As the second largest economy in the world, it is perhaps inevitable that China's currency is set to play a bigger role in international trade.

Indeed, official figures released this month already suggest trade deals settled in yuan reached US$58.7bn last year and could rise to more than $3 trillion a year by 2015.

As with all things to do with China, the numbers are simply mind-boggling. Since China first allowed international trade to be settled in its currency, the yuan, in 2009, cross-border transactions have soared - rising thirteen-fold last year alone, according to the State Administration of Foreign Exchange.

And as more and more foreign-funded companies choose to pay and be paid in the yuan as an alternative to major world currencies, this figure looks set to explode.  

A report released last month by Australia and New Zealand Banking Group (ANZ) and the Asia Society points to the volume of trade deals settled in the yuan hitting CNY2.2 trillion a month (US$350bn at today's exchange rate) by 2015. And it says the yuan-denominated bond markets could reach CNY375bn (US$60bn).

It also notes that cross-border RMB-based trade settlements in Hong Kong - currently the only offshore trading hub for China's currency outside the mainland - rose from US$1.5bn in June 2010 to more than US$15bn in December 2010.

Not surprisingly, the advice to apparel firms - who, after all, depend on China as one of the most important production and sourcing centres in the world - is to position themselves for new opportunities as the yuan transitions to an international currency.

Shirley Chan, head of global transaction services in Hong Kong, at the Royal Bank of Scotland, points out that apparel retailers and brands are increasingly stretching their payment terms to 90 days - but if they continue to push suppliers too hard, "they'll go work for someone else."

"We're reaching a turning point," she believes.

What are the benefits to retailers from trade settlement in the yuan? "If a sourcing company pays in yuan it knows exactly what the foreign exchange will be, so it can negotiate with suppliers to make the pricing more transparent," she explains.

"From the supplier's side, the benefit is they don't have to worry about pricing-in appreciation - which leads to transparency and stability for them as well."

Not only could using the yuan as an invoicing currency help companies hedge the risk of appreciation, but it also insulates them from the risks originating from volatile commodity prices such as raw cotton. It could even provide a useful tool for businesses to negotiate more favourable terms with their Chinese partners, and potentially widen their pool of suppliers.

Greater use of the yuan could also help importers and exporters to find "natural hedges" in their balance sheets if they hold yuan accounts, according to the ANZ Asia Society RMB Handbook.

And over time, combined with slow appreciation, it could even encourage Chinese imports and reduce China's trade surplus. Meanwhile, the offshore yuan market also offers a funding source for international firms operating in China.

A trigger for the growth of yuan-settled trade is coming from the Chinese government, which has made the wider use of the currency in cross-border transactions one of its policy objectives as it seeks to reduce dependence on the US dollar.

Its decision last June to let the yuan start appreciating against the dollar has also accelerated the uptake of yuan deals from trading companies outside China who feel the undervalued currency is likely to appreciate.

And at the end of last year Chinese regulators increased the number of exporters that can use the yuan to settle international transactions from a few hundred to nearly 70,000 across a total of 20 provincial regions.

All of which suggests this is set to be a trend in the future - and one that savvy apparel firms should be watching closely.