Icandy Trading - Development of the renminbi - Episode 1 - Hsbc now

China is the world's second biggest economy. Its growth has been the story in world trade. The country's currency, the renminbi, hasn't kept up, but that's changing fast. I'm Joana Negrao, part of the HSBC Commercial Banking team in London. To tell the story of how crucial the renminbi is becoming in world trade, I've come to Biggleswade, in Southern England. We do all the design engineering here in the UK and then all the manufacturing is done in China. Has this relationship with China evolved along the years? Yes, most definitely. In addition to the registration of our own company there and employing a whole team, we are now also selling into China, so we have a distributor who is distributing the iCandy range of products throughout China. The heart of iCandy's manufacturing operation is here in the Guangdong province. We are producing strollers for ourselves, iCandy, from the plastics, to metal parts, to the sewing parts. Everything is assembled in this area. How are you paying your suppliers in China? We are paying now in RMB, but before we were paying in dollars. iCandy have been aware that the RMB was going to become a much more significant player in the currency market. Having opened a current account in RMB, iCandy looked at potential opportunities and benefits that trading in RMB would bring them. They've been able to negotiate strongly with their supplier base by taking away the currency risk that they had against the US dollar. iCandy are using the renminbi to run their operations in China as efficiently as possible, but now iCandy don't want to just spend in renminbi, they also want to earn renminbi, and they will do so by selling their products in the shops and boutiques of Shanghai. iBaby has been promoting iCandy in the Chinese market for three years in Shanghai, Beijing, Tianjin, Chengdu and Nanjing. The market response is quite good. It should become the top brand in China. iCandy looks attractive and trendy. The Beckhams use it as well! When we use it in the streets, it's like pushing the BMW of prams. So, Warren, as you go full circle with the currency do you see the company accumulating reserves in renminbi? We can hold the RMB and we can pay more and more suppliers with the RMB, which, as we said earlier, is stability with our suppliers that we can pay them with the RMB. So getting it from our customers, paying our suppliers, it's much more stable for all of us. It also means that we're staying in the one currency and not having to switch through different currencies with all the exchange rate implications that that has. What role do you see the renminbi playing in the future of iCandy? I think with the future of China looking so bright, there's no doubt that it's just going to become a more important currency. I think it's the way of the future for China, for the world and for iCandy. People like Bradley and Warren are part of this new global trend of thousands of companies that decided to embrace the renminbi as one of the currencies for their future growth. As the government eases the restrictions on the currency, buying from China will mean paying in renminbi, and selling into this huge market will mean earning in renminbi. No wonder economists say that the renminbi is going to be one of the top trading currencies by 2015.