest settled in U.S. dollars — despite the renminbi now being a top-five payment currency.

“The government’s aim is to raise this to around 20% in the mid-to-long term,” Oh told Corporate Treasurer.