However, an expected slowing in future take-up of the Chinese currency in Singapore, coupled with revenue-hungry businesses from the United States, Europe and the Middle East – who see the yuan as a tool to gain market share in China – could threaten Singapore companies' trade and business activity in the world's second-largest economy, the report said.
The HSBC RMB Internationalisation Study is an annual survey involving 1,600 decision makers from companies in various markets that conduct business with or from China. The survey, conducted by Nielsen between May 23 and July 5, garnered responses from 100 businesses in Singapore.
The report found that yuan usage by Singapore corporates nearly doubled from 15 per cent last year, surpassed only by China, Taiwan and Hong Kong. The primary drivers for using the yuan, both in Singapore and globally, was to manage foreign exchange risk and requests from trading partners.
Conversely, Singapore corporates were also reported to be the most likely to believe that they can gain a financial advantage (53 per cent compared to 40 per cent global average) or relationship advantage (52 per cent compared to 44 per cent global average) over competitors who are not using the yuan.
"The yuan could be a possible sales angle for Singapore corporates who are looking to expand their reach in China," the report said.
However, the report also found that the pace of adoption by Singapore corporates is expected to taper in future, possibly owing to its current prevalence.
Among the current non-users, 28 per cent expect to use the yuan in future, compared with 32 per cent of non-user respondents last year, the report showed.
"Yuan usage almost doubled here as opportunistic Singapore corporates recognised value in the currency and were agile in adopting it.
However, there are signs of a tapering in the short-term as fewer non-users expect to start using the yuan for cross-border activity compared to a year ago," said Mr Steven Cranwell, head of commercial banking, HSBC Singapore.
The report also finds that non-Asian international companies are beginning to see the yuan as a sales lever to gain more business in China.
According to the report, a key driver for corporates outside of Asia – Europe
(48 per cent), Middle East and North Africa (77 per cent), and North America (50 per cent) – for using the yuan is to drive cheaper or more competitive pricing.
Mr Cranwell added: "While some Asian corporates have already established a rhythm of using the yuan over the past few years, international corporates from other regions looking to do business with China could benefit from adopting a yuan strategy with China clients and suppliers."
China's yuan joined the International Monetary Fund's (IMF) basket of reserve currencies on Oct 1, in a milestone for the government's campaign for recognition as a global economic power.
The inclusion of the yuan into the IMF's special drawing rights basket – which also contains the US dollar, the euro, the yen and British pound – will be a further boost to the use of the yuan for the payment of international transactions, analysts have said.