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Bitcoiners, I need your help. If anyone here is running a business in China, I'd appreciate your input.
I've been a part of the Bitcoin community since late 2012 and want to support other businesses who want to transact in bitcoin.
I'm based in Australia and run a business selling customised silicone wristbands, among other things.
We get these wristbands produced in China and back in November 2013, I asked the factory to accept bitcoin as a form of payment. Initially they were receptive (considering the huge upswing in price at the time), but the next month, People's Bank of China stepped in (you know the story).
Consider my problem for a moment. If the factory does not accept bitcoin, this is what I have to do.

Receive payment in bitcoin from customer.
Sell some bitcoin -> AUD (fee on spread + 1%)
Go to Forex company and exchange AUD -> USD (fee is $10 + conversion spread)
Forex company wires funds to China (takes average 3 business days)
Factory deposits USD into their bank account, which converts to RMB (I cant buy RMB through Forex)

In fact, if the factory accepted bitcoin, I can code my fulfillment system to automatically pay the factory when the customer pays me... Skipping every laborious step! Programmable money for the win!
Not only would myself and the factory save on fees, the factory gets paid the very moment I do, and I save countless hours on accounting, manual labor, etc
Every few months, I have revisited the issue with the factory. This is an uphill battle. Here is the latest response.

Dear Justin,
Well received with the comments on payment in Bitcoin! We have worked with each other for many years and your support to our business is highly appreciated. I am really so sorry that this payment term could not be accepted as the payment could not converted to dollars or RMB in bank. And in our country, it is the policy that Bitcoin business is illegal and it wont be protected by laws. And currently, only the wire transfer and credit card payment is accepted as the payment term.
Best Regards,

How accurate is their response saying "Bitcoin business is illegal"?
What can I do to convince the factory that accepting bitcoin is allowed (and is it ...) ?
Any suggestions for a legal workaround, ie bitcoin company in China that will pay factory for me (or will I get in trouble for this) ?
Thanks

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Australian business needs help paying Chinese factory in Bitcoin

(Eng & BM) Forex Trading Technical Analysis For USD/CAD 21 Jan 2019