RMB Cross Border Settlement: Is There A Price Without Market?

This year, the road map of RMB internationalization process is increasingly clear.

From the BRICs summit held in Sanya, Hainan in April to the China, Japan and Korea finance ministers' meeting held in Hanoi, Vietnam in May, "local currency settlement" became the high-frequency word mentioned by the chancellor of the exchequer.

Not long ago, the official start of the cross-border settlement business of our country and Laos was also marked.

Facing the increasingly accelerated process of RMB internationalization, China's textile and garment enterprises will undoubtedly benefit from the international currency exchange rate fluctuations and cost pressures.

However, from the sober attitude of some enterprises, the textile and garment industry seems to face many obstacles in the process of developing RMB cross-border settlement business.

The real good is more than 4%.

What is the direct benefit of China's textile and garment enterprises using RMB for cross-border business settlement? If it is solved by financial executives of various enterprises, the answer is mostly the reduction of financial expenses.

Insiders have made estimates that the current exchange cost of Chinese enterprises accounts for about 4% of the total operating cost of enterprises.

"If the import and export business originally settled in US dollars is used for RMB settlement, it means that we will save 4% of the exchange cost. For the textile and garment enterprises whose profit margins are not high enough, it is surely the most direct benefit."

Mr. Li, the financial director of a foreign trade company, said.

In addition to the advantages of reducing costs, for most textile and garment enterprises, the benefits of using RMB cross border settlement are far more than these.

Instability of international currency exchange rates to textiles

It is precisely because of the instability of the international currency exchange rate.

Guangdong silk textile group is the first textile enterprise to carry out RMB cross-border settlement business in Guangdong province. Since its first cross-border RMB settlement business in July 7, 2009, the company has been exposed to such areas as China, Hongkong and ASEAN.

In the company's finance department, it seems that the use of RMB in cross-border business settlement can effectively help enterprises avoid exchange rate risks.

"Compared with the fluctuation degree of the US dollar, the renminbi value is more stable, and the expected revenue of the enterprise can be guaranteed more."

Zhang said.

In addition, some business representatives also pointed out that since there is no verification link in the use of RMB settlement business, funds will not enter the accounts to be verified, so it will also help enterprises to improve the efficiency of capital use.

As a matter of fact, all sorts of advantages that this business has brought for enterprises are also promoting the increase of RMB cross-border settlement business.

It is reported that the first quarter of this year, the bank has handled cross-border trade RMB settlement business 360 billion 300 million yuan, accounting for 70% of the total business volume of 506 billion 300 million yuan last year.

The right to settle accounts is difficult to grasp.

Although the favorable factors of RMB cross border settlement business can be seen, however, when a reporter telephoned some representatives of textile and garment export enterprises, he obviously felt that the Guangdong silk textile group was still a small number of enterprises that dared to taste "fresh" and really benefited.

The companies surveyed generally indicated that the current export business is still dominated by the US dollar and euro settlement.

In the course of the development of RMB cross-border settlement business, it has repeatedly run into a wall, which has led to the cold attitude of the business, and the biggest problem encountered is the lack of settlement power.

Since last year, Wang Qingchun, the financial center of Beijing garment import and export Limited by Share Ltd, has received several phone calls and visits from several banks. The main reason for these bank visits is to cooperate with enterprises in RMB settlement.

However, the unilateral enthusiasm of banks did not facilitate the smooth development of the RMB cross-border settlement business.

"Representatives of major banks have recommended this business.

We also know that there are many advantages of RMB settlement in export business, but now our textile and garment foreign trade market is a buyer's market after all.

We are generally at a disadvantage in negotiations with foreign businessmen, and the choice of which settlement currency is mainly for foreign investors.

Shen Quanfang, deputy general manager of Shanghai new textile import and Export Co., Ltd. also expressed frustration about the lack of corporate settlement leading power. "We have tried to offer renminbi settlement to foreign businessmen, but the key is whether they are willing to accept it."

At present, Shanghai New Union textile import and Export Co., Ltd. has a range of business covering more than 40 countries and regions: Europe, America, Japan and ASEAN.

Shen Quanfang said he had little interest in the settlement business, so the company has yet to carry out a RMB settlement cross-border business.

"After the renminbi is used as the settlement currency, it is equivalent to pferring the risk of RMB appreciation to the customers.

They are all in business, and no one is willing to do things that have no interest in themselves.

Shen Quanfang pointed out that many factors should be taken into account in the settlement of RMB by foreign businessmen.

Such factors as the exchange of Renminbi and local currency, the amount of Bank held by merchants in their locality, and the exchange rate of RMB by local banks, all of which may become a "burden" for foreign businessmen.

"In order to carry out the RMB settlement business in an all-round way, there is a long process of cognition and running in between enterprises and foreign businessmen."

Shen Quanfang said.

Effective implementation is easier said than done.

Although the benefits of RMB settlement are self-evident, the difficulties encountered in the actual operation make it difficult to advance. Many factors have led to the fact that most textile exporting enterprises have not yet experienced the benefits and benefits of RMB cross-border settlement.

Wang Shouwen, director of the foreign trade division of the Ministry of Commerce, said that China's foreign trade enterprises need to emphasize ways and means to overcome some difficulties facing the current RMB settlement.

Wang Shouwen suggested that enterprises can choose products with strong competitiveness as a breakthrough point, or choose countries and regions with strong trust in the renminbi as targets.

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It is understood that most of the products that Guangdong Silk Textile Group has settled for cross-border business with RMB are high-end silk products with their own brands. These products have established good reputation in foreign trade for a long time, effectively reducing the difficulty of RMB settlement by enterprises.

Some business representatives said that it is relatively easy to develop this business with foreign agents with agents in China.

"Now many foreign businessmen have direct offices in the country, and they can make specific contacts with these offices, so that they can settle directly with foreign merchants in Renminbi."

In fact, from the situation of cross-border RMB settlement companies, most of them are mainly countries such as Vietnam and Russia.

A statistics show that half of China's foreign trade is now trading with Asian countries and regions, which has increased 4.5 times in ten years, with an average annual increase of 21%.

Obviously, China's growth in emerging markets will become the biggest bright spot for future import and export.

And the development of RMB cross-border business may also be easier to test the water on this land.