HSBC Survey: Canadian companies leaving Renminbi on the table
VANCOUVER, July 9, 2014 /CNW/ - Canadian businesses trading with Mainland China are missing out on new opportunities and cost savings because they are not settling their trade transactions in Renminbi (RMB), the world's fastest growing currency. This is the key finding in Canada of a new global survey of international business decision makers in 11 countries carried out by HSBC.
Canadian companies are the least likely of those surveyed to use RMB for trade settlement. Only 5% of the Canadian businesses surveyed said they had conducted cross border transactions in the local Chinese currency, compared to 22% of global companies and 17% of US companies. Conversely, 55% of Chinese businesses surveyed said they would offer discounts of up to 5% to their trading partners for RMB denominated transactions.
In contrast, Canadian companies are embracing trade with Mainland China. 74% of Canadian companies surveyed expect to increase trade with the country in the next 12 months - well above the global average of 59%.
Linda Seymour, Executive Vice President and Head of Commercial Banking at HSBC Bank Canada, said: "China is Canada's second largest trading partner behind the US. Trade between Canada and China is growing at a remarkable pace - increasing 57 per cent between 2007 and 2012. The survey results highlight the need for Canadian businesses to learn more about how using RMB can help them reduce costs and secure a competitive advantage when trading with China. For example, HSBC Bank Canada's first client to open a RMB savings account in 2012 saved nearly US$100,000 by settling a US$5 million trade with its Chinese supplier in RMB."
In 2012, HSBC was the first major financial institution in Canada to offer a RMB commercial savings account, and offers a suite of global cash management, FX risk management, and international financing solutions to assist companies that are trading internationally, including with China.
While many respondents do not currently perceive the benefits of settling trades in RMB, 37% of Canadian companies surveyed expect to start using the currency in the future, just above the global average of 32%.
Canadian companies who are not currently using the RMB but who expect to in the future will do so to meet demand from their counterparties, and drive more business. In comparison, companies who are currently using the RMB cite their reasons for doing so as convenience, minimizing FX risk, and requests from trading counterparties.
When asked what might motivate them to use RMB, survey respondents cited: simplification of procedures; further liberalization of the exchange rate; expansion of transaction types that are RMB eligible; and the availability of more guidance.
Added Seymour: "Whether a Canadian company is importing from or exporting to China, transacting in RMB not only offers financial benefits, it can also open doors to new business. HSBC is the leading international bank in Canada, and the largest foreign bank in China with more than 140 years of history in the region. It's this advantage that makes us a trusted expert and ally to our clients looking to realize the benefits of transacting in the world's fastest-growing currency."
RMB Resources for Canadian Businesses:
- HSBC HSBC RMB Resource Centre: Global HSBC website site designed to provide clients with useful content and information on the RMB, including step-by-step how-to guides. www.rmb.hsbc.com/
- HSBC Global Connections: Comprehensive web-based resource for businesses looking to grow internationally. Includes news on international business, free tools to help identify global opportunities, and research insights from around world. www.globalconnections.hsbc.com
About the Global HSBC RMB Survey:
- HSBC commissioned a survey of 1,304 businesses in 11 markets - including approximately 100 businesses in the manufacturing, retail, construction & engineering, metals & mining, food & beverage, pharmaceuticals & health care and other sectors, in Canada - on their usage and expectations of the RMB.
- Those interviewed were selected because they currently do business with Mainland China (or for businesses in China, because they do business outside Mainland China), either with import/export activities or with a physical presence in Mainland China.
- Respondents were financial decision-makers/those with influence over the selection of financial service providers for their business.
- The 11 markets surveyed are: Canada, US, Germany, UK, France, UAE, Mainland China, Hong Kong, Taiwan, Singapore, and Australia.
Notes to editors:
About the RMB Survey
HSBC commissioned Nielsen to conduct a market survey of 1,304 international companies that currently do business with Mainland China or are a business in Mainland China that imports/exports outside of the region. The survey was in field between 3 April and 7 May 2014 and was undertaken to understand clients' attitudes towards using RMB, reasons of using / not using RMB for trade and investment activities, as well as other insights they can offer about the RMB. The research surveyed international businesses in Australia (n=100), China (n=200), Germany (n=100), Hong Kong (n=200), Singapore (n=100), the UK (n=100), the USA (n=100), Canada (n=100), Taiwan (n=100), France (n=100), and the UAE (n=100). Of the companies surveyed, approximately 50% had an annual sales turnover between of US$3M-50M, 40% had a turnover of US$50M-500M and 10% had an annual sales turnover above US$500M. (Copyright © 2014, The Nielsen Company)
Nielsen N.V. (NYSE: NLSN) is a global information and measurement company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence and mobile measurement. Nielsen has a presence in approximately 100 countries, with headquarters in New York, USA and Diemen, the Netherlands.
HSBC Bank Canada
HSBC Bank Canada, a subsidiary of HSBC Holdings plc, is the leading international bank in Canada. The HSBC Group serves customers worldwide from over 6,300 offices in over 75 countries and territories in Europe, Asia, North and Latin America, and the Middle East and North Africa. With assets of US$2,758bn at 31 March 2014, HSBC is one of the world's largest banking and financial services organizations. For more information see www.hsbc.ca.
HSBC Commercial Banking
For nearly 150 years HSBC has been where the growth is, connecting customers to opportunities. Today, HSBC Commercial Banking serves businesses ranging from small enterprises to large multinationals in almost 60 developed and faster-growing markets around the world. Whether it is working capital, trade finance or payments and cash management solutions, HSBC provides the tools and expertise that businesses need to thrive. With a network covering three quarters of global commerce, HSBC is the world's leading international trade and business bank. For more information see www.hsbc.com/1/2/business-and-commercial
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