Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Being RMB-Ready Gives Competitive Advantage in China Trade

15 July 2014


BEING RMB-READY GIVES COMPETITIVE ADVANTAGE
IN CHINA TRADE, GLOBAL SURVEY SHOWS

***Perceptions gap highlights potential leaders and laggards as
trading nations strive to boost China exports***

In the global race to develop trade links with China, readiness to do business in renminbi (RMB) could give some exporters a vital edge over their rivals, a new HSBC Commercial Banking survey shows.

Whilst two-thirds of companies in mainland China and Hong Kong said foreign firms doing business with China gain financial and relationship advantages from using RMB, awareness of these potential benefits varies widely overseas, according to the 11-market poll.

Half of respondents from Singapore, 44% from the US and 42% from the UK said they believe RMB usage brings financial benefits, yet less than a third of their German and Canadian peers share this view. More than half of UAE respondents said they see business relationship benefits from RMB adoption, compared with 46% in France and 40% in Australia.

Overall, 59% of decision-makers surveyed said they plan to increase their cross-border activity with mainland China over the next 12 months. At the same time, only 22% said their company currently settles business in RMB.

“This survey highlights a need for many companies to learn more about how the RMB can help them connect to opportunities in China and get ahead of their rivals in this highly competitive market,” said Cath Henry, Head of Payments and Cash Management at HSBC New Zealand. “Most Chinese businesses look favourably on overseas partners who are using RMB, both because it shows commitment and because it eliminates foreign exchange risk from their cost base. Although a currency can’t guarantee commercial success in China, it’s clear that RMB should be a core component of every company’s business planning.”

With its trade in goods passing US$4 trillion, China overtook the US to become the world’s largest trading nation in 2013. The IMF’s projections for nominal dollar GDP show that China will add about US$850 billion to global demand this year; the equivalent of adding an economy the size of Indonesia to global trade flows.

New Zealand’s corporates are well positioned to take advantage of the growth that is happening in China as a result of the comprehensive Free Trade Agreement signed between New Zealand and China in 2008 and the CNY/NZD direct convertibility agreement that was signed between New Zealand and China in March of this year. (HSBC is one of the first banks in New Zealand able to facilitate this direct convertibility.)

These initiatives facilitate trade and investment flows between the two countries by simplifying tariffs, foreign exchange transactions and ultimately reducing costs.

As China becomes ever more important to international businesses, the internationalisation of the RMB is creating new opportunities in trade, investment, cash management and funding. HSBC forecasts that a third of China’s trade will be settled in RMB by 2015 and that the currency will be fully convertible by 2017.

For its new survey, HSBC polled more than 1,300 decision-makers from mainland China, Hong Kong, Singapore, Taiwan, Australia, Germany, France, Canada, the UK, the US and the UAE who represent companies that conduct international business with or from China.

Among the other highlights of the survey:
•Outside the Greater China region (mainland China, Hong Kong and Taiwan), businesses in France (26%) and Germany (23%) report the highest levels of RMB usage.
•Of companies using the RMB to settle cross-border business today, 59% expect to use it more over the next 12 months.
•32% of companies that don’t use the RMB already expect to do so in the future.
•Reasons for using the RMB include requests from trading partners, reducing FX risk, convenience, winning new business and gaining better pricing.
•Those surveyed believe that the simplification of procedures (68%), further liberalisation of the exchange rate (61%) and expansion of transaction types that are RMB eligible (57%) would encourage them to further use RMB.


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Royal Society: Review Finds Community Water Fluoridation Safe And Effective

A review of the scientific evidence for and against the efficacy and safety of fluoridation of public water supplies has found that the levels of fluoridation used in New Zealand create no health risks and provide protection against tooth decay. More>>

ALSO:

Scoop Business: Croxley Calls Time On NZ Production In Face Of Cheap Imports

Croxley Stationery, whose stationery brands include Olympic, Warwick and Collins, plans to cease manufacturing in New Zealand because it has struggled to compete with lower-cost imports in a market where the printed word is giving way to electronic communications. More>>

ALSO:

Prefu Roundup: Forecasts Revised, Surplus Intact

The National government heads into the election with its Budget surplus target broadly intact, delivering a set of economic and fiscal forecasts marginally revised from May to reflect weaker commodity prices and a lower tax take. More>>

ALSO:

Convention Centre: Major New SkyCity Hotel And Laneway For Auckland

Today SKYCITY Entertainment Group Limited revealed plans to build a new hotel and pedestrian laneway of bars, restaurants and boutique shopping on land it owns in the Nelson and Hobson Streets block, expanding the SKYCITY Entertainment Precinct. More>>

ALSO:

Igniting The Spark: Bringing The Digital Enabler To Life

Changing a name is, relatively speaking, the easy part of a re-invention. Changing a culture, getting all the ducks in a row, turning yourself inside-out to become customer-inspired is a much bigger challenge. More>>

ALSO:

Ebola And NZ: Targeted Screening At Airport But Risk Low

The risk of any cases of Ebola in New Zealand remains very low, but health and border authorities are well prepared... anyone arriving in New Zealand who in the last three weeks has visited countries affected will be screened for symptoms of the disease. More>>

ALSO:

Scoop Business: Brewer Seeking Crowd-Funding Cancels Shareholders’ Dividends

Shareholders in Renaissance Brewing company, the first business to seek equity through crowd-funding in New Zealand, have cancelled their claim on $147,000 of accumulated earnings “to make Renaissance a more attractive investment opportunity.” More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news