RMB "Breaking Seven" Textile Industry Profit Margin Dropped To 1%

"RMB appreciation is too fast, and we expect that the price increase will not keep pace with the appreciation."

Zhejiang Shaoxing Keqiao International Trade Building or Cetra Building, a textile foreign trade enterprise boss Mr. Lu said.

The company has always quoted and ordered orders according to the possible changes in the RMB exchange rate within 3 months, but after 2008, this advance forecast failed to catch up with the appreciation rate.

"At the beginning of the second quarter, we expect the RMB to break seven against the US dollar, which is now 3 months ahead of schedule.

We usually only take orders within 3 months, and we dare not accept long term orders.

Such a phenomenon is very common.

The rapid "breaking seven" of the renminbi is a great pressure for Shaoxing textile export enterprises.

"Foreign trade companies generally need two or three months to negotiate and deliver products.

The speed of appreciation is so fast that the pressure on enterprises is very great.

Chen Yongjian, director of Shaoxing foreign trade and Economic Cooperation Bureau, said.

The rapid appreciation of Renminbi has directly led to many SMEs not dare to answer.

"Customers who refuse to raise prices do not accept, do not raise prices, manufacturers increase costs, sell at a loss, it is really hard for both ends."

Liu Xing, who has been doing business in Keqiao for 10 years, said with a bitter smile.

"The year 2008 is the most difficult year for textile export trade," a person in charge of Yong Qing Tong Group said.

He calculated an account: the profit margin of the foreign trade enterprise may be only about 1%, and the factory is about 3%.

Before the Spring Festival, their company received an order from the United States. The quoted price has been raised according to the appreciation rate of the renminbi at that time, with a profit margin of around 2%.

But a 4% appreciation in the first quarter has basically drained profits.

Not only that, the appreciation of the renminbi also directly affects export volume, but the fast rising prices of raw materials are even more pressing for export enterprises.

"The profits of textile exporting enterprises have generally declined, and some big Export Trading Company can not avoid them."

Chen Yongjian said.

At present, it is still the peak season for textile trade. The large demand for foreign trade and the lagging effect of rising costs make some small and medium-sized foreign trade enterprises still struggling to support them.

However, SMEs will face severe challenges after entering the low trade season after June.

Shaoxing's economy has a high degree of dependence on foreign trade, foreign trade exports have dropped by 1%, and the county's GDP has dropped by 0.4%.

Faced with the grim situation, Shaoxing county has set up early-warning points, listing 150 enterprises at all levels, 30 focusing on observation, and 120 actively taking the initiative to grasp the trend of the entire textile industry.