Canadian Businesses Slower to Use Chinese Currency

Renminbi | BCBusiness

Canadian companies do a lot less business in Chinese currency than their global counterparts, according to new HSBC survey

Despite record levels of trans-Pacific trade, only a fraction of the Canadian companies that do business in China settle their transactions in renminbi (RMB), the currency of the world’s second-largest trading economy, China.
Only five per cent of Canadian companies surveyed have closed renminbi-denominated transactions, compared to 17 per cent of U.S. companies, and 22 per cent of global companies surveyed. Those numbers come from an HSBC survey of 1,301 international companies—just over 100 based in Canada—that do business in mainland China.
In the forestry and agri-foods sectors, which account for a large proportion of Canadian exports to China, buyers tend to be more traditional and prefer to use the U.S. dollar, says Ben Arber, head of global trade and receivables finance at HSBC Bank Canada.
Businesses that do use RMB cite convenience, minimizing foreign-exchange risk and the requests of their trading partners as reasons why they use Chinese currency. “If you’re selling to Chinese buyers, often in the raw materials space, the ability to receive payment in RMB rather than U.S. dollars can give you a stronger bid,” says Arber.
China is Canada’s second-largest trading partner (behind the U.S.) and trade increased 57 per cent between 2007 and 2012, indicative of China’s trade growth globally.
According to the survey, the lack of usage doesn’t signify a lack of interest. Seventy-four per cent of Canadian businesses surveyed want to do business in RMB, compared to 55 per cent of U.S. businesses.