Tue, Sep 27, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

SMEs are switching to Renminbi for Chinese business according to Deutsche Bank survey

Tuesday, August 28, 2012
Opalesque Industry Update - A growing number of companies are switching to Chinese currency Renminbi (RMB) for their Chinese business according to a representative survey carried out by Deutsche Bank among companies in the UK, Germany and the Netherlands. Currently, 20% of companies carry out their invoicing in Renminbi, with the remaining 80% stating that switching their invoicing over to Renminbi is already in the pipeline. By moving over to Renminbi, companies can lower prices in negotiations with Chinese business partners by an average of 4.8%.

"We are seeing a growing trend towards the use of Renminbi transactions, particularly from SMEs," says Nils Ole Matthiessen, Head of Global Finance & Foreign Exchange Structuring Germany & Austria. In doing so, companies are taking advantage of a number of benefits. They are expanding their network of suppliers and buyers by bringing on board more Chinese companies who, in the past, only had limited access to western currency. They are also improving their negotiating position with Chinese customers and suppliers. "What's more, transaction costs are reduced and buyers can secure price reductions of an average of almost 5%," says Nils Ole Matthiessen.

In spite of increasing volatility in foreign exchange markets, only around half of companies that were surveyed hedge foreign exchange risks in Renminbi transactions.

For companies themselves, the greatest obstacles in international foreign exchange transactions are the slow payment process (approx. 30%) and difficulties in obtaining approval for payments from the Chinese authorities (approx. 15%). "Processes which accelerate or simplify payment processes in Renminbi helps European companies to strengthen their competitive position in China," says Nils Ole Matthiessen.

In June earlier this year, Deutsche Bank became the first bank to introduce cross-border RMB payment processing in the form of a pilot project with the Chinese central bank. The simplified RMB cross-border payment scheme allows certain China-based companies to invoice and settle cross-border trades in Renminbi without having to provide documentation for pre-trade verification. Currently, banks are required to physically check the documentary proof of each underlying trade transaction before they can process a RMB payment on behalf of their corporate clients.

Trade outside of China using the Chinese currency Renminbi currently amounts to around USD 2 billion per day, meaning that trade in the currency pair USD/RMB has doubled in volume over the past 15 months (May 2011: USD 1 billion). Cross-border RMB processing volume rose year-on-year by 42% to RMB 1.4 billion in the first half of 2012. Deutsche Bank processes between 20 to 30% of global trade in Renminbi (outside of China) through its systems.

Information on the survey:
In April and May 2012, 102 companies from the UK, Germany, and the Netherlands were asked about their experience in doing business in China. Around 60 percent of those companies had turnover in their China business of lower than RMB 10 million.

(press release)

Deutsche Bank is a leading global investment bank with a substantial private clients franchise. Its businesses are mutually reinforcing. A leader in Germany and Europe, the bank is continuously growing in North America, Asia and key emerging markets. With more than 100,000 employees in more than 70 countries, Deutsche Bank offers unparalleled financial services throughout the world. The bank competes to be the leading global provider of financial solutions, creating lasting value for its clients, shareholders, people and the communities in which it operates. www.db.com

Bg

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Activist News - Caesars offers creditors another $1.6bn, would spell end of hedge fund ownership, Activist investors double chance of CEO exits[more]

    Caesars offers creditors another $1.6bn, would spell end of hedge fund ownership From Calvinayre.com: Casino operator Caesars Entertainment has improved its offer to junior creditors to over $5b, but the offer is only good until Friday. On Wednesday, Caesars added an extra $1.6b to the $

  2. Nobel Sustainability Trust, Prince Albert II of Monaco help launch major new initiative to drive sustainable technologies[more]

    Matthias Knab, Opalesque: The Nobel Sustainability® Trust ("NST") is leading a major new initiative to finance, incubate and accelerate the development of clean technologies. The initiative will start with the formation of the Nobel Sustainability Fund® ("NSF"). NSF will drive faster access t

  3. Studies - Hedge funds’ study reveals vast disparity in types of investors securing side letter arrangements, Cambridge: Look to private investments for best access to LatAm growth[more]

    Hedge funds’ study reveals vast disparity in types of investors securing side letter arrangements A new study of the hedge fund space by industry law firm Seward & Kissel LLP reveals a wealth of information regarding established hedge fund managers’ use of side letters—special agreements

  4. Activist News - Caesars 'optimistic' on deal with hedge fund creditors[more]

    From Reuters.com: Caesars Entertainment Corp said on Monday it remains "optimistic" of reaching a $5 billion deal with the bulk of its creditors to push its main operating unit out of bankruptcy, but one hedge fund bondholder said it will pursue litigation. Caesars offered a sweetened $5 billion set

  5. Trend reversals lead to losses as managed futures drops 1.52% in August[more]

    Komfie Manalo, Opalesque Asia: Trend reversals in August have led managed futures traders to lose 1.52% last month according to the Barclay CTA Index compiled by BarclayHedge. The Index is up 0.62% year to dat