Just 14% of UK businesses currently trade in renminbi (Rmb) despite the competitive advantage the currency can provide.
The results of a recent HSBC survey, revealed at an Rmb and UK-China trade meeting GTR attended, suggest that UK exporters aren’t yet seeing the benefits of Rmb as a trading currency. Less than half (44%) of UK respondents to the survey see an advantage to using Rmb in building relationships with Chinese firms, while two thirds of businesses throughout Greater China think it gives foreign firms an advantage.
Rmb use among UK firms (14%) is lower than the global average of 22%, and significantly lower than in France (26%), Germany (23%) and the US (17%).
But the results also suggest the UK is more optimistic about future trade with China. 86% of UK firms anticipate trade with the world’s largest trading nation to increase in the next 12 months, compared with 63% of firms in France, 45% in Germany and 55% in the US.
Commenting on the survey’s findings, UK head of global trade and receivables finance at HSBC, Mark Emmerson, says: “Not enough UK business appreciate how big a part Rmb use can play in gaining a competitive advantage.
“Now is the time for ambitious British companies to incorporate Rmb as a tool for growing their business in the years ahead. UK companies are more optimistic than many other countries when it comes to growing their business with China, and Chinese businesses are increasingly keen to do business with international partners who are using Rmb.”
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. Overall, the results of HSBC’s 11-market survey found that 59% of businesses engaged in international trade plan to increase cross-border activity with China but just 22% settle business in Rmb.
“It’s clear that Rmb should be a core component of every company’s business,” says chief executive of HSBC commercial banking, Simon Cooper.
“The currency cannot guarantee commercial success in China but businesses look favourably on overseas partners that use Rmb because it shows commitment and eliminates foreign exchange risks from their cost-base.”
The new survey polled more than 1,300 representatives from companies engaged with trade to or from China from the following markets: Greater China, Singapore, Australia, Germany, France, Canada, the UK, the US and the UAE.