RMB Exchange Rate "Breaking 7" Import And Export Enterprises Can Only Be Helpless

The impact of RMB appreciation on China's foreign trade is gradually emerging.

According to customs statistics, China's trade surplus decreased sharply in February, less than half of last month.

However, the trend of appreciation is still accelerating. In April 10th, the central parity of RMB against the US dollar broke 7 for the first time.

In the interview, reporters found that for the arrival of the "6 era", the import and export enterprises cried less, and most of them were deeply helpless.

Suichang County of Zhejiang province is China's largest base for bamboo charcoal production, processing and export.

Because 50% of China's bamboo charcoal products rely on exports, the appreciation of the exchange rate has brought great impact to this industry.

"From the year before the exchange rate rise, especially after July 1st last year, 13% of the export tax rebate has been abolished. The development of bamboo charcoal enterprises, especially exports, is mostly in a state of stagnation."

Tu Zhilong, general manager of Biyan ecological resources development in Suichang, told reporters: "the technical threshold of this industry is not high, so there are a large number of homogeneous enterprises in China, and the competition is fierce.

In the past, we all relied on tax rebates, and as long as export prices met cost prices, and sometimes even lower, they were acceptable.

Now that the tax rebate is cancelled, it will not work.

In particular, the exchange rate continues to rise. Now it has broken 7, which means that the $100 thousand shipment I want to send to Singapore will soon get 830 thousand yuan, and now it can only get 690 thousand yuan.

At present, we dare not sign a long-term contract. We only dare to do it one by one, and try to win the payment without US dollar settlement.

When it comes to coping strategies, Tu Zhilong seems very helpless.

He said several aspects, such as the digestion of enterprises, the development of new products and new technologies, the demand for customers to raise prices, and the development of markets. However, reporters heard from his tone that he himself was not very confident.

He said that if prices were raised to solve the problem, customers would probably be lost.

Wujin fine chemical plant, Changzhou, Jiangsu, founded in 1979, is one of the earliest professional manufacturers of industrial water treatment chemicals in China.

At present, it has become the largest exporter of water treatment chemicals in China, with customers in Asia Pacific, North South America, the European Union and Africa.

When it comes to the rise of the RMB against the US dollar, Liu Fan, general manager of the company, told reporters repeatedly that because of the majority of the export of the company's products, the appreciation of the RMB had a great impact on it, and 15% of the profits last year were affected.

"The annual sales volume of Wujin fine chemical plant is US $24 million, of which the export volume is between 16 million and 17 million US dollars. Last year, the loss caused by RMB appreciation was about 1500000 yuan, accounting for 1% to 2% of exports."

Liu Fan said, "in the second half of 2006, our exports to the EU countries began to be settled in euros, but EU customers accounted for only 30% of the export volume. The customers in the north and South America and the Asia Pacific region have been using US dollars to settle accounts."

He told reporters that after all, the volume of goods we do is not large, which is different from the bulk trade in the textile industry. Therefore, it is not easy to avoid risks by using the bank's forward exchange rate tools. "We once had contact with banks, but considering the cost of using such tools, we gave up this way."

Liu Fan said that now that the appreciation of RMB is getting faster and faster, they will make some price adjustments when they enter into agreements with other importers every year. "But the main thing is to rely on self digestion and absorption, optimize management and reduce costs."

He also said that in order to deal with the current situation, they are balancing the proportion of domestic sales and export and increasing domestic sales.

In an interview, reporters found that if the core technology of the industry could not be grasps, even the leading enterprises in the country could not resist the change of exchange rate.

Jiangsu Changjiang electronic Polytron Technologies Inc is the leading semiconductor enterprise in China with some independent intellectual property rights.

According to conventional conjecture, the impact of the enterprise is relatively limited.

However, because most of the intellectual property rights of the electronic information industry are in the hands of large foreign companies, the whole industry in China is in the middle and low end of the manufacturing chain. The reduction of profits caused by the appreciation of RMB is difficult to "digest", and the enterprises feel a lot of pressure.

Yu Xiekang, general manager of the company, told reporters that because of historical reasons, the domestic electronic information enterprises still lack the core intellectual property rights.

Large companies abroad have almost completed the full coverage of intellectual property rights, such as the semiconductor industry from design to packaging, and most of the intellectual property rights are in the hands of foreign companies.

The export products of domestic enterprises are mostly processed trade, and the profits of the products themselves are not very high.

The products of this industry are almost all priced products of the world, settled in US dollars, and the continued appreciation of the RMB against the US dollar has reduced the profits of the industry. Many enterprises may not have enough profit space to digest them in the near future.

According to Yu Xiekang, the average profit margin of the domestic electronic information industry is only 3%.

Experts in the industry have made calculations that if the renminbi reaches 6.5:1 against the US dollar, the domestic electronic information industry will suffer a loss in the whole industry.

In the past two years, the cost of electronic information industry has been rising, labor costs have increased fastest, environmental costs and raw material costs are also rising.

In the past March, Changyuan technology parent company's export volume was 180 million yuan, the company actually got the money of 175 million yuan, due to the exchange rate difference and gold price increase, a month's profit decreased by 5 million yuan.

Textile industry is a major industry of China's exports, and it is also a serious industry which is hit by the appreciation of RMB.

However, some enterprises with technological innovation products have clearly told reporters that "limited impact".

Huang Shuyun, general manager of Hengsheng yarn industry company in Wujiang, Suzhou, told reporters that Hengsheng yarn industry is a newly established company. Its products are special varieties and are spun with biological materials such as bamboo fiber, soybean fiber, milk fiber and corn fiber.

In recent years, the appreciation of RMB and the change of international economic and trade environment have brought great impact to the textile industry. Many large enterprises have reduced their capacity, but the products of Hengsheng yarn industry are in short supply, and prices have not been affected.