Use of the RMB in international business has grown rapidly
China’s currency is increasingly important in international trade. More than a fifth of companies are discussing the potential benefits of using the renminbi (RMB), according to a new survey from HSBC. Use of the RMB in international business has grown rapidly since China began to reform rules restricting its use for cross-border transactions.
Companies outside China used to see RMB adoption as somewhat niche, but it’s increasingly mainstream
HSBC Commercial Banking commissioned Nielsen to carry out a survey of firms conducting international business with or from China. The most common reasons businesses gave for using the RMB were to reduce foreign exchange risks and costs, and to meet a request from a trading partner.
Simon Cooper, Chief Executive of Commercial Banking, HSBC, said: “Companies outside China used to see RMB adoption as somewhat niche, but it’s increasingly mainstream. If you’re doing business with China, the world’s biggest trading nation, you have to think about doing business in China’s currency.”
More than half of the businesses surveyed expected to increase their cross-border trade with China in the next 12 months. Most firms already using the RMB expected that their level of business in the currency would increase over the next 12 months.
A separate study from HSBC Global Research suggested that the proportion of China’s merchandise trade settled in RMB reached 22 per cent in December 2014, up from 10 per cent in early 2013.
HSBC commissioned Nielsen to conduct a market survey of 1,610 international companies that currently do business with mainland China or are a company in mainland China that imports and exports outside of China. The survey was conducted in January and February 2015 and was undertaken to understand attitudes towards RMB, reasons for using or not using it, and any other insights about the currency. The research, carried out via random telephone interview, surveyed international businesses in Australia, China, Germany, Hong Kong, Singapore, the UK, the USA, Canada, Taiwan, France, the UAE, Brazil, Malaysia and South Korea. Of the companies surveyed, approximately 50 per cent had an annual sales turnover of between USD3 million and USD50 million, 40 per cent had a turnover of between USD50 million and USD500 million and 10 per cent had an annual sales turnover of more than USD500 million.