The renminbi is well on its way to internationalization. This is no pipe dream, but is fast becoming a reality, and that is no truer than in Hong Kong, the world’s largest off-shore renminbi market. The latest 2018 Personal Finance Monitoring study published by Nielsen Hong Kong says the number of renminbi time deposit accounts more than doubled, from 10% to 21%, over the past two years, and the proportion of the affluent population – those who have liquid assets worth more than $HK1 million – having such accounts reached 37%.
The largest off-shore renminbi market is strongly connected with the on-shore market, mainland China. The connection is not only geographical but also economic, as Hong Kong is a part of the Greater Bay Area initiative.
The Greater Bay Area initiative was introduced in China’s 13th Five Year Plan (2016-20). This initiative aims to integrate Hong Kong, Macau and nine cities in Guangdong province to develop the region to enhance connectivity, capital and talent flow as well as expand regional cooperation and growth. Ultimately the region will be developed to be an integrated economic hub, the heart of a network of supply chains as well as a world-class high-tech innovation centre.
Business potential waits to be unlocked in Greater Bay Area
The business potential of the area is undoubtedly tremendous: Its overall GDP is about $US1.36 trillion^, which represents 12% of the GDP of the country, equivalent to that of Australia. In addition, the Ministry of Culture and Tourism of the People’s Republic of China says there were about 36 millions overnight visitor stays in Guangdong last year, with about 22 million (roughly 60% of the visitors) from Hong Kong, representing 4.7% growth compared with the previous year.
“As the Greater Bay Area initiative continues to gain momentum, Nielsen expects that in the near future more Hong Kong residents will travel to Guangdong for both business and leisure. A growing number of businesses of various kinds, as well as personal activities, are envisaged in the region, and banking and financial organizations in Hong Kong and mainland China will benefit from the rise of e-payments and the growth of cross-border banking needs,” said Michael Lee, Managing Director, Nielsen Hong Kong and Macau.
Growing trend of e-payments
Personal Finance Monitor 2018 reveals that most visitors from Hong Kong who travel to the Greater Bay Area still use cash (93%) for their day-to-day activities in the area. Nevertheless, the business potential of digital payment methods should not be overlooked. Payment by credit card is also common. About one-third of the Hong Kong visitors (34%) have used credit cards to settle payments in the Greater Bay Area. This payment method is more common among millennials and Generation X.
The report also shows that mobile wallet has become increasingly popular in the Greater Bay Area. About 20% of Hong Kong visitors in the area have used this method, according to Nielsen Personal Finance Monitor. Such use is higher among Generation Z and millennials. The use of mobile wallet is expected to continue growing.
Growing banking needs in the Greater Bay Area
“The Greater Bay Area is creating an international economic powerhouse, and Hong Kong banking and financial institutions should capitalize on this valuable business opportunity. Currently just a quarter of Hong Kong visitors (26%) have used different kinds of banking products and services in the area. The ownership of banking products and services is higher among millennials (34%). Growing demand for banking and financial services is expected in the area, and financial institutions are well advised to tap into this rich vein by developing products and services there,” Lee suggested.
^ Sources: news.gov.hk
ABOUT NIELSEN PERSONAL FINANCE MONITOR
Nielsen Personal Finance Monitor 2018 is a syndicated study that provides financial institutions with the most comprehensive understanding of the personal finance market. The study aims to monitor the ever-changing personal finance market and to provide holistic views on consumers’ personal financial status. The study covers more than 1,000 respondents from Hong Kong aged 18 to 64 with a sampling error of 3.1%. The data were collected through online interviewing in May 2018.
Nielsen Holdings plc (NYSE: NLSN) is a global performance management company that provides a comprehensive understanding of what consumers Watch and Buy. The company’s Watch segment provides media and advertising clients with Nielsen Total Audience measurement services across all devices where content – video, audio and text – is consumed. The Buy segment offers consumer packaged goods manufacturers and retailers the industry’s only global view of retail performance measurement. By integrating information from its Watch and Buy segments and other data sources, Nielsen provides its clients with both world-class measurement and analytics that help improve performance. Nielsen, an S&P 500 company, has operations in more than 100 countries that cover more than 90% of the world’s population. For more information, visit www.nielsen.com.