RMB is rising too fast! Export enterprises are under great pressure and orders are less

category:Finance
 RMB is rising too fast! Export enterprises are under great pressure and orders are less


Fujian Shangfei garment is an outdoor garment enterprise that produces and mainly faces overseas markets. Ms. Liang, the companys relevant person in charge, told the global times on the 18th that the appreciation of RMB exchange rate had a significant impact on the companys business, and the whole industry also generally felt the impact of the rapid rise of RMB exchange rate.

Ye Jinfeng, head of an enterprise that mainly produces tablecloths, shower curtains and other products, told the global times on the 18th that the fluctuation of RMB exchange rate has a great impact on enterprises. Mainly reflected in the price rise, less orders, less profits.. He added that SMEs do not have any hedging plans and can only digest exchange rate differences on their own.

The reduction of orders and the loss of foreign exchange settlement are the common challenges faced by these foreign trade enterprises. When some enterprises receive foreign payment for foreign exchange settlement, due to the rise of exchange rate, the RMB actually received is greatly reduced, which directly affects the enterprise benefit and even leads to enterprise loss. Ms. Liang told reporters, in order to avoid this risk, we have to lock foreign exchange, that is, in the case of frequent fluctuations in the exchange rate, let the bank handle the operation of locking the exchange rate for enterprises..

The reporter also noted that some price sensitive enterprises are usually affected by the appreciation of RMB exchange rate. The staff of a yarn foreign trade enterprise admitted that their prices were usually pushed to a very low level by customers due to the requirements of competition. When enterprises encounter the loss of RMB exchange rate, coupled with the rise of raw materials and shipping freight, the operating pressure of enterprises will increase greatly.

Tan Yaling, President and chief economist of China Foreign Exchange Investment Research Institute, told the global times on the 18th that half of Chinas exports are supported by private enterprises, and their ability to withstand market risks is relatively weak compared with state-owned enterprises and foreign-funded enterprises. The rapid appreciation of RMB exchange rate has indeed brought great challenges to these private enterprises. If an enterprise earns back 1 million US dollars, it can get back 7 million yuan when the RMB exchange rate is 7, but now it can only get back 6.5 million yuan. The profit margin of these enterprises is very low. The rise of RMB exchange rate will suddenly exceed their cost line, and even form a survival challenge for these enterprises.

Different industries have different feelings

According to the data of the General Administration of Customs of China, in October, Chinas exports increased by 7.6% in RMB terms year-on-year, maintaining a continuous positive growth since April. At the same time, the RMB began to appreciate strongly. The trend of RMB exchange rate and export freight index have shown obvious correlation since this year. After Chinas export growth accelerated to a new high of more than a year and a half in October, the China container export freight index of Shanghai air exchange further rose to a new high of more than six years in November, reflecting the strong demand for export orders.

However, in the context of Chinas overall export growth, opportunities for each industry are not equal. According to the data of the General Administration of customs, in the first three quarters, mechanical and electrical products, accounting for 58% of Chinas total export value, increased by only 3.2% year-on-year. However, notebook and home appliances increased by 17.6% and 17.3% respectively. Textile and clothing, which accounted for 20.4% of the total, increased by 5.4% year-on-year, but the export of mask related textiles increased by 37.5%. The export of medical equipment increased by nearly 50% year on year.

Although Chinas export continued to maintain a positive growth, Bai Ming, deputy director of the International Market Research Institute of the Ministry of Commerce, told the global times that the overall export growth, but the performance of each industry is indeed different. Some foreign trade enterprises with low profit will be significantly affected by the RMB exchange rate, while the products that meet the market demand during the epidemic period have good performance, such as epidemic prevention products and tablet computers. Bai Ming believes that exchange rate fluctuation is a long-term market risk faced by foreign trade enterprises, but the recent rapid appreciation of RMB has caught some enterprises off guard. In contrast, the appreciation of the RMB to around 6.5 makes the small and medium-sized enterprises that rely on the price to win a very big challenge. These labor-intensive products will compete in price because of the appreciation of the RMB exchange rate, but they can not compete with some Southeast Asian countries.

The impact of the epidemic may be more long-term

In the face of a stronger RMB exchange rate, the peoples Bank of China has twice stepped in to cool down the market. On October 10, the peoples Bank of China lowered the risk reserve ratio of forward foreign exchange sales from 20% to 0. On October 27, it was decided to gradually fade out the counter cyclical factor in the RMB / USD middle price quotation model. In addition, Tan Yaling told the global times that the state can support small and medium-sized enterprises in exchange rate management, because banks have many corresponding products in terms of foreign exchange locking.

Compared with the short-term impact of RMB exchange rate, the impact of the epidemic is more long-term. Shanghai Xuande International Trade Co., Ltd. mainly exports cable products for overseas infrastructure projects. Mr. Bi, the head of the company, told the global times on the 18th that their products were not affected by the RMB exchange rate as the export of daily consumer goods, and customers did not care much about the price changes caused by exchange rate fluctuations. What really worries him is that the epidemic will cause the overseas market to shrink. The infrastructure projects of some overseas customers may be compressed. At that time, our exports will be greatly impacted, and the real impact may appear next year or the following year.. Zuo Qianyi also said that although the RMB broke through 6.5, the actual impact on them was not very great, and peoples expectations and confidence in the future economy were more important. Getting out of the haze of the epidemic as soon as possible is the spring of industry, she sighed. Source of this article: Chen Hequn, editor in charge of global network_ NB12679

Compared with the short-term impact of RMB exchange rate, the impact of the epidemic is more long-term. Shanghai Xuande International Trade Co., Ltd. mainly exports cable products for overseas infrastructure projects. Mr. Bi, the head of the company, told the global times on the 18th that their products were not affected by the RMB exchange rate as the export of daily consumer goods, and customers did not care much about the price changes caused by exchange rate fluctuations. What really worries him is that the epidemic will cause the overseas market to shrink. The infrastructure projects of some overseas customers may be compressed. At that time, our exports will be greatly impacted, and the real impact may appear next year or the following year..