Generation ¥ - RMB: the new global currency infographic
1. 20th
position
An Economist Intelligence Unit report, commissioned by Allen & Overy
An Economist Intelligence Unit survey, commissioned by Allen & Overy
China’s currency, the renminbi (RMB) has become international with
amazing speed. How are global businesses managing its rise?
102%
0
20
40
60
80
100
120
RMB All currencies
4.4%
2014 global payments value growthRMB’s position in total value of
currencies used for global
payments (according to SWIFT)
20th
position
2011
2013
5th
position
2015
JANUARY
The dramatic rise in international usage of RMB
is the result of steps taken by China to open up
its financial markets. Non-Chinese companies’
use of the currency is expanding and changing
dramatically
Importance of RMB to
international business
15%
75%
RMB is important
to their business
RMB is very important to
their business
Multinationals are using RMB for
much more than just payments
Top 5corporate usages of RMB offshore other than
trade settlement. In the past year (% respondents):
47%
51%
50%
49%
48%
To pay staff/payroll
Intercompany cross-border lending
Channel RMB offshore and convert to
other currencies
Channel RMB offshore without
converting to other currencies
To finance acquisitions
Why paying in RMB is paying off
Top 5reasons for using RMB in cross-border
transactions:
To lower transaction costs
To lower funding costs/cost of capital
To access new business opportunities
To broaden access to onshore buyers and
suppliers
For timelier settlement
¥
0
20
40
60
80
100
Devolved
m
ore
pow
erto
decision-m
akers
in
m
ainland
Relocated
regionaltreasury
operations
to
China
Allow
ed
greaterpricing
pow
er
overproducts
in
China
Expanded
expansion
strategyto
‘second
tier’cities
in
China
M
ore
flexibilityin
setting
salaries
and
benefits
in
China
G
reaterexpansion
overseas
from
operations
based
in
China
Restructuring
ofregional
supplier/vendornetw
ork
Restructuring
ofglobal
supplier/vendornetw
ork
M
ore
investm
entdevoted
to
m
ainland
expansion
plans
(because
oflow
erfunding
costs)
Strategic shifts
How internationalisation of the RMB has affected company strategy
Already done
Not done yet but possible with further liberalisation of RMB
To download the full report visit
http://www.allenovery.com/news/en-gb/articles/Pages/Multinationals-are-ill-equipped-to-handle-rapid-rise-in-RMB.aspx
The report is based on a survey of 150 senior executives conducted in January-February 2015, including 50 from each of the US, Europe and the
Asia-Pacific region. All the companies in the survey have some exposure to the remninbi, but companies headquartered in greater China were
excluded to ensure the results reflected how the liberalization of the currency is affecting corporate strategy globally. Data are % respondents to
survey unless noted.
Percentage of respondents paying/receiving in RMB for settlement of cross-border trade in:
IndiaRussia Mainland
China
Australia/
New Zealand
Africa UK The Euro
Zone
Japan North
America
Middle
East
Other
ASEAN
Countries
Hong
Kong
SingaporeTaiwanSouth
Korea
88%79%75%61%
59%
58%57%54%48%
48%
46%40%37%36%34%
Frankfurt
Most attractive locations outside Hong Kong for managing RMB liquidity over next 5 years
0
10
20
30
40
50
60
70
80
Shanghai
FTZ
Singapore Luxembourg London Frankfurt
Where will win?
78%
Shanghai FTZ
33%
London
52%
Luxembourg
14%
77%
Singapore
0
10
20
30
40
50
60
70
80
Hurdles to clear
The rapidly increasing volume of RMB-denominated transactions presents challenges for many companies
% respondents rating issue “very important” or “important”
0
10
20
30
40
50
60
70
80
2 3 41
2
3
4
1
Lack of common technical standards
Uncertainty over exposure to regulatory risk
Political risk; i.e., China policy reversal
Delays in rollout of CIPS
57%
31%
28%
74%
% respondents rating issue “very important” or “important”
2 3 41
Poor understanding within company about RMB transactions
Need for changes to intra-company invoicing model
Need for company to devise new hedging strategy
Poor onshore-offshore bank IT connectivity
44%
40%
38%
77%
2
3
4
1Company-specific obstacles
Regulatory obstacles
RMB: the new global currency
Generation ¥