Eric Fu may soon pay for the steel, wood, cables and other materials he buys from China in that country's currency.
At the moment, the US$4 million (Dh14.6m) in materials his company, China National Building Materials Group (CNBMG), ships from China to the UAE every month is paid for in US dollars.
But agreeing to price and pay for the goods in yuan, or renminbi to give it its official name, would enable the company to negotiate better terms with Chinese suppliers . More and more suppliers in China are keen to deal directly in their local currency to avoid the risk of a fluctuating exchange rate, particularly as the dollar continues to slide against the Chinese unit.
"If we can take advantage of that it would be easier to trade," says Mr Fu, the general manager of CNBMG in the UAE.
The company is one of the growing numbers of businesses banks in the UAE are seeking to engage as they try to tap the China market.
As China loosens its grip on its currency and financial system, the yuan's profile in the UAE has slowly risen, as it has across the rest of the world.
The trend is a reflection of the UAE's growing ties with China, the world's fastest-growing economy and its largest exporter.
Trade between the two countries reached $35 billion last year and is tipped to reach at least $100bn by 2015. At the same time the number of Chinese firms in the UAE has swelled to about 3,000.
International banks have been the first to move since the People's Bank of China began easing controls on the yuan's international use in 2010, triggering a scramble among banks around the world.
In the UAE, HSBC completed the Middle East's first cross-border yuan trade transaction in September 2010. A month later Standard Chartered became the first foreign bank in the region to open a yuan account for a customer. The customer, the Rivoli Group, a luxury retail chain headquartered in Dubai, wanted to enable visiting Chinese consumers to pay for goods in their domestic currency.
Now local banks are looking to carve out a slice of the action. Mashreq last month became the first local bank in the Middle East to offer offshore yuan services. Several others are believed to be considering similar steps.
"We are seeing concrete demand from our customers to do transactions in renminbi," says Hugo Perez, the head of global transaction services at Mashreq. "At the moment, most of our transactions are not settled in the renminbi but sooner or later this will change."
Mashreq's account services will allow commercial contracts to be drawn up in yuan, allowing Chinese suppliers to invoice and receive settlement from UAE buyers in the currency.
Paying in yuan has its benefits for UAE businesses.
Royal Palace Furniture, a manufacturer and retailer in Ajman, has been using the yuan to pay for about a fifth of the raw materials it imports from China since October 2010.
"Those vendors who are willing to accept it, we can usually negotiate a discount from," says Chandra Krishnamoorthy, the director of Royal Palace Furniture.
Being prepared to pay in the currency enabled Middle East businesses to negotiate between a 5 and 7 per cent discount with suppliers, estimates Tim Evans, the regional head of trade and receivable finance, at HSBC in the Middle East and North Africa.
"A lot of large corporates in this part of the world have been willing to start a dialogue with exporters in China, while the middle-sized companies are still adopting a sort of wait-and-see approach," he says.
Standard Chartered in the UAE has handled a 400 per cent rise in yuan transactions so far this year compared with the same period last year.
There is another reason suppliers in China are increasingly amenable to receivables in yuan, instead of the de facto global trade currency, the dollar.
"When you pay in renminbi it will go faster through the Chinese clearing system," says Haytham El Maayergi, the head of transaction banking in the UAE at the bank.
Increasing use of the yuan in the UAE is a reflection of the global trend. Worldwide yuan transactions have risen 17-fold since October 2010, faster than any other currency.
The currency is likely to receive a further boost as China considers other ways to give it more international muscle. Two years ago, Hong Kong became the first testing ground outside mainland China for a freer yuan and sales of yuan bonds in the city have since risen. Singapore and London are among cities jostling to join Hong Kong. The Dubai International Financial Centre (DIFC) has also been discussing plans to permit transactions in the currency, DIFC officials were quoted by Reuters as saying in February.
If Dubai does become an offshore trading centre for the currency, a rising tide of investment is likely to join the building materials traded by the likes of Mr Fu between the two nations.
tarnold@thenational.ae
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
COMPANY%20PROFILE
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Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
The Sand Castle
Director: Matty Brown
Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
Rating: 2.5/5
THE SPECS
Engine: 1.5-litre
Transmission: 6-speed automatic
Power: 110 horsepower
Torque: 147Nm
Price: From Dh59,700
On sale: now
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
MATCH INFO
Champions League quarter-final, first leg
Ajax v Juventus, Wednesday, 11pm (UAE)
Match on BeIN Sports
A new relationship with the old country
Treaty of Friendship between the United Kingdom of Great Britain and Northern Ireland and the United Arab Emirates
The United kingdom of Great Britain and Northern Ireland and the United Arab Emirates; Considering that the United Arab Emirates has assumed full responsibility as a sovereign and independent State; Determined that the long-standing and traditional relations of close friendship and cooperation between their peoples shall continue; Desiring to give expression to this intention in the form of a Treaty Friendship; Have agreed as follows:
ARTICLE 1 The relations between the United Kingdom of Great Britain and Northern Ireland and the United Arab Emirates shall be governed by a spirit of close friendship. In recognition of this, the Contracting Parties, conscious of their common interest in the peace and stability of the region, shall: (a) consult together on matters of mutual concern in time of need; (b) settle all their disputes by peaceful means in conformity with the provisions of the Charter of the United Nations.
ARTICLE 2 The Contracting Parties shall encourage education, scientific and cultural cooperation between the two States in accordance with arrangements to be agreed. Such arrangements shall cover among other things: (a) the promotion of mutual understanding of their respective cultures, civilisations and languages, the promotion of contacts among professional bodies, universities and cultural institutions; (c) the encouragement of technical, scientific and cultural exchanges.
ARTICLE 3 The Contracting Parties shall maintain the close relationship already existing between them in the field of trade and commerce. Representatives of the Contracting Parties shall meet from time to time to consider means by which such relations can be further developed and strengthened, including the possibility of concluding treaties or agreements on matters of mutual concern.
ARTICLE 4 This Treaty shall enter into force on today’s date and shall remain in force for a period of ten years. Unless twelve months before the expiry of the said period of ten years either Contracting Party shall have given notice to the other of its intention to terminate the Treaty, this Treaty shall remain in force thereafter until the expiry of twelve months from the date on which notice of such intention is given.
IN WITNESS WHEREOF the undersigned have signed this Treaty.
DONE in duplicate at Dubai the second day of December 1971AD, corresponding to the fifteenth day of Shawwal 1391H, in the English and Arabic languages, both texts being equally authoritative.
Signed
Geoffrey Arthur Sheikh Zayed
MATCH INFO
Uefa Champions League, semi-final result:
Liverpool 4-0 Barcelona
Liverpool win 4-3 on aggregate
Champions Legaue final: June 1, Madrid
MATCH INFO
What: India v Afghanistan, first Test
When: Starts Thursday
Where: M Chinnaswamy Stadium, Bengalaru
Blackpink World Tour [Born Pink] In Cinemas
Starring: Rose, Jisoo, Jennie, Lisa
Directors: Min Geun, Oh Yoon-Dong
Rating: 3/5
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Squid Game season two
Director: Hwang Dong-hyuk
Stars: Lee Jung-jae, Wi Ha-joon and Lee Byung-hun
Rating: 4.5/5
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In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
Banned items
Dubai Police has also issued a list of banned items at the ground on Sunday. These include:
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Political flags or banners
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Bikes, skateboards or scooters
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
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RECORD%20BREAKER
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Kathryn Hawkes of House of Hawkes on being a good guest (because we’ve all had bad ones)
- Arrive with a thank you gift, or make sure you have one for your host by the time you leave.
- Offer to buy groceries, cook them a meal or take your hosts out for dinner.
- Help out around the house.
- Entertain yourself so that your hosts don’t feel that they constantly need to.
- Leave no trace of your stay – if you’ve borrowed a book, return it to where you found it.
- Offer to strip the bed before you go.
