Canadian Companies Trail Peers in Using Yuan, HSBC Says

Canadian companies are the least likely of peers from 11 nations to use the yuan to settle transactions with Chinese firms, missing out on cost savings from using the currency, according to HSBC Holdings Plc.

In a survey of “business decision makers” from 11 countries, 5 percent of Canadian companies said they conducted trade with China in the local currency, HSBC Bank Canada said in a release. That compared with 22 percent of companies globally and 17 percent of U.S. respondents, HSBC said.

The survey found 55 percent of Chinese businesses would offer discounts of as much as 5 percent to trading partners settling in the yuan, the bank said. China is Canada’s second-biggest trade partner, according to data compiled by Bloomberg.

A representative of London-based HSBC is co-chairing a committee of Canadian banks looking into establishing North America’s first trading hub for the Chinese yuan in Canada. Canadian Finance Minister Joe Oliver said last month the country has held preliminary talks with the Chinese government about establishing the hub. There has to be enough trading activity to merit it, he said.

Cities around the world are racing to establish trading centers for the yuan, which HSBC said in March surpassed the euro last year to become the most widely used currency in trade finance after the U.S. dollar. China has already signed agreements to trade the yuan more freely with Singapore, London, Frankfurt and others as part of an economic restructuring that includes taking steps to loosen exchange controls.

HSBC said its survey found 74 percent of Canadian companies expect to increase trade with mainland China in the next 12 months, compared to an average of 59 percent among respondents from other nations. Many Canadian businesses don’t perceive the benefits of settling trades in yuan, also known as renminbi, the bank said in its statement.

Along with Canada, the survey covered companies from the U.S., Germany, the U.K., France, the United Arab Emirates, China, Hong Kong, Taiwan, Singapore and Australia.