Steps to move to RMB trade settlement

steps to move to RMB trade settlement_slide 13_advantageBC_v2

The documentation process for sending an RMB payment is not unlike sending a payment in any other currency. The documentation process may vary between institutions but it includes three basic steps:

  1. The payment must be for trade-related purposes. Your bank may require you to fill out a template or ask for a copy of an invoice as part of its verification process.
  2. The payment beneficiary must be able to receive cross border funds.
  3. It is important to get the full details of your Chinese beneficiary, including the official name of the company and its address; it is also very helpful to have the beneficiary’s name in Chinese characters.
  4. To receive funds in RMB – follow the steps that are provided by your corporate banking contact.

Scenario 1: The RMB Clearing Cycle – Canadian Exporter

With Canadian RMB Offshore Clearing

  1. Chinese importer remits RMB payment for Canadian goods through its bank to a bank in Canada with access to RMB clearing.
  2. RMB clearing bank converts and submits payment to Canadian exporter through its bank.
  3. Canadian exporter delivers goods to Chinese importer.

RMB Clearing Cycle

 

  • Exporter benefits from improvement in funding terms.
  • Exporter reduces costs to customer on currency premium from a more efficient conversion.
  • Exporter has access to more Chinese customers – essentially the whole market.

 

Scenario 2: The RMB Clearing Cycle – Canadian Importer

With Canadian RMB Offshore Clearing

  1. Canadian importer remits CAD payment for Chinese goods through its bank to a bank in Canada with access to RMB clearing.
  2. RMB clearing bank converts CAD to RMB and submits payment to Chinese exporter through its bank.
  3. Chinese exporter delivers goods to Canadian importer.

RMB Clearing Cycle_Importer

  • Importer benefits from improvement in funding terms.
  • Automatic extension of payment terms up to 210 days.
  • Importer saves costs on currency premium from a more efficient conversion.
  • Importer has access to more Chinese suppliers – essentially the whole market.

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Did you know?

  • You may be eligible for a refund of BC corporate tax on income from international business activities.
  • Vancouver is among the top-10 wealth management centres in the world.
  • All five of Canada’s largest banks have significant operations in BC.
  • BC has some of the lowest corporate taxes in North America.
  • BC has a lower tax rate than Hong Kong and Singapore.