Richard was recently hosted at the Global From Asia podcast, run by Mike Michelini. Global From Asia helps companies with their business in Asia. Their services range from company formation in China and Hong Kong to business insurance and tax advice.
For anyone interested in business with China, The Global From Asia podcast is an invaluable source of knowledge and I’d highly recommend it. It’s full of practical information on various topics with experts in respective industries.
Listen to the Global From Asia podcast on cross-border payments
In the latest podcast, Richard and Mike discuss cross-border payments for businesses. Richard talks about how he got into the payments business, before going on to discuss with Mike the state of the international payment system. Mike’s not a stranger to payment issues with China and was pleased to be able to dig deeper into the reasons behind why some of his payments were getting bounced or delayed.
We’ve prepared a special offer for listeners of the podcast, so be sure to check it out! You can listen to the full podcast below 👇🏻, or you can pick it up on iTunes for your commute to work. Of course, it’s also available on the official Global From Asia site, where you can also find some extra materials (link).
Cross Border Summit
Continuing our work with Mike, we’ll be speaking at the Cross Border Summit on April 16th in Shenzhen. This event is unmissable for small business owners selling from Asia. You can learn more about the event here. Look forward to seeing you there!
Chinese people are now back to the work from a week full of celebrations of the new Year of the Monkey.
Recently all eyes are on China. Just a few weeks ago it was made official — the Chinese economy grew by 6.9%, making it the slowest growth in the last 25 years. Doubts are forming about China’s future.
Some economists say we are heading into the next world crisis, fuelled by market turmoil in China and low oil prices.
But, before we dive into predictions for the “monkey” year, let’s have a look at how the “goat” did.
2015: China as a Global Player
For the first time, China took an active role in the United Nations (UN). Xi’s speech at the UN about China’s intentions in international affairs has sent a promising message. Then, the climate conference in Paris confirmed Chinese ambitions to fight pollution and become a “green” leader.
Yuan joining exclusive club
Upgrading the Chinese currency to reserve currency status by the International Monetary Fund was another milestone for China. The Chinese yuan has joined an exclusive club of the world’s most important currencies. This was an important step towards positioning the yuan as a competitor to the US Dollar, but the impact on short-term demand for the yuan is questionable.
China goes global
President Xi Jinping travelled a lot in 2015. One of the most important visits of the past year was to the United States. Relations between China and USA have cooled in the recent years so the meeting was not going to be an easy one. The list of discussed topics included thorny issues like cyber security and military relations.
During Xi’s visit to the UK, both sides focused on the positives of the relationship. British support for the Chinese role as a global superpower had been indicated earlier in the year when the UK became the first major Western country to apply to join the Chinese-led Asian Infrastructure Bank.
Xi was given a red carpet welcome, and lots of proclamations were made about the new “golden era” in China-UK relations. In the Chinese state media the trip was reported for several weeks, announcing one big deal after another.
But “Big Daddy Xi” didn’t stop there. The president was trying to repair relations with the neighbours, notably with the Philippines and Vietnam. In Pakistan, he negotiated some major economic projects and he also found time for a groundbreaking meeting with Ma Ying-jeou in Singapore in 2015.
China Scares the Markets
2015 saw China continuing with its reforms, opening up further to the world. We saw an indication of a more market-based pricing mechanism for the yuan on 11th of August. In a move which many see as signalling intent, we saw the biggest one-off devaluation of yuan in 20 years. Chinese currency weakened by 2% against US dollar.
Most of the mainstream media accused China of manipulating its currency to boost exports, but that is misleading. Opening up the currency was in line with China’s plan to internationalize the yuan. Unfortunately, reform was met with many people selling the Chinese currency when they had the chance. That led to the massive capital outflows.
Supply exceeded demand and the Chinese yuan depreciated. In the following days, China rushed to stop it by having the People’s Bank of China buy the yuan wholesale to prevent further depreciation. It sold around 200 billion USD from its foreign exchange reserves to calm the markets.
Moving from a very strict domestic monetary policy to a more flexible international one was not going to be easy. The Year of the Goat certainly saw some growing pains. But in the long-term, the yuan will be more freely traded and things will settle down. And if Beijing gets its way, it may even begin to challenge the USD as the primary currency for global trade.
From One-Child to Two-Child Policy
All couples have been given green-light to have two children since late 2015. Famous one-child policy, introduced in the late 1970s, is now officially over. The change of policy was necessary. China needs to balance population development with the challenge of an ageing population and male — female imbalance.
On Chinese New Year’s Eve, Chinese families get together to celebrate Chinese New Year. The celebrations look similar to the New Year celebrations in the West. People eat, drink and watch New Year TV programs together.
One key difference though is Lucky Money. During Chinese New Year’s Eve, people gift money to each other in red envelopes (红包). Each envelope contains a certain amount of money (the amount depending on how generous the giver is feeling!). The red colour of the envelope is associated with luck and good fortune in China.
Nowadays, the physical red envelope is not the only way to surprise friends and family.
Red Envelope with “lucky” new 100 RMB banknotes | Remitsy’s picture
Popular Chinese message app WeChat now has an option for sending Red Envelopes. It even has a cool function that allows you to randomise the amount received for each person in a group. During the Chinese New Year it is not uncommon to see people staring at their smartphones as they wait impatiently to snap up Red Envelopes being sent on their various groups!
Innovation in consumer payments is present even during this significant day of Chinese families.
But not all numbers are equal. For example, many Westerners are superstitious about the number 13. Similarly in China, people are sensitive about number 4 (sì 四), because it sounds like the word for death (sǐ 死). As a result, it’s better to avoid an amount with a four in it.
Turbulent Year of the Monkey Ahead
The beginning of 2016 suggested that this year won’t be an easy one for China. After double-digit losses in the first week of the Chinese stock market of 2016, the following week experienced further steep sell-offs. Over the first month of trading, shares in Shanghai fell about 22% and Shenzhen stock market was down by around 24%.
It’s not all doom and gloom over here, though. China seems to have conviction in its intention to internationalize the yuan, and we can expect yet more positive monetary reforms this year. The ambitious One Belt One Road project is gathering steam too. This will likely lead to some very exciting opportunities for European businesses that wish to cash-in on China’s infrastructure projects in Central and South-East Asia.