Industry insiders weigh in on direct currency trading deal between Korea, ChinaUpdated: 2014-07-23 21:59:55 (KST)
Just an hour car ride away from the capital city of Seoul, there's a factory in the city of Gunpo owned by K-C-C Incorporated, a machine manufacturer based in Korea.
The factory agreed to deliver its products to its Chinese partners, worth more than 1.4-million U.S. dollars, in the coming months.
"We want to start paying in the yuan when we do business in China since it will cut down our costs. But what we're concerned of, as a small-and mid-sized company, is possible risks incurred due to a sudden fluctuation of the yuan. We have more information when trying to predict the value of the U.S. dollar compared to that of the yuan."
Only about one-percent of Korean companies currently settle their trading bills with their Chinese partners using the Chinese currency.
Zero-to-Seven Incorporated, a Korean clothing manufacturer for toddlers, is one of them.
With sales of around 236 million dollars last year and more than 2-hundred stores across China, the company has been making payments in the yuan for the past three years.
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"We currently save one-percent of company payments every year by paying in the yuan. We asked our Korean subcontractors, in the early stages of the contract, to use the yuan and they agreed to it."
The company says it has not yet experienced any currency risk stemming from the sudden fluctuation of the value of the yuan which is partly pegged to foreign currencies selected by the Chinese government.
But it suggests Beijing could do more to raise transparency by sharing its financial policies and vision so that more business entities will want to trade in its currency.
The global trade volume settled in the yuan amounted to 4.6-trillion yuan or 741-billion dollars last year and was one of the most used currencies in the world.
Kim Ji-yeon, Arirang News.
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