With a mission to inform, empower, celebrate and advocate for British Columbia's current and aspiring business leaders, BCBusiness go behind the headlines and bring readers face to face with the key issues and people driving business in B.C.
Issue link: http://digital.canadawide.com/i/526329
158 BCBusiness July 2015 Hub of Activity how will allowing for local settlement of china's currency, the renminbi, change the nature of b.c.'s–and canada's–trade with china? L ★ ★ ★ ★ ★ ★ ★ Doing Business in C h i n a Despite all the talk about china and its importance to b.c.'s trade future, fully three- quarters of BCBusiness readers surveyed between april 20 and May 1—or 459 of the 608 people total—said neither they nor their company currently does business in china. therein lies both a challenge—and also an opportunity—for b.c.-based businesses. Of those surveyed who are doing business in china, it's a mixture of relative newbies (35.6 per cent have been there less than five years) and more experienced operators (another third have been there for five to 10 years, and a final third more than 10 years). and without a doubt, the rising tide is lifting all boats in china, with over 75 per cent of respondents saying that business is growing steadily, or even booming. and of those currently not doing business in china? fully a third of them expected to be doing so within the next five years. W Survey SAyS! ast November, the federal, B.C. and Chinese governments announced the first Americas-based hub for trading Chinese currency, to be established in Vancouver. It was a historic break- through, given that until 2009, the Chinese government prohibited the use of its renminbi ( RMB) in inter- national transactions, with compa- nies doing trade with Chinese firms typically doing so in U.S. dollars. Canada will eventually join just a handful of countries—Russia, Sri Lanka, Vietnam, Thailand, Japan and Aust ralia—t hat will be able to directly settle transactions in renminbi. HSBC Canada's chief economist David Watt says the hub will lower a key hurdle for companies in both Canada and China to trade with each other. "By providing access to trade settlement in renminbi, it opens up the door to other trading partners who may not be big enough to have access to U.S. dollars," Watt explains. "It creates an opportunity to access a range of potential export or trade partners that we didn't have before." The hub should also help expand trade beyond traditional goods and into financial products services. Cana- dian institutions such as pension funds, for example, will for the first time have the ability to buy up to 50 billion yuan ($9.2 billion CDN) in Chinese stocks and bonds directly. "It means that we will be developing products such as savings vehicles or hedging vehicles, and it will create more liquidity for trading the Canadian dollar," says Watt. AdvantageBC's president and CEO Colin Hansen has been working to solidify Vancouver as a key financial centre for trade with China. To him, the hub goes beyond lowering costs for Canadian companies. "It is not just a currency mechanism to service Canada because you can also, through this Canadian pipe- line, do any currency in the world directly into and from renminbi," explains Hansen. "So you can do U.S. dollar to renminbi. You can do Mexican peso to renminbi through the Canadian hub or you can do the Brazilian real directly." For Brazil—the ninth-leading exporter to China—and other countries in the Americas, settling trade through the Vancouver hub would allow them to conduct business without the inconven- ience of dealing with an Asian time zone. For Hansen, that makes this big- ger than a China-Canada trade story and puts Vancouver firmly on the world stage. "It's a real opportunity for Canada to become a financial services gateway between the Americas and China." ■ ★ ★ ★ ★ F u l l s u r v e y r e s u l t s a t B C B u s i n e s s . c a / C h i n a