Samsung’s trading using China’s yuanStarting Monday, Samsung Electronics began using yuan for transactions between its Korean office and subsidiaries in China, according to Korean financial authorities.
The tech bellwether has become the first Korean company conducting business in the world’s second-largest economy to use yuan at home. Samsung has mostly traded in U.S. dollars when it came to businesses in China, which meant the company had to convert the Korean won to dollars and then to yuan.
In China, Samsung runs a semiconductor factory in Xian, a home appliance plant in Suzhou and mobile phone production facilities in Haizhou. Those operations had estimated revenues of 45 trillion won ($39.8 billion) last year and 17 percent of Samsung Electronics’ net revenue last year came from China, one of the fastest-growing economies in the world.
Korea launched direct trading of the yuan and won Dec. 1, the third country. The move came five months after an agreement was made between President Park Geun-hye and Chinese President Xi Jinping at a summit in July.
The historic signing of a free trade agreement between Korea and China took place in November.
Even after direct won-yuan transactions were made possible in Seoul, many Korean companies remained reluctant to change their longtime pattern of using U.S. dollars. Samsung’s move is expected to prompt other companies to join yuan trading. Industry sources say top automaker Hyundai Motor and No. 1 steelmaker Posco are deliberating using yuan when doing business with China.
As of the fourth quarter last year, transactions using yuan in trade between Korea and China accounted for only 1.7 percent of trades, according to the Bank of Korea. U.S. dollars represent 95 percent.
BY SEO JI-EUN [firstname.lastname@example.org]