The program will work to help Western businesses establish long-term supply chain relationships in China and will help the company’s dedication toward lubricating global business flows.
Transactions will be simplified, the post said, and while paying in Chinese yuan renminbi (CNY) has benefits and has become more common in supply chains, there are still challenges. One challenge is that some Chinese suppliers insist on USD payments for their own operational reasons. In those instances, the blog post said that Parallel Forward will make it so European buyers transacting with Chinese suppliers in USD can still get long-term, stable cost management.
Otherwise, those transactions would likely end up threatened by USD/CNY cost fluctuations. Western buyers will now be able to get rid of the one-sided risk regarding CNY with the supplier making sure they get the right amount of CNY in USD.
“Parallel Forwards will fundamentally improve supply chain relationships between … [Western] countries and their Chinese suppliers by ensuring a fairer and more efficient payment system,” said U.K. and Ireland Country Manager Tom Davies. “No longer will … [Western] buyers be forced to pay over the odds due to currency rate fluctuations that are out of their control threatening the global supply chains that are so crucial for businesses in Europe and the Americas. By eliminating this currency risk, we hope that Chinese suppliers will benefit from increased demand fostering new, long-term relationships in a win-win for trade as we emerge from the coronavirus pandemic.”
While post-pandemic demand had initially spurred a double-digit increase in trade between the U.S. and China, consumers’ appetites have now begun to wane.
In April, China’s trade with the U.S. and other parts of the world was up 32.3 percent from 2019 and hitting $263.9 billion. The figure aligned with March, but it was a heavy decline from the 60.6 percent increase from January and February this year.