RMB Appreciation Will Impact The Clothing Industry To A Certain Extent.

The appreciation of the renminbi will have a negative impact on the export oriented textile and garment industry. The industry expects that the export growth of China's textile and garment industry will slow down in the fourth quarter of this year.

However, driven by the vigorous consumption demand in China, the textile and garment industry has been developing rapidly.

Weaken the low price competitive advantage

In September 16th, the yuan rose 69 basis points to 6.7181 against the US dollar, which is the new low of the fifth consecutive trading days of the central parity of RMB against the US dollar since 2005.

Since September 10th, the central parity of RMB against the US dollar has surged by 636 basis points.

Many agencies predict that the trend of RMB appreciation is expected to continue in the future.

RMB appreciation will have a certain negative impact on China's exports.

The industry pointed out that the appreciation of RMB has increased the cost and quotation of China's textile and clothing, thereby losing the competitive advantage of China's products in the international market to a certain extent, and the export will be restrained.

Part of the bargaining power of enterprises will be able to shift part of the appreciation pressure through price increases, while the uncompetitive enterprises will be the first to be hit.

Prior to this, authoritative estimates have indicated that the net profit margin of the textile industry will decrease by 1% when the value of RMB is increased by 1%, which will further compress its profit margins for the textile industry whose profit margins are already low.

It is also widely expected that the export recovery of textile and garment industry will slow down in the fourth quarter of this year.

Data show that in the first 8 months of this year, textile and garment exports maintained a relatively high growth rate, driven by rising demand and rising prices.

In the first 8 months, textile and apparel exports totaled $129 billion 804 million, an increase of 23.75% over the same period last year.

Among them, the total exports of textiles amounted to 49 billion 515 million US dollars, and clothing exports totaled 80 billion 289 million US dollars, with a growth rate of 32.29% and 19.02% respectively.

But the rapid recovery of exports is not sustainable. CIC securities Kong Jun believes that the growth rate of textile exports has declined in August, indicating that the boom in global textile and garment production has declined due to the shrinking demand in Europe and the United States, which will affect the overall growth of domestic textile and clothing exports in the coming months.

However, due to

Industry recovery trend unchanged

Kong Jun said that although the export growth rate of textile and clothing is expected to slow down, it will not change the overall recovery trend of the industry.

Guotai Junan Zhang Wei also pointed out that domestic consumption demand for textile and clothing is still strong. In the first half of this year, the retail sales of clothing and textiles have shown a good growth, maintaining a growth rate of over 20% over the same period.

Starting from August, the retail sales of clothing and textiles increased, and reached a peak until December.

It is estimated that the total retail sales of textile and garment will remain about 25% year-on-year in the second half of this year.

According to the Statistics Bureau, in 1-8 months, the retail sales of clothing, shoes and hats and needle textiles in the enterprises above the limit reached 354 billion yuan, an increase of 23.7% over the same period last year. In August, the retail sales of clothing, shoes and hats and needle textiles in the enterprises above designated size amounted to 39 billion 900 million yuan, up 22.1% from the same period last year.

The year-on-year growth rate is faster than the total retail sales of consumer goods in China.

However, although the future prosperity of the textile and garment industry is good for the industry, the rising cost of raw materials and labor has made the cost growth of textile and garment enterprises far exceed the income growth rate, especially the profit margins of small and medium-sized enterprises are shrinking.

If the RMB continues to appreciate, more and more enterprises will be eliminated.