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The company is not a household name outside China and probably not much beyond its home base of Hangzhou, a city in eastern China.
But it recently signed up United Overseas Bank in Singapore to handle its cross-border renminbi cash management, to support expansion beyond China.
Lin Jianhua, Sanchuan chief executive, says the Singapore bank approached his company when it learnt that the hydropower group was looking to extend its operations.
“Recognising that we needed to enhance our cross-border liquidity flow, UOB shared with us their strong understanding and insight on China’s financial liberalisation and RMB internationalisation trends, as well as on offshore RMB regulations,” Mr Lin says.
UOB, Singapore’s third-largest bank by assets, has particularly strong connections with ethnic Chinese business in the region, as it traces its roots back 80 years to the Straits Chinese, or Peranakan, who settled in Southeast Asia in the late 19th century.
It is now acting as intermediary for a next wave of outbound Chinese businesses such as Sanchuan and doing so by offering renminbi banking services as Singapore’s role as an offshore renminbi centre grows.
Sam Cheong, head of the foreign direct investment advisory unit at UOB, says almost half the companies that the bank helps expand into Southeast Asia are from China. “Increasingly, we are seeing more of them use renminbi as a settlement currency.”
In June, UOB established a “renminbi solutions team” to help companies better manage their cross-border business in the Chinese currency.
While Hong Kong remains the dominant offshore renminbi centre, China has appointed renminbi clearing banks in Singapore, London, Luxembourg and Taipei and other locations, at the same time agreeing currency swap lines with other central banks and handing out renminbi quotas.
When it comes to handling global payments in the Chinese currency, the addition of other countries on top of market leader Hong Kong as renminbi centres boosted the share of collective activity by such hubs to 25 per cent of total activity in February. According to Swift, the clearing system, this was up from 17 per cent in February 2013.
While that may create an impression that each centre is competing for a slice of offshore renminbi action, the example of Sanchuan shows that each hub is fulfilling different roles and that they are not necessarily competing directly with each other, even as the total pie is growing.
Singapore, for example, is building itself up as a regional treasury centre for multinational companies, as well as companies emerging from within the Association of Southeast Asian Nations (Asean) and expanding beyond their home markets.
It is also vying with Hong Kong for pole position as Asia’s largest wealth management centre.
“Singapore provides a lot of hedging and liquidity solutions for corporates and is developing wealth management products catering for the potential opening up of overseas outbound investment for Chinese investors,” says Candy Ho, global head of renminbi business development, markets, at HSBC in Hong Kong. “Each of these centres serves different purposes.”
The renminbi has outstripped the Japanese yen, the US dollar and the Hong Kong dollar as the main currency for payments between China and the rest of the Asia-Pacific region over the past four years, according to data from Swift published in May.
The Chinese currency was used in January-April for 31 per cent of payments between China (including Hong Kong) and the rest of the Asia-Pacific region, up from 7 per cent back in April 2012, Swift says.
Singapore is increasingly seen as providing a conduit for use of the renminbi in Southeast Asia, building on the Asian city state’s position as a regional entrepot since the 19th century.
Meanwhile London, the world’s largest foreign exchange trading hub, has carved out a role as a big renminbi FX trading centre. In its latest half-yearly survey of the British capital as a renminbi centre, the City of London Corporation found “particularly strong growth” in FX-related businesses in 2014.
Overall trading volumes more than doubled last year, up 143 per cent, from 2013, with average daily volumes reaching $61.5bn, nearly six times as large as those reported in the Corporation’s first survey in 2011.
According to the British Consulate in Hong Kong, London accounted for 42 per cent of all FX trading in renminbi by the third quarter of 2014, compared with 31 per cent at the end of 2013. This equals the share of such trades taking place in Hong Kong.
In Taiwan, interest in the renminbi is largely domestic, focusing on the needs of insurance companies for longer-dated borrowing using so-called Formosa bonds, denominated in renminbi.
But the underlying trend is clear. Internationalisation of the renminbi is being driven by the growing number of offshore centres other than Hong Kong.
Just as in the case of Sanchuan, that process is bringing to light some unexpected players. Recent data from Swift show that the renminbi is starting to be used in South Africa, a country hitherto scarcely known for this.
The amount of payments in the Chinese currency has jumped by a third in the past 12 months and by 191 per cent over the past two years. According to Hugo Smit, head of Africa south at Swift: “The rise of renminbi usage in South Africa is another good indicator of the cross border use of the currency.”