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Is your RMB pay pegged to the USD?

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julie2
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Joined: Sep 19, 2004
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Posted: Aug 19, 2007 - 12:28 AM
Post subject: Is your RMB pay pegged to the USD?

Employees from overseas are paid in RMB. Every month the employer pays them according to that months exchange rate, which is of course dropping like a stone. So the RMB they receive is less and less. If they were paid in US currency, I can see how this is just the tough break, but at least they have US currency and can deposit it in a US account, convert into RMB what they need to spend here. But it seems that being paid in RMB, but not fixed RMB amount, is the worst of both worlds.

Is this a typical arrangement for expats?

Lappen

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Joined: Oct 29, 2005
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Posted: Aug 19, 2007 - 01:24 AM

Part in Rmb and part in the home country (USD, EUR etc..)

Magnolia
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Joined: June 01, 2004
Posts: 31672

Posted: Aug 19, 2007 - 07:31 AM

I was paid in USD. Never RMB, unless I requested RMB cash for the month. USD direct-deposited to my BOC account.

julie2
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Posted: Aug 19, 2007 - 08:07 AM

Thanks for your input. I'm starting to think this is unacceptable. When i negotiated salary I pushed hard to be paid in USD but it was no go. I insisted on locking in the exchange rate then, as anyone could guess the USD is falling. So I'm paid in RMB with a fixed exhange rate. The other new employees didn't do this and don't realize their salary is going to change every month, and not in a good way.....

Magnolia
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Joined: June 01, 2004
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Posted: Aug 19, 2007 - 08:11 AM

I was fortunate that the RMB was still pegged to the USD so the rates never mattered, but if I was negotiating now and the company insisted on an RMB salary, I would only accept an RMB-set salary in Shanghai and a USD (or whatever currency) set in my home country.

yu888
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Joined: Jan 25, 2003
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Location: ZhongShanParkArea SH

Posted: Aug 19, 2007 - 08:47 AM

On a related note, ever since we started renting out properties, we always rented based on RMB and not USD for the express reason that then the exchange risk would be minimized. Since most expenses for the apartments are paid in RMB, it made sense to do it this way and its worked out well.

Always taken positions paying in RMB, no exchange rate peg. Again since most of my expenses are here, getting paid USD would make no sense. Though paying my US mortgage payments is a bit of a pain. Nonetheless, I'd stick with Magnolia's method in negotiating any position's compensation package.

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shanghaiceltic

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Location: Perth WA
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Posted: Aug 19, 2007 - 08:51 AM

I get paid in Pounds Sterling. I would not accpet RMB payments. However I have to accept any currency exchange rate changes. This still allows me to use part of my salary here by transferring money as I need it and still pay off credit card bills and pay into my pension account

When I lived in Japan I had the same arrangement. I was caught out there, the Pound lost heavily against the Yen when the UK pulled out of the Euro exchange rate scheme under the Conservatives and overnight I lost about a third of the purchasing power. I had to renegotiate the value of my salary as living in Japan was very expensive anyway.

Julie2, is your company a US based one?

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julie2
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Posted: Aug 19, 2007 - 09:45 AM

Yes Celtic, but they act like they're not...does that make sense? All Chinese/Taiwanese board of directors.

Magnolia
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Joined: June 01, 2004
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Posted: Aug 19, 2007 - 09:55 AM

they act like a company; looking out for their best interests.

wolfy
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Joined: Sep 13, 2004
Posts: 2510

Posted: Aug 19, 2007 - 10:00 AM

shanghaiceltic wrote:

I was caught out there, the Pound lost heavily against the Yen when the UK pulled out of the Euro exchange rate scheme under the Conservatives and overnight I lost about a third of the purchasing power. I had to renegotiate the value of my salary as living in Japan was very expensive anyway.

Nasty.

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Batavia

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Posted: Aug 19, 2007 - 11:11 AM

So is it best to peg your usd salary to rmb now and get paid in full in rmb?

Magnolia
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Posts: 31672

Posted: Aug 19, 2007 - 11:17 AM

Depends on where you are from. Addionally, if you require funds from outside of China, tansferring can be more difficult and less lucrative.

I would never peg my salary to USD now in concrete terms.

alphabet

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Joined: Apr 17, 2005
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Posted: Aug 19, 2007 - 11:23 AM

I am not sure I understand OP's rationale. If you are paid in RMB in the current environment, then you should be laughing. It is those who are paid in USD or other currencies and not pegged to RMB who are having their purchasing power in the mainland eroded every month.

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Magnolia
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Posted: Aug 19, 2007 - 11:30 AM

^ employee "A" is paid USD5000/month. when the contract was signed, the exchange rate was closer to 8rmb/usd. now that the rate is closer t 7rmb/1usd, the take-home amount is less.

Macpod

Veejay

Joined: Apr 15, 2006
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Posted: Aug 19, 2007 - 11:31 AM

alphabet wrote:

hes not getting a fixed amount of RMB. its dropping as the USD is dropping. im guessing the rational is that if the USD rises his salary also rises...............but HA, goodluck.

3 years ago 1 australian bought you about 50cents USD but now its 86. Amazon and ebay just became alot more attractive.

Macpod

Veejay

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Posted: Aug 19, 2007 - 11:33 AM

Oops..

Anyway. if anything, the RMB is more stable than the AUD. Although i still trust the australian real estate market more.

Witch_Pauline

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Joined: Sep 23, 2005
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Posted: Aug 19, 2007 - 08:30 PM

A salary in RMB but varying each month depending on the USD/RMB exchange rate. Sounds like a lot of annoying admin work for the company, I dont think any company financial manager would want that. Tell them to fix the RMB amount, its good for them too (unless the directors are Singaporean or Hongkongese, in which case they probably care a lot about the small savings they can make for the company).

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hammerforlife
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Joined: May 24, 2004
Posts: 3302

Posted: Aug 19, 2007 - 08:52 PM

I get paid in RMB, not pegged to anything. Quite happy with the arrangement with the way the exchange rate is going.

The two drawbacks is that it makes me more expensive to the company when the RMB strengthens and its a bit of hastle to transfer money back.

StMichael

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Posted: Aug 19, 2007 - 08:55 PM

Hmm...I'm curious - you mean Singaporean or HK directors generally do such things?

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Posted: Aug 19, 2007 - 08:58 PM

Quote:

I insisted on locking in the exchange rate then, as anyone could guess the USD is falling.

Maybe I am stupid but if USD is falling isn't it BETTER to be paid in RMB ? If I am the company I would happily agree to pay you in fixed US$ amount, because it would cost me less and less in RMB. Example - lets say you have 30K RMB which is $4K with rate 7.5 and you make contract in US$, after the exchange rate fell to 6.5 you would cost them only RMB 26K not 30K...

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freeman2007

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Joined: July 07, 2007
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Posted: Aug 19, 2007 - 09:06 PM

the rmb will keep rising against other currencies so the best thing to do now is to get paid in rmb

in the last 2 years china raised the currency a lot but not enought according to waht the us wanted and other countries from europe were hoping

the rest of the world is basically pushing the chinese governement to raise the currency more and more how far that will go is up in the air but it will deffinitly keep rising for a while

frisian

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Posted: Aug 19, 2007 - 10:27 PM

I get paid in HKD, balanced every month to the Euro. A part of this money comes to my Chinese account as HKD, the rest goes to Holland as Euro. As I fixed the amount of HKD to my Chinese account, and the HKD (and RMB) have been loosing against the Euro, the amount into the Dutch account has slghtly gone up. I can put RMB, HKD and Euro's into my Chinese account. The disadvantage is, that every now and then I have to move money from my HKD account to the RMB account. Disadvantage, as the waiting in the bank is often quite long. The advantage however is, that I can easily withdraw The HKD or Euro's in the accounts here as HKD, or Euro, without needing to proof where the money came from, nor any costs, or exchange rates.

julie2
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Posted: Aug 20, 2007 - 06:26 AM

Thanks again for everyone's comments.

Yes it IS better right now to be paid in RMB, but the problem is that the company is not agreeing to a fixed exchange rate. That's why it's the worst of both worlds---floating exchange rate with a sinking dollar, but no USD CURRENCY to at least offset the loss by saving you the time and fees of exchanging your RMB to USD. So all these people have is less and less RMB bills in their hands every month. If they were paid in USD currency, at least the amount would be the same every month.

Someone mentioned that getting paid in fixed RMB makes them more expensive to the company. But I think it's more of a case of the company not making money off of you...

edbreejen

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Posted: Aug 20, 2007 - 09:05 AM

I am not really bothered by USD/RMB rate, as i work for a European company, but as i get paid in Euro i also have some exchange rate risk. With my company, i agreed a fixed starting exchange rate, agreed a bandwidth if x% plus or minus, keep track of cumulative effects in either direction and if i run into a disadvantage for 3 months in a row, they will adjust my Euro salary accordingly. Sounds complex, but i have to check exchange rates for business purposes anyway, so Excel does the rest.