Trading with China: Why cross-border transactions hit your bottom line
Hong Kong’s businesses have strategic advantages when it comes to cross-border trade. Not only is Hong Kong one of China’s largest export markets, it also has a bilateral trade agreement with the mainland.
But some of that strategic advantage has been ceded to an unnecessary foe – outmoded payment management. According to recent research, the hidden cost of facilitating cross-border transactions can have a significant impact on a business’s cashflow, especially for Hong Kong’s companies.
The Navigating China’s Cross-Border Payments, Opportunities and Challenges for Hong Kong Businesses survey recently conducted by American Express (AMEX), uncovers the ‘true’ cost of these payments. The survey’s authors found more than half of all payments between Hong Kong’s small and medium-sized enterprises (SMEs), and mainland China, still use old-fashioned cross-border payment methods. These include telegraphic transfers (89%), cheques (67%) and banker’s drafts (61%).
These payment methods appear to be the cheapest available but they mask hidden costs. Businesses using these methods not only pay more, but they also miss out on advantages and risk reduction opportunities inherent in digital processes, such as e-fund transfers.
Additionally, the research revealed another slug to the bottom line of smaller enterprises – longer cash conversion cycles. Technology can help reduce hidden costs and offers solutions that can reduce transaction pain points, in addition to streamlining the entire transaction process.
To obtain your copy of the American Express Navigating China’s Cross-Border Payments, Opportunities and Challenges for Hong Kong Businesses survey please download the survey here.