Renminbi usage likely to be a long term phenomenon

A new survey of companies doing business with and in China has highlighted the benefits of switching to renminbi – China’s “people’s currency”.

The survey of 11 markets shows that companies that use renminbi are reaping significant financial and relationship benefits from their switch. They are also more optimistic about increasing their business in China over the next 12 months than those who use other currencies.

Over the past 11 years, renminbi has gone from a local currency confined within China’s borders to become the world’s seventh most used trade settlement currency and an offshore market with assets of more than RMB5.3 trillion (US$855 billion).

Renminbi, which is also known as the Yuan, has particular relevance for Mauritius. China is our (second) biggest trading partner and anecdotal evidence from clients strongly suggests that the Yuan is rapidly expanding its role, spurred by China’s growing domestic demand and key position at the heart of global supply chains.

Earlier this year, HSBC asked the market research company Nielsen to canvass more than 1,300 companies that do business with China. A number of data points stand out.

More than three-quarters of the companies that use the Yuan said it had given them both financial and business relationship benefits. It is getting easier and cheaper to access RMB products, and for corporates with both operations and sales in China, using the Yuan can reduce the level and cost of currency risk. And although many Chinese companies are completely at ease transacting in foreign currencies, an overseas client or supplier’s willingness to shift to renminbi settlement is frequently seen as a sign of commitment...

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