Transformation And Upgrading Of Shoes And Clothing Enterprises In Zhejiang

On July 13th, "I am going to Europe tomorrow to negotiate with several dealers in Denmark, Switzerland and Germany, mainly about the impact of the change of RMB exchange rate on the pricing of products in the second half of the year."

Excellent clothing is only a microcosm of Zhejiang's foreign trade.

Yesterday, the Hangzhou Customs announced the situation of foreign trade in the whole province for six months: in the first half of 2010, Zhejiang achieved a total import and export value of US $117 billion 510 million, a record high, an increase of 41.3% over the same period last year. Of them, exports amounted to us $82 billion 220 million, an increase of 39.7%, which is 4.5 percentage points higher than the national average growth rate.

Single month data is refreshed again

According to customs statistics, in June, Zhejiang achieved a total import and export value of US $22 billion 770 million, an increase of 41.2% over the same period, of which 16 billion 680 million US dollars in exports, an increase of 50.8% over the same period last year.

This is the highest monthly import and export value and export value of Zhejiang province once again after May.

Yu Yueping said that after the baptism of the financial crisis, many small businesses went bankrupt, and a large number of businesses concentrated on the rest of the enterprises, so the company's orders increased rapidly.

In addition, in the clothing industry, there are three years for a cycle of law, this year is just the new year.

Foreign dealers have been shrinking after two years of business, and are worried that stocks will not be sold after they are reduced, which will naturally increase imports.

Hangzhou customs statistics show that the European debt crisis and the depreciation of the euro have not had a significant impact on Zhejiang's exports.

In the first half of this year, the province exported 22 billion 80 million US dollars to the European Union, an increase of 36.7% over the same period last year.

In addition, exports to emerging markets such as ASEAN, India, Russia and Brazil have also increased rapidly.

In terms of export commodities, electromechanical products and textile clothing have obvious advantages.

As a traditional export commodity of Zhejiang Province, textile and garment industry has relatively stable demand in the international market, and has maintained a relatively fast export growth momentum in the first half of this year.

In the first half of this year, Zhejiang exported 11 billion 530 million US dollars of textile yarn and products, an increase of 34.9% compared with the same period last year, and export clothing and accessories 10 billion 370 million US dollars, an increase of 15.4% over the same period last year.

After the sharp decline in exports last year, the mechanical and electrical products achieved rapid growth in the first half of this year. Exports amounted to US $36 billion 390 million, an increase of 50.1% over the same period last year, accounting for 44.3% of the total export value of the province. Of them, ship exports amounted to US $4 billion 100 million, an increase of 1.3 times compared with the same period last year.

Exchange rate will push enterprises to pform and upgrade

Although sales growth is obvious, the profits of enterprises have not changed much, and some have even been shrinking.

Yu Yueping said that the average profit of clothing enterprises in Zhejiang was around 15%, probably not even 10% this year. Some of them will start production if they have 1%-2% profits. Besides the rising cost of labor and raw materials and foreign businesses, there is also the effect of exchange rate fluctuations.

After a new round of exchange reform, the RMB exchange rate has been fluctuating. For foreign trade enterprises, this has almost offset their already little profit.

Li Haijun, head of import and export business of Zhejiang AOKANG footwear Limited by Share Ltd, said AOKANG's sales in the first half of last year were basically flat from last year, but its average profit dropped a lot. "A pair of leather shoes sold for 20 US dollars -30 dollars has been able to earn 4 US dollars -6 dollars before. Now it is only 2 US dollars -3 dollars. If it is for international big name OEM processing, a pair of shoes can only earn 0.8 dollars or so."

In order to reverse the impact of exchange rate, AOKANG has worked with local banks to purchase financial products linked to exchange rate and reduce losses incurred by exchange rate fluctuations after receiving customers' foreign exchange.

For Yu Yueping, there is another task to go to Europe tomorrow: try to persuade clients to use Renminbi to settle accounts.

In June 22nd, six ministries and commissions such as the Central Bank jointly issued the notice on issues related to the expansion of cross border trade RMB settlement pilot. The pilot area for cross border trade RMB settlement expanded to 20 provinces and municipalities such as Beijing, Tianjin, Jiangsu, Zhejiang and other regions.

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The data show that for export enterprises, the cost of 3%-5% can be saved by RMB settlement.

However, what makes foreign trade enterprises entangled is that few clients are willing to accept RMB settlement. Yu Yueping once suggested to a German customer that he should adopt Renminbi quotations, but the other side would rather raise the euro quotations than use the renminbi quotations, "because if the currency is settled, it means that the exchange rate risk is borne by the customers."

"In the long run, the appreciation of the renminbi will reduce the international competitiveness of our products, but it will help to speed up the adjustment of the industrial and economic structure."

Zhang Handong, director of the Zhejiang international economic and Trade Research Center, said that the appreciation of the renminbi has directly reduced the foreign asset prices, which is conducive to improving the investment ability of enterprises in foreign markets and accelerating the pace of "going out".