HSBC’s Complete RMB Solution

02 HSBC’s Complete RMB Solution

Since the cross-border Renminbi (RMB) settlement scheme was first announced by the Chinese government in April 2009, the internationalisation of the RMB has been gathering pace. In January 2011, China announced another pilot scheme that allowed approved Chinese companies to settle their overseas investments in RMB, which further facilitates the process of the RMB internationalisation.

If the current trend continues, HSBC estimates that at least half of China’s trade flows with emerging market countries could be settled in RMB within 3-5 years. This means that nearly USD2 trillion worth of trade flows could be settled in RMB annually, making it one of the top three global trading currencies.

Therefore, Australian companies may need the ability to adopt the RMB in their businesses in order to deepen their engagement with the world’s fastest growing economy.

HSBC’s RMB Capabilities

HSBC has a comprehensive suite of RMB products and services to support our clients in Australia.

Payments and Cash Management

�� RMB banking accounts to facilitate the receipt and payment of RMB

�� Credit interest yielding account (term deposit) for surplus RMB

�� HSBCnet to enable online access to your RMB account for straight through processing

Global Trade and Receivables Finance

�� Open account trading in RMB

�� Ability to issue and negotiate documentary letters of credit in RMB

�� Trade financing in RMB

�� Guarantee issuance in RMB

Global Markets

�� Fully deliverable RMB spot and forward to hedge foreign exchange exposures

�� RMB-denominated bonds

�� Non-deliverable option

�� Non deliverable forwards are also available if preferred

Cross-border RMB Trade Settlement

Under this scheme, all overseas companies (where local regulations permit) can settle their import/export with their Chinese counterparts in RMB. The relevant criteria are set out in the following page.

Benefits for Importers

�� Opportunity to obtain better pricing from mainland suppliers

�� Access a wider export base who might otherwise have limited access to foreign currency and adverse to FX risks

�� Secure/maintain supplier relationship

Benefits for Exporters

�� Potential RMB appreciation

�� Access a wide import base who might otherwise have limited access to foreign currency and adverse to FX risks

�� Secure/maintain buyer relationship

Why HSBC

With over 140 years’ experience of banking in China and an extensive network of over 100 offices and branches, the largest of any international bank, it’s easy to see why HSBC is best placed to help Australian businesses take advantage of opportunities in China.

In Australia our dedicated China Desk is able to provide expert local support and advice so you can do business with China more efficiently. While our nationwide team of Relationship Managers can connect you to HSBC’s global network. HSBC Group has around 7,500 offices in 80 countries and territories across the globe and is one of the world’s largest banking and financial services organisations.

Find out more

Speak to your Relationship Manager to find out how our RMB solutions can help your business.

HSBC’s Complete RMB Solution 03

Frequently Asked Questions

What you need to know about RMB trade settlement

Scope of the scheme

1. What cities and provinces in China are within the scope of the scheme?

The scheme is available nationwide in China.

2. Is RMB allowed for all kinds of cross-border payments?

RMB cross-border payment (to/from China) is allowed for settlement of trade transactions for goods or services. Payment under capital items requires case-by-case approval from the relevant authorities in China in advance.

Eligible participants

3. Are all companies in mainland China eligible to conduct cross-border RMB trade settlement?

�� For goods (merchandise) trade, mainland enterprises with import and export qualifications may import or export goods in RMB.

�� For services trade, all mainland enterprises are allowed.

4. Are there any requirements for Australian companies?

All Australian companies which have import and export trading business with eligible companies in mainland China can settle their trade in RMB with counterparties in China.

Doing business in RMB

5. What is required for RMB remittance to and from mainland China?

All RMB remittances to and from mainland China are subject to verifications by the Chinese regulators and banks and must comply with the rules and requirements in mainland China. HSBC in Australia will process the RMB remittance as per usual banking practice. However, HSBC in Australia is not responsible for checking that the payment is compliant with Chinese requirements.

You should confirm with your counterparty in mainland China that:

�� they are able to remit or receive the RMB funds.

�� their bank can accept payments with the account name expressed in English. If their bank holds the account name in Chinese characters only the payment may be rejected.

�� they provide you with the CNAPS (China National Advance Payment System) code of their bank.

6. Are there any restrictions on the maximum amount of each RMB denominated remittance or documentary credit to mainland China?

There are no restrictions on the maximum amount in each

RMB-denominated settlement, as long as the amount remitted is used for goods or service trade settlement, up to the actual invoiced amount.

7. Once overseas companies receive RMB funds, are there any restrictions on further transfer or conversion of the funds?

RMB funds received by overseas companies may be converted to other currencies or used for any other purposes.

8. Can companies transfer RMB remittances into mainland China to pay a personal customer?

No. The cross-border RMB trade settlement scheme only allows remittance between companies to settle merchandise imports/exports and services trade.

9. Is capital injection into mainland China allowed in RMB?

Any transfer of RMB into mainland China for purposes other than for trade settlement transactions would require approval by mainland authorities on a case-by-case basis.

10. How can RMB exposures be hedged?

It is possible to hedge RMB exposure through a range of deliverable and non-deliverable forwards and options depending on your bank’s capabilities.

The information in this document, including the Frequently Asked Questions is based on HSBC’s current understanding of the scheme requirements and information obtained from sources it believes to be reliable but which HSBC has not independently verified and is subject to change without notice. HSBC believes the information in this document to be reliable but HSBC makes no guarantee, representation or warranty and accepts no responsibility or liability for the contents or accuracy or completeness of this document.

Issued by HSBC Bank Australia Limited ABN 48 006 434 152 AFSL 232595 (“HSBC”) for informational purposes only.

Renminbi (RMB) is currently not freely convertible and conversion of RMB through banks in Hong Kong is subject to certain restrictions. Clients should be reminded of conversion risk in RMB products. In addition, there is a liquidity risk associated with RMB products, especially if such investments do not have an active secondary market and their prices have large bid/offer spreads. RMB products are denominated and settled in RMB deliverable in Hong Kong, which represents a market which is different from that of RMB deliverable in Mainland China.

This document has been prepared without taking into account of the objectives, financial situation or needs of any specific person who may receive this document. Any such person should, before acting on the information in this document, consider the appropriateness of this document having regard to your circumstances, and consider the relevant product disclosure statements. The product disclosure statements can be obtained by calling 1300 300 437 or by visiting www.hsbc.com.au or by contacting your Relationship Manager. In all case, anyone proposing to rely on or use the information in this document should independently verify and check its accuracy, completeness, reliability and suitability and should obtain independent and specific advice from appropriate professionals or experts.

No part of this document may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC, Copyright HSBC Bank Australia Limited. All rights reserved.

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