2011-01-20 21:18

HONG KONG - Over one-third of small and medium-sized enterprises (SMEs) in Hong Kong have settled cross- border trade in renminbi (RMB), according to an HSBC survey released on Thursday.

The latest HSBC Small Business Confidence Monitor revealed that 37 percent of SMEs in Hong Kong have settled cross-border trade in RMB. The figure is expected to grow to 50 percent within the next 12 months.

The survey, conducted from October to December 2010, showed that three-quarters of Hong Kong SMEs are either holding or intend to hold RMB deposits, with 87 percent of them holding below 500, 000 RMB

Meanwhile, about 70 percent of Hong Kong SMEs who are holding RMB deposits are planning to increase their RMB holdings.

"The number of businesses completing cross-border RMB trade settlement and holding RMB deposits accounts in Hong Kong is rising clearly," said Albert Chan, head of Commercial Banking Hong Kong, HSBC.

"The survey results also show that while emerging markets have been more open in adopting RMB trade settlement, developed markets are only now beginning to see the potential."

Analyzing the survey results, Jonathan Moore, HSBC's Global Head of Business Banking, added: "It is particularly interesting to see SMEs across the globe show such a strong interest in expanding internationally."

The number of SMEs across the globe conducting international business activities is expected to expand from 29 percent nowadays to 40 percent by 2013. As to Hong Kong market, about 40 percent of Hong Kong SMEs are international-focused. This segment is expected to grow to 45 percent over the next two years.

"As the local businesses become international, they will use more RMB to trade, but this takes some time," Chan said.

The majority of businesses in Hong Kong considered "foreign currencies" and "risks associated with overseas partners" as their top concerns related to international business, according to the survey.

The semi-annual HSBC Small Business Confidence Monitor was conducted by research agency TNS for HSBC Commercial Banking to gauge the six-month outlook of SMEs on local economic growth, capital investment plans and recruitment, covering more than 6,300 SMEs across 21 markets in Asia, the Middle East, Europe, North America and Latin America.