LONDON, February 27, 2012 /PRNewswire/ --
Western Union Business Solutions, a business unit of the Western Union Company (NYSE:WU), a leader in global payment services, today released new research showing UK importers are costing themselves £180 million pounds in unnecessary fees by not paying Chinese trade partners in renminbi (RMB).
The study surveyed 1,000 Chinese businesses on their experiences in dealing in the RMB. The results show that more than one third (36%) would rather be paid in RMB, with 23% of those asked naming exporter convenience and reduced forex risk as the main drivers for this preference.
Despite this appetite, however, 91% have not seen an increase in RMB payments. Perceived buyer reluctance was the main reason attributed to this number, with over 50% naming client inconvenience (33%) and difficultly obtaining RMB (20%) as the cause.
One in five of those surveyed also said the reluctance of their customers to pay in RMB forced them to add, on average, 3% in fees to protect against currency fluctuation risks.
Another result of this reluctance is a clear hesitance on the part of Chinese companies to speak about RMB settlement with their buyers and risk being rebuffed; 42% of the businesses who have a clear preference for renminbi payment have never even asked to be paid in their native currency.
Neil Graham, Regional Divisional Director, UK, for Western Union Business Solutions, said:
"What we are seeing here is a lack of education among UK importers about renminbi and how easy it has recently become to conduct trade with it. Businesses are used to paying in USD and are unaware of the vast amount of money their reluctance to change their approach is costing them."
"The number of Chinese companies conducting business in RMB will continue to grow and the renminbi's ongoing liberalisation means Chinese exporters will increasingly demand payment in their local currency. Savvy businesses in the UK and Europe who change their approach to cross-border payments and trade in RMB will benefit from improved trading terms and relationships with their Chinese suppliers; those who do not will be behind the curve."
The markets seen as most reluctant to pay in RMB are the USA (42%), Europe (23%) and South East Asia (13%), with Japan (8%) and Australia (2%) seen as less unwilling.
Among the companies that have been successful in billing their trading partners in RMB, 79% say they are happy using the currency to settle international business.
Graham continued: "The problem here is lack of communication. Companies outside of China are not aware there is a real appetite among Chinese businesses for renminbi payments. Coupled with Chinese suppliers' hesitation to ask for RMB in the face of perceived buyer reluctance, particularly in Europe and the US, and you get a no-win situation. If British businesses, however, were to break this cycle and offer to pay in RMB, it would strengthen their relationships with their Chinese suppliers and give them a competitive advantage in the Chinese marketplace.
Trading in RMB will also save them money, reducing their exposure to hidden fees while improving transparency, cost management and efficiency."
Western Union Business Solutions, which recently acquired Travelex Global Business Payments, is dedicated to helping UK businesses understand FX and manage their cross-border payments. It was the first non-bank to offer businesses the ability to make direct renminbi payments into China through its GEO Global Clearing network, which provides easy access for a wide range of small businesses and corporations who previously had to rely on a relatively small number of major banks.
Notes to Editors:
About Western Union Business Solutions
Western Union Business Solutions enables companies of all sizes to send and receive international payments and manage foreign exchange, creating unique solutions tailored to suit their FX needs. Western Union recently acquired Travelex Global Business Payments and is a leading nonbank provider of cross border payments, operating its Business Solutions services through locally licensed affiliates in 23 countries. Supported by a network of trading offices, strategic banking relationships and a global clearing network, businesses can send cross-border payments in more than 140 currencies. © 2012 Western Union Holdings, Inc. All rights reserved.
Western Union Business Solutions services in the UK are provided by Custom House Financial (UK) Limited or Travelex Global Business Payments. Custom House Financial (UK) Limited (registered in England, Company Number 04380026, Registered Office Address: 2nd Floor, 12 Appold Street, London EC2A 2AW) is authorised by the Financial Services Authority under the Payment Services Regulations 2009 (Register Reference: 517165) for the provision of payment services and is registered as an MSB with HM Revenue & Customs (Registered No: 12140130). Travelex Global Business Payments Limited (registered in England, Company Number 02854737, Registered Office Address: 65 Kingsway, London, WC2B 6TD) is authorised by the Financial Services Authority under the Payment Services Regulations 2009 (Register Reference: 536611) for the provision of payment services and is registered as an MSB with HM Revenue & Customs (Registered No: 12122416).
"Travelex" is a registered trademark of Travellers Exchange Corporation Limited and is used by Travelex Global Business Payments Limited and its affiliates under license
About Western Union
The Western Union Company (NYSE: WU) is a leader in global payment services. Together with its Vigo, Orlandi Valuta, Pago Facil and Western Union Business Solutions branded payment services, Western Union provides consumers and businesses with fast, reliable and convenient ways to send and receive money around the world, to send payments and to purchase money orders. As of December 31, 2011, the Western Union, Vigo and Orlandi Valuta branded services were offered through a combined network of approximately 485,000 agent locations in 200 countries and territories. In 2011, The Western Union Company completed 226 million consumer-to-consumer transactions worldwide, moving $81 billion of principal between consumers, and 425 million business payments. For more information, visit http://www.westernunion.com.
1. Western Union Business Solutions' research found that one in five Chinese exporters added an average of three per cent in fees or surcharges to account for FX risk associated with receiving $USD payments. Based on HM Revenue & Customs figures for 2011, there was £30.2 billion worth of merchandise imports from China into the UK. On this basis the value of FX related fees charged by Chinese exporters is approximately £180million, or three per cent of the value of one-fifth of UK's total imports from China.
SOURCE Western Union Business Solutions