Export Growth Fell 14% Yiwu Mode "Midsummer Winter"

In June, the prosperity index of Yiwu small commodity city decreased by 57 points, the upstream raw material price soaring, the export tax rebate reduction, and the export trade barrier has become the main challenge.

In June, at the beginning of midsummer, the "Yiwu small commodity city" prosperity index, which was called the "world commodity market vane", failed to follow the steadily rising air temperature. Instead, it turned down all the way, and the prosperity index was no longer "boom".

The report shows that the June Commodity City boom index is 1073 points, a decrease of 57 points, the downward trend is obvious.

Contrary to the prosperity index, the price index has climbed all the way. The index reached 102.49 points in June, a slight increase of 0.51 points.

With the combined effects of price increases of raw materials, export tax rebates, RMB appreciation, labor costs rising and trade barriers, sales of small commodity businesses in the city have been reduced sharply, profit margins have been compressed, export growth has stagnated, and the Yiwu model, known for its "all embracing, good quality and low price", is experiencing an unprecedented challenge.

"Up 10%, we can only rise 5%."

Yu Tianlong is a merchant who runs toy business in the small commodity city of Yiwu.

5 years ago, Yu brothers began to set up a business in the small commodity city, starting from a dilapidated freight van, having experienced the plight of being "too poor to fill the car at a time and can only add up to 20 yuan at a time." but after tireless efforts, he succeeded in earning the first pot of gold in the small commodity city.

But the sales expert told reporters, "business is harder now."

Since the end of last year, oil prices have been soaring all the way, and the prices of plastic toys, which are downstream products of the oil industry chain, are also rising.

"From the beginning to the present, the upstream suppliers have increased the quoted price by nearly 10%. However, for those of us in the small commodities business, we can only raise the price by 5% in order to maintain the competitiveness of sales in the fierce competition.

If it is too high, there will be no business. "

Yu Tianlong said, "from the previous situation, the toy industry in the small commodity city generally has a profit of 5%~10%, but now the supplier raises the quoted price by 10%, which has reduced our profit space to a tiny extent."

In the small commodity city of Yiwu, the shrinkage of profits due to the rising raw materials is not only a case in the toy industry.

According to the June business climate index report, in June, as oil and raw materials prices continued to rise, the price of nearly 50% commodities in the small commodity city has been raised, and the paction has been greatly frustrated.

The report shows that in June, there were 9 categories of products prices rising in all 17 industries in the small commodity city.

53% of the increase in commodity prices accounted for less than 5%, accounting for 33% of 5~10%.

The advantage of Yiwu commodity city lies in its low price. Many small businesses like us also hope that the prices of products will remain stable.

Therefore, most of them will choose to digest some of the cost of raw materials by themselves, hoping to compensate for losses by running volume.

Wang Yuan, who specializes in hardware trade in the small commodity city, told reporters.

"It can be said that the merchants of small commodity cities are also sharing the risk of rising prices in the whole industry.

At present, the average profit of hardware business in small commodities has been reduced to 2%~3%.

Wang Yuan said.

According to the report of Small Commodity City, the production cost of steel, copper processing, electroplating and other industries will also increase, and the profit margins of many industries such as hardware tools, locks, electrician products, gold-plated ornaments and so on will be squeezed again.

The compression of profit space has also affected the overall revenue of most small businesses.

"Raw material and fuel prices have risen sharply, while product prices have continued to slump, resulting in a decline in corporate profits or even losses."

A report from the Yiwu Economic Development Council said.

Export growth dropped 14 percentage points

Yu Tianlong told reporters, "as the upstream products are rising too fast, if we do domestic sales, we can hardly make money, because domestic customers are very sensitive to price and the price can not be raised."

While foreign customers are not so sensitive to price, but because of a variety of factors such as the appreciation of the renminbi, it also makes the competitiveness of products discounted.

He said, "a lot of foreign customers have not been able to get visas to China, which has also made business worse."

He said that after Olympic Games, business will be better.

What makes Yu Tianlong anxious is that the subprime mortgage crisis has led to a sharp reduction in the demand for customers in the US and Europe.

"At present, the subprime mortgage crisis has weakened the confidence of consumers in many countries and regions, especially the reduction in consumption expenditure in the United States, which has led to a decline in the overall economic demand of the world and difficulties in overseas distribution of products made in China."

Mark, an Economic Observer for Yiwu's China small commodity index and a researcher at the center for economic and social research at Cornell University, said: "the slowdown in US economic growth (its GDP growth from 2.3% in 2006 to 1.6% in 2007) has led to a worldwide slowdown.

With us GDP reduction of 1%, China's exports will be reduced by 6%.

Therefore, China has been hit the most in this change.

According to the report of Yiwu Economic Development Bureau, because most of the enterprises in Yiwu are at the low end of the industrial value chain, the appreciation of the renminbi has also allowed most export enterprises to enter the freezing period. Profits have been greatly reduced, especially in industries such as clothing, textiles, toys and processing.

Affected by rising raw material prices, reduced export tax rebates, appreciation of the renminbi, and rising labor costs, Yiwu 1 to