More than half (53%) of Chinese businesses would offer discounts of up to 5% for transactions settled in renminbi, a survey by HSBC has revealed.
The research also found that 50% of international companies in Hong Kong and almost a third in mainland China (30%) are now using renminbi to conduct cross-border business.
But a limited number of businesses outside Hong Kong and mainland China are making use of the renminbi to gain competitive advantage. At present, just 11% of businesses surveyed in Singapore, 11% in the UK, 9% in Germany, 9% in the US and 7% in Australia are using the Chinese currency.
Some 52% of companies surveyed admitted to having a limited understanding of the internationalisation of the renminbi and the associated benefits. Meanwhile, 51% of companies said that their renminbi usage would increase if the procedures for settling in the currency were further simplified.
Despite China’s growing trade with the rest of the world, 61% of Chinese companies said their counterparties were unwilling to consider using the renminbi.
But this is likely to change since nearly a quarter (24%) of those surveyed expected to start using the currency within the next five years to mitigate FX risk (59%) and benefit from better pricing (42%) as well as market disparities between onshore and offshore renminbi markets (39%).
Commenting on the findings, Simon Constantinides, HSBC’s regional head of global trade and receivables finance, Asia-Pacific, said: “Businesses are continuously searching for ways to reduce costs and find a competitive advantage. There are very real monetary benefits for businesses using the renminbi – a 5% saving across a buyer’s total China spend could be quite significant.”
Sally Percy is editor of The Treasurer