CITIGROUP INC. 
He thought using the local currency for the purchases, worth several million pounds every month, would be a selling point with his Asian partners, a sign of good faith and presumably easier to do.
They would rather have dollars.
This is a familiar experience for hundreds of small and medium-sized British companies which deal with Chinese factories and firms. It also jars with the big headlines over the past year proclaiming the emergence of the yuan as a major currency, and London as its main international trading hub.
"We have tried but there is no appetite," says Brown, who has 19 years of experience in working closely with Chinese suppliers.
Flows among some of the major banks and speculative financial investors have surged, and the yuan is an increasingly heavily used trading currency in Asia. But its visibility in the day-to-day economy in the West is next to nil.
Some of the thousands of British managers who regularly deal with China say this is due to the difficulty of changing established practices, the Chinese firms' need for dollars to pay off debt and other international dues and a lack of faith in the current value of the yuan, now in the throes of its second major devaluation since last August.
"Historically they desperately wanted dollars and it has just continued. We've had discussions about paying in local currency. But they just have limited exposure in yuan so they would rather have dollars," said Brown.
If you've played fairground or funfair stall games over the past few years in Britain, the chances are your prize has been imported by his company, Whitehouse Leisure, based in the town of Basildon just outside London.
The biggest seller in the past year has been fluffy Minion toys, made famous by the kids' movie "Despicable Me" and distributed to points ranging from the Legoland theme park to small mobile funfairs that set up around Britain.
It's good business and Whitehouse Leisure is a leading client of AFEX, among the biggest in a group of London-based currency brokers specializing in dealing for companies whose needs aren't quite large enough to get the premium rates and services that banks offer top corporates.
AFEX sales director James Collins says that of the 150 corporate clients on his books, none is doing any major business in yuan due to Chinese reluctance. "We've offered it, and lots of people have looked at it, but there has just been no take-up from the other side," he says.
SURGE
China has pressed ahead with efforts to internationalize the yuan in the past year, regarding this as a crucial element of its future place in the global economic and financial hierarchy.
Data from banking network Swift show the yuan, also known as the renminbi or RMB, is now the fifth most-used currency for international payments. The big bank-to-bank trading platforms report a surge in its usage that often makes it among a handful of their most traded currencies.
A decade of huge dollar earnings for Chinese companies, however, allied to ultra-low U.S. interest rates since 2008, has reinforced the greenback's day-to-day usage in investment and trade.
The International Monetary Fund's admission last year of the yuan into its benchmark currency basket should soon mean the Chinese unit makes up closer to 10 percent of global central bank reserves.
However, even after two years of substantial growth, the yuan is worth just 2 percent of all international payments compared with 52 percent for the dollar, and it is used for less than 0.5 percent of trade in goods and services.
Chinese companies still hold around $1 trillion of short-term debt in U.S. currency and are repaying it, and the interest, in billions of dollars monthly. Much of that money comes in to offshore accounts and never lands in China.
Another AFEX client, Bob Latham, pays around $100,000 every month for the reinforced composite and glazing materials he buys from Chinese factories to sell on to clients in the West.
"We did offer to pay the factories in RMB. It's in our interest to make it as easy as possible for them to sell to us, so that we're the easiest route to market," he says.
"But it all tended to get a little bit crazy. They have foreign bank accounts and that's where they handle all their foreign sales. So when we tried to pay in yuan they changed it into U.S. dollars, and then they transfer it from U.S. dollars back into RMB. So we couldn't see any logic or benefit."
RATE PLAY
All of that is hard to square with the flood of corporate promotion of the yuan, chiefly by banks such as HSBC, Standard Chartered, Citi and others for whom it is a rare growing market at a time when trading operations and profits have been slashed.
The Swift numbers point to a disparity between Asia and the rest of the world. The yuan is used, for example, for about 7 percent of payments between Japan and China, compared with the 2 percent global figure.
Still, the yuan offers better returns than dollars, compensating for higher conversion costs due to the wider gap between buy and sell rates.
Bankers say trade in the yuan in London has boomed in the past six months and that bigger corporate clients have been paying in the currency for over a year.
"We're doing a lot of it now," says Tobias Davis, who sells hedging and options products to bigger corporates for Western Union in London.
"Especially on forwards and options there's a lot of benefit in settling direct in yuan. Interest rates are above 4 percent so while you're holding the position you get that interest rate carry. That offsets the marginally wider spreads you will get on the yuan compared to the dollar."
But he also acknowledges Chinese clients remain keen to receive dollars. "The assumption since last year has been they will devalue the yuan further. So at least right at the moment the Chinese corporates don't want to be holding yuan while that happens - they would much rather have dollars."
(editing by David Stamp)
By Patrick Graham
