RMB Appreciation, Foreign Enterprises Start Survival Contest

The continuous exchange rate of RMB has only been one step away from the 7 pass of the integer.

This year, in the 3 month period, the appreciation of RMB has risen to more than 4%, which exceeds the level of 2006, and is equivalent to the appreciation rate in the first 8 months of 2007.

If domestic enterprises have gradually realized the negative effects of RMB appreciation in 2006 and 2007, then the traditional industries with advantages of textile, clothing, electronics, furniture, footwear and other industries in 2008 are undoubtedly being tested by unprecedented survival. Some people in the industry even use the "speed of life and death" to describe the severe challenges faced by these industries.

If the intermediate price of the exchange rate breaks through the integer mark of "7", it means that the RMB appreciation has been nearly 16% since the exchange reform in July 2005, which will bring a large number of enterprises including textile, electronics, furniture, light industry and other industries to the brink of extinction.

The more you sell, the more you will lose.

From the first half of last year, he told reporters that "little impact". Recently, he shouted "the situation is grim". The heads of several export divisions of Yiwu small commodity city witnessed the "thrilling" export situation of clothing, toys and other commodities over the past year.

As early as the first half of last year, when journalists investigated the status of Zhejiang export enterprises, many enterprises in Hangzhou and Yiwu said that although the exchange rate had a certain impact on their business, the normal operation was still not too big.

But when the time turns to March 2008, the RMB exchange rate points to the 7 pass, the majority of these owners can no longer find the ease and optimism at that time.

"Many factories are reluctant to supply to us and overseas. The meager profits are letting them gradually abandon some overseas markets." for us, the normal procurement business can be maintained, but some toys, shoemaking and garment factories may have been "uncovered", a head of the export division of Yiwu commodity city told reporters.

The cost crisis and price crisis brought about by the appreciation of RMB are eroding the profit margins that these enterprises have already had.

The research results of the China Textile Industry Association in 6 provinces in Shandong, Jiangsu, Zhejiang, Guangdong, Hebei and Fujian have shown that in the case of RMB appreciation, raw material and labor costs rising and export tax rebate reduction, 2/3's profit margin is only 0.62%, while other 1/3 enterprises occupy 80% of the whole industry, but the gross profit margin is only 6% to 10%.

According to the research data, the total profit of the textile industry will decrease by 2% to 6%, and the export growth rate will slow down by 0.3 to 0.4 percentage points every 1% appreciation.

In fact, the export pressure brought by the appreciation of the renminbi has been revealed in recent relevant data, and many enterprises are losing interest in export trade.

In February, trade data showed that China's exports to the US textile and clothing amounted to 1 billion 386 million US dollars in that month, and the negative growth of -17.60% appeared.

Exports of textiles and clothing were US $524 million and US $862 million, respectively, which declined by 8.23% and 22.41% respectively compared with the same period last year.

Some industry analysts say that the pressure on the rapid appreciation of the renminbi this year is not only in the clothing, toys, footwear industry, but also in the electromechanical, furniture and electronics industries.

Whether to turn left or right, pformation or abandonment and how to avoid exchange rate risk are becoming a difficult problem in front of these industries.

The west is not bright.

Chen Deming, Minister of Commerce, said in his early 2008 work report that "optimizing the structure of import and export, maintaining the basic stability of export policy and focusing on expanding internal consumption" have been identified as the focus of the Ministry of Commerce this year.

And these development directions are becoming new business strategies adopted by many enterprises.

All along, many domestic export-oriented manufacturing enterprises believe that full rational industrial upgrading is actually a short-term hope that is hard to achieve. In the long run, the pformation of products and industry strategy is imperative, but in the short term, it is obvious that some of them are "far from being thirsty".

Against this background, the domestic market is becoming a "life-saving straw" for many enterprises.

Statistics show that the growth rate of China's consumer goods market has accelerated significantly in 2007 and has reached a new high in 10 years on the basis of rapid growth in recent years.

The total retail sales of consumer goods totaled 89210 billion yuan in the year, an increase of 16.8% over the previous year, an increase of 3.1 percentage points over the previous year, the fastest growth since 1997.

According to the reporter, with the recent acceleration of RMB appreciation, fierce export competition and shrinking profits, hundreds of foreign trade factories such as small household appliances, kitchen utensils, electronics and other industries in Zhejiang, Yiwu and Jiangsu Suzhou have taken a look at the domestic market and become domestic traders. Coastal areas are developing into new profit growth points for these enterprises.

A senior official of the Yiwu hardware and electrical appliances industry association said optimistically, "the west is not bright East, and although the export is trapped, the domestic market will surely help enterprises tide over difficulties."