THE DISTILLERY: Yuan love

Much is said about the rise of China and the residual benefits that Australia will receive, but it's usually through the prism of their demand for our stuff. How much can they buy? How much can we make? Very little is written about how Australian companies engaging with China can make their interactions more cost effective. ANZ knows this better than most thanks to its super-regional bank ambitions, and The Australian's Glenda Korporaal finds the bank has one simple message for Australians doing business in China – try using their currency. Meanwhile, the same newspaper's John Durie explains the challenge that the powerful consumer brand Coca-Cola Amatil has with their enormously powerful distributors, the supermarkets. And finally, the dire future of Greece and the delightful future of New Zealand come up for further analysis.

But first in this morning's Distillery, The Australian's Glenda Korporaal says ANZ institutional operations boss Shayne Elliott is trying desperately to convince Australian companies to do their Chinese transactions in yuan.

"Elliott, who moves into the role of chief financial officer on March 1, has been trying to explain to customers that it is cheaper to transact directly between the Australian dollar and the Chinese currency, rather than going through the traditional method of having US dollar denominated contracts. For those with an exposure to China already, doing business in the yuan provides a natural hedge. And the yuan, which the Americans are constantly complaining about as being held artificially low, is expected to continue to slowly appreciate. But Australian companies have been slow to grasp the idea of doing business with China in its own currency.”

The Australian's John Durie nicely encapsulates the battle between manufacturers – Coca-Cola Amatil – and the big retailers – Woolworths in this instance – over who's getting the better deal.

"The retail side of the argument says on a global scale the big manufacturers such as Coke, Kraft, Nestle and Colgate Palmolive earn on average 22 per cent earnings before interest and tax margins. The big retailers earn more like 4.5 per cent. In Australia, Woolies earns 7.5 per cent against Coke's 21.1 per cent, but the producers say the figures are distorted because they own the brands and the property, while the retailers park property off balance sheet, without all the overheads. The producers say return on capital is a better measure. While Davis is a superstar with 17.1 per cent returns, Woolies gets double that after making the adjustments. In truth they are both big enough to sort it out, but the little manufacturers have no chance.”

The Sydney Morning Herald's Michael Pascoe argues that this bailout of Greece will be the last, and not because it'll work. The whole exercise was designed to buy time for other European nations to put reforms in place at lower funding costs.

"Delaying the Greek default and exit also gives the European Central Bank more time for its de facto bailout of the more exposed European banks. Another dose of several hundred billion euros in three-year money at one per cent will do nicely. The interesting thing last week was that, while the headlines were concerned about the looming Greek deadline and the brinkmanship, the bond markets were taking it relatively calmly, apparently looking through the theatre and assuming the game continues.”

The Australian's Rowan Callick gives some of our best Kiwi-bashers something to think about, by pointing out that HSBC forecasts New Zealand to be the only "growth country” in the developed world over the next 40 years – bad luck Australia – and that a sense of pragmatism has delivered free trade agreements where bureaucrats from Canberra have failed.

"The Kiwis recently re-elected John Key in a landslide, the first prime minister in Australasia for decades to come from a successful, in his case an internationally successful, business career. They have been especially smart in recent years, in integrating themselves into the complex new trade and investment noodle bowl in Asia. New Zealand completed a free trade agreement with China four years ago. Australia is about to enter its seventh fruitless year of negotiating an FTA with Beijing, as well as with Malaysia. We are five years into our FTA talks with Japan.”

Staying with global economic affairs for the rest of this morning's Distillery items, the Sydney Morning Herald's Malcolm Maiden continues his analysis of the remedies being proscribed for the Greek economy and explains why they won't work and why the patient is increasingly realising that it doesn't want it. In domestic affairs, The Age's Peter Martin says wages aren't growing fast enough to worry the Reserve Bank, while The Australian's Bryan Frith senses that now might be the time for Australia to take advantage of investor demand for solid defensive positions and build a deeper domestic corporate bond market.

In company news, The Australian Financial Review's Matthew Stevens examines how Woodside Petroleum chief executive Peter Coleman is quietly reshaping the company in the wake of predecessor Don Voelte. The Australian's Barry Fitzgerald says the history of Australian oil and gas acquisitions abroad is a shocking one and investors will be watching with judgmental eyes to see what Coleman does with the Pluto project proceeds. In a separate comment, Fitzgerald says Santos can find some good news in the bad news that recent acquisition East Star Gas possessed an unacceptable attitude towards environmental damage in NSW's Pilliga State Forest.

The Australian Financial Review's Chanticleer columnist Tony Boyd says Suncorp-Metway is probably destined for higher profits now that a disastrous year of, well, disasters, is behind it. The Age's Adele Ferguson says Seven West Group has performed well to gain such a formidable position in the free-to-air TV market, but still has a task ahead of it with such a persistently poor advertising market. Fairfax's Insider columnist Ian McIlwraith says billionaire Gina Rinehart hasn't got a good deal so far on Ten Network shares, while The Australian's Tim Boreham finds currency in the way of another stellar set of CSL numbers.

Meanwhile, The Australian's Robin Bromby points out that there were no big Chinese names at the second annual IQPC rare-earths conference in Sydney, which is somewhat perplexing – to say the least – when China is behind 97 per cent of the world's rare earths. And finally, the Herald Sun's Terry McCrann takes the handouts for the car industry apart, foreseeing that the Australian economy will one day be the big miners at the top, the small internet companies at the bottom, and very little in between.