Domestic Enterprises Should Develop Diversified Markets

Stimulated by a series of European rescue measures, the euro rebounded against the US dollar last week. However, at the beginning of this week, the euro's stamina was not enough and it was now down. On the 27 day, the euro exchanged 8.3940 yuan for the central parity of RMB. In just half a year or more, the euro exchange rate has broken through "10" and "9" has broken the "8" trend.

Zhongshan is one of Guangdong's "big foreign trade cities". The EU market has long occupied the third largest trading partner of the city, occupying a larger share of Zhongshan's total exports. However, the survey found that the Zhongshan enterprises generally used the US dollar settlement, which was not affected by the depreciation of the euro. But on the other hand, exporters generally expressed concern that orders from the European Union could be greatly affected if the euro continues to depreciate.

Status quo

With euro settlement 100 thousand euros, it loses 140 thousand yuan.

At the end of last year, Mr. Liu, who had just signed a furniture order of hundreds of thousands of euros, suffered a lot of losses when his company stumbled and fell on the euro exchange rate. Liu told reporters that at present, less than 10% of the export business of the company was settled in euros. "When the dollar depreciated sharply in 2007 and 2008, we began to try to use the euro settlement."

It was hoped that the settlement in euros would reduce risks and reduce losses. But at the end of last year, Mr. Liu received an order settled in euros, and the company's losses would not be small at the latest exchange rate. In January 1st of this year, 100 thousand euros could be exchanged for 979 thousand and 700 yuan, but as of 27, it could only be exchanged for 839 thousand and 400 yuan and 100 thousand euros for 140 thousand and 300 yuan. For Mr. Liu, goods or those goods, domestic production costs have not dropped by one point, and even manpower and raw material costs have risen a lot in the first few months of this year. But once the 100 thousand euros arrive, they will earn less than about 100000 yuan due to the depreciation of the euro. According to Mr. Lau, because the buyer will have to pay for a period of time after the arrival of the goods, the goods have not been received yet, and if the euro continues to depreciate, the loss of this order may continue to expand.

It is not unusual for Mr Liu to suffer much losses because of the depreciation of the euro. However, a reporter survey found that most of the enterprises in Zhongshan were settled in US dollars when they exported their products, so there were not many enterprises affected. Even if the enterprises settled in euros, the amount of money would be relatively small.

Mr. Liu told reporters that after the depreciation of the US dollar, most of their export settlement business, especially the US dollar business, signed a long-term settlement business with the bank, that is, the exchange rate of customers' payment was locked according to the production cost of the company, so the impact of exchange rate fluctuation was far from that of 2007 and 2008.

Forecast that orders from Europe will decrease in the second half of the year.

"In fact, whether it is settled in euros or in US dollars, there is a greater risk of exchange rate, so how to choose a better hedge is the most effective." Liu Hui, deputy general manager of Zhongshan Qijia Furniture Co., Ltd., said in an interview with reporters.

Liu Hui said that the depreciation of the euro, because the Zhongshan export enterprises generally use the US dollar settlement, so the direct economic losses will not be too great. Even before the euro settlement business, most of the enterprises now return to the way of US dollar settlement, but the key is that the EU market as Zhongshan's third largest trading partner, the negative impact of the market is relatively large, may lead to the decline of orders, the current good foreign trade growth momentum slowed down. "Our company's European market accounts for about 10% of the total business volume, and most of them are fixed customers. There is no obvious feeling yet."

Liu Guanchong, general manager of Zhongshan Guan Yi furniture factory, said in an interview with reporters that the company's orders from the European market account for only about 5%, and most of them are regular customers. At present, the negative impact of the European debt crisis has not yet been felt clearly. "However, it can be felt from the shorter order period in Europe and the longer payment time. It is expected that the second half of this year will be more difficult."

Unlike Zhongshan furniture, which is mainly exported to the North American market, the electromechanical products of Zhongshan and small household appliances are basically the same as the European market. The negative impact of the depreciation of the euro on these products will be more obvious and direct in the coming months.

Strategies to develop emerging markets and North American markets

Many enterprises say that if the euro continues to weaken, then the order from the EU market will be likely to be greatly affected. On the other hand, the continued depreciation of the euro will also lead to the export enterprises' difficulties in increasing the cost of foreign exchange settlement and the declining competitiveness of product prices.

According to customs statistics of Zhongshan, from 2010 to April, the trade volume between Zhongshan and the European Union was 1 billion 150 million US dollars, an increase of 22.7%, ranking third in Zhongshan's main trading partners, and the growth rate was higher than that of the US market share in the same period. The trade volume of Zhongshan has greatly accelerated the rapid growth of Zhongshan's foreign trade. 1.

For the vast majority of export enterprises in Zhongshan, the euro is weakening. They have two main concerns: one is the decline in competitiveness of products and no profit at all, and the other is that the continued depreciation of the euro will lead to the deterioration of the European economy. The export business that has already been revived may be hit by European exports, and orders from Europe will be greatly reduced.

As the European sovereign debt crisis is showing no signs of improvement, the prospects for recovery in the euro market are still uncertain. It will be difficult to judge whether the euro will break "8" or how long the euro will fall. Therefore, Zhongshan customs related foreign trade experts remind enterprises that, in the face of the current uncertainty, export enterprises should be flexible in their contracts with the euro area market, and take more "short and fast" routes, mainly based on short-term small contracts.

In addition, the EU market accounts for a larger proportion of Zhongshan's exports, and Zhongshan enterprises must develop diversified markets, emerging markets, and North American markets. At the same time, we must be good at using all kinds of financial products to avoid exchange rate risk.