The Euro Exchange Rate Continued To Decline &Nbsp; Spinning Enterprises Will Shrink In The Second Half Of The Year.

Only a month or so has the garment orders profits been lost.

"Since March this year, the euro exchange rate has been in a downward trend. At the end of April, the euro to RMB exchange rate is still at 1:10. Now it has reached 1:8.4." 27, Qin manager of a knitting enterprise in Jimo told reporters that although hundreds of employees in the workshop are rushing to make orders for arriving in June, whether these orders can make money is unknown.

He told reporters that in March of this year, the company received an order of 200 thousand euros in pajamas, and the contract was delivered in 3 months.

After that, the euro began to oscillate from the 1:9.24 to the RMB exchange rate.

Qin said that a 15 euro pajamas will be converted to RMB 135 at Euro exchange rate and RMB 1:9, with a profit of around 10 yuan each.

Now the exchange rate is only 1:8.4,15 yuan worth of more than 120 yuan RMB, virtually compressing profits.

Manager Qin said, it is now necessary to sell more than 17 euros per piece to make money, but this price is not enough for European customers.

Zheng Mingmei, Secretary General of Qingdao textile and Garment Association, said small and medium-sized textile enterprises had low profits and the average profit did not exceed 10%. In recent months, the euro has depreciated 14% to 15% in a disguised form, which basically offset the profits of these enterprises.

[large enterprises] some "emboldened" raise prices, some are converted to us dollar settlement.

In order to prevent the exchange rate risk caused by the continued depreciation of the euro, large textile processing enterprises such as Jin Wang, Yi Fa, Xue Da, Qing Fang Lian, Heng Da and so on began to quietly use the US dollar settlement, while some enterprises increased their product quotes to European enterprises according to their own strength.

Sun Xiaoyan, manager of the brand Department of Qingdao Hengda Group, told reporters that Hengda accounted for 40% of overseas sales every year, of which the EU market was second only to the United States and Japan.

Although some European order profits will be affected by the exchange rate of the euro, the group has chosen more in recent years to join up with large European customers and set up more than 20 branches in Europe and the United States to form a stable production and sales relationship, so that when a long term contract is signed, a fixed profit margin can be agreed, and it will not change with the exchange rate changes. If exchange rate changes are encountered, bargaining and compensation will be offered.

However, a textile industry has said that because of the excessive number of domestic textile enterprises, enterprises may also be refused to negotiate with foreign customers, and sometimes bear the risk of withdrawal of orders. Some may be "emboldened" to raise prices. "Such bargaining is entirely dependent on the strength of enterprises and the quality of cooperative relations. If the exchange rate continues to decline, customers refuse to make up the price, and enterprises will not be able to take orders easily".

[textile industry] corporate profits decline, orders may shrink in the second half

According to Qingdao customs statistics, the main export markets of Shandong in the first quarter were the European Union, the United States and South Korea, which exported 3 billion 720 million US dollars to the European Union, up 26.7% compared to the same period last year, while the whole province exported nearly 3 billion 400 million US dollars to foreign textile yarns, fabrics and products, and garments. The export of textile products accounted for the top three of Shandong's exports to Europe.

The general manager of Wenbo, Qingdao's multinational purchasing center, said that the EU is now the largest trading partner of Shandong's exports to the outside world. The depreciation of the euro will not only affect the profits of foreign orders, but also affect the next batch of orders, and orders from Europe may shrink.

Zhao Yong, an analyst at Qilu Securities, said the depreciation of the euro exchange rate will also have an impact on the performance of export enterprises in the second half of the year.

According to analysis, after the decrease of the euro exchange rate, the consumption ability of Europe decreases, and Shandong's exports to its consumer goods will decrease.

But in the long run, the low-end consumer goods produced in China may also be more popular with the ordinary European class. This is also a business opportunity.

Professor Guo Xiandeng, a researcher at the Qingdao Academy of Social Sciences, believes that as Qingdao will test the RMB cross-border settlement in the near future, Qingdao export enterprises can try to use RMB settlement to avoid exchange rate risk.

Liu Yongquan, general manager of Qingdao's Hong Ni group, said that the depreciation of the euro and the appreciation of the renminbi, in fact, stimulated the driving force of textile exporting enterprises to sell domestically. Their enterprises will spend more than ten million yuan this year to expand the market of the first tier cities in China, so that more export commodities will come closer to the life of the people in the island and other parts of the province.