Businesses in Hong Kong are capitalizing on expanded yuan banking services. The new deal, signed between the People's Bank of China and the Hong Kong monetary authority, broadens services to include corporate clients. And retailers are enjoying the windfall.
This is the North Cape area in downtown Hong Kong. Most of the shops on the street have put up signs accepting payment in Renminbi. Sun Weiguang, a 30-year old Hong Kong native, owns a store selling dried seafood. He receives several thousand yuan in payment from customers every day.
Sun Weiguang, one shop owner said "Previously, we did not accept Renminbi. It was only after 2005 that we allowed payments in yuan."
The change came in 2003, after the introduction of the individual traveler scheme on the Chinese mainland. Since then, the mainland has become the biggest source of tourists to Hong Kong, accounting for over half of Hong Kong's travel market. Currency exchange outlets initially cashed in on the opportunity. But retailers soon began to accept Renminbi notes to attract mainland customers.
Sun Weiguang said "The Renminbi is quite safe now. Most of the shops accept yuan payments, except for small businesses like newspaper stands. After receiving Renminbi, we save it in the bank."
In 2004, branches began taking Renminbi deposits from individuals after 15 years of service-suspension. Also booming are yuan-related financial tools available at local banks.
In January 2007, the Renminbi exchange rate against the U.S. dollar surpassed that of the Hong Kong dollar for the first time. This led to a psychological turnaround in Hong Kong. The Renminbi is now an increasingly popular choice in the property portfolios of Hong Kong investors.
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