The Appreciation Game Will Continue -- The Textile And Clothing Industry Needs To Dig Deeper Into The Domestic Demand Market.

RMB continues to appreciate, more and more enterprises will be eliminated, prompting the garment industry to further adjust.

Appreciation seems to be the general trend.

"RMB appreciation is too fast now, and we dare not do some bigger orders."

This year's global economic recovery and the gradual increase in foreign orders, which is an exciting thing, has made some export enterprises unhappy.

Export enterprises are now focusing on the exchange rate market every day, besides paying attention to the production and operation of enterprises.

The latest data from the China Foreign Exchange Trading Center show that in September 29th,

"Now that the exchange rate has changed so much, it may be profitable when signing the bill, but it has become a loss at the time of settlement."

Many business owners say frankly.

In September 29th, the US House of Representatives passed the "fair trade act on monetary reform", aiming to impose special tariffs on countries that underestimate the exchange rate of their currencies.

The bill may open the door to countervailing actions by Chinese industries or enterprises on the basis of the so-called RMB undervaluation.

On the issue of RMB exchange rate, China is under tremendous pressure from the international community, especially the United States.

At the hearing of the US Congress on international economic and monetary exchange rates, US Treasury Secretary Geithner said the United States will join forces with other countries to put pressure on China, and hinted that the current appreciation of the Renminbi should at least reach 20%.

The European Union also followed the US pressure on the Yuan recently.

After the RMB has entered a round of appreciation channels, the central bank monetary policy committee put forward at the third quarter regular meeting that the next stage will further improve the RMB exchange rate formation mechanism, focusing on the market supply and demand, and adjusting with reference to a basket of currencies to enhance exchange rate flexibility.

Teng Tai, chief economist of Minsheng securities, said, "the monetary authorities are right.

According to tengtai, by the end of 2010, the yuan will rise to 1:6.5 against the US dollar, which means that there will be a 3% appreciation in the fourth quarter.

Goldman Sachs predicted that the renminbi would appreciate by 5% in the next 12 months.

Some small and medium-sized enterprises can not escape the fate of bankruptcy.

The continued appreciation of RMB is more unfavorable to export enterprises.

Especially for

The appreciation of RMB will weaken the comparative advantage of our textile and clothing products and reduce the competitiveness of our products.

In particular, clothing products are at the end of the industrial chain. Therefore, the garment industry will be affected by the appreciation first and Pyramid radiation. Most of the labor intensive enterprises with low added value at the grass-roots level are the most affected. For them, a change in the price of a penny will make the customer make new choices and pfer production.

In this case, after the appreciation of the renminbi, some of the export products may be sold to the domestic market, and will also aggravate the competition in the domestic market.

Therefore, the textile industry has become one of the industries that are expected to be negatively affected by the revaluation.

"For garment enterprises, the most worry is the appreciation of the renminbi."

Xu Weimin, chairman of Jiangsu Dong Du group, said.

He told reporters, "China's textile industry, generally speaking, the current product profit is about 5%, which is still relatively good, most of them can be controlled at 3%.

If RMB appreciation is 1% now, nearly 20% of enterprises have reached the critical point of profit and loss.

If RMB appreciation is 5%, I estimate that more than half of the enterprises will be closed down.

Xu's view reflects to some extent that the textile industry is worried about the appreciation of the exchange rate.

A number of garment enterprises in Fuzhou also said that once RMB appreciation exceeds 3%, enterprises will lose foreign orders.

Because foreign orders increased, but clothing export orders generally low profits, and some enterprises in order to retain customers have to maintain capital or even at a loss.

On the other hand, because of the huge increase in raw materials and labor costs, the profit margins of enterprises have been greatly reduced. Under the influence of these two factors, some orders will not be accepted because of no money, which will eventually lead to customer churn.

Wu Jintu, President of Fuzhou Garment Association, admitted that the appreciation of the renminbi is a big blow for Fuzhou's clothing industry. Even if companies want to increase export prices to make up for losses, it is also very difficult, because the bargaining power of Chinese enterprises is low.

Generally speaking, the short-term impact of RMB appreciation is greater than that of long-term impact. The impact on low value-added products is greater than that on high value-added products, and the impact on production enterprises is greater than that on pure trading enterprises.

Promoting further integration of industries

Reporters learned in the interview that many enterprises appreciated the renminbi, though it was very sudden, because it did not expect to appreciate at this time.

But many export companies say that the appreciation of the renminbi has made the export profit margins very thin, but they have been psychologically prepared. They believe that although the appreciation of the renminbi will have a negative impact on them in the short run, in the long run, the floating exchange rate is conducive to international integration, and it is also a good opportunity for enterprises to adjust their product mix and upgrade their industrial level.

According to the import and export status of products and raw materials, the main garment enterprises can be divided into three categories: the first type is the relatively large proportion of the export earnings of the products, and the raw materials mainly come from domestic enterprises. These enterprises are in the net export status, and the appreciation of the RMB has a greater negative impact.

The second type is the enterprises that need to import large quantities of raw materials, and the products are mainly sold in the domestic market. These enterprises are basically in a net import state, and the appreciation of RMB has positive driving effect, which is only a small part of the whole industry.

The third type of enterprises is mainly from the domestic raw materials, while the products are mainly domestic sales enterprises, the appreciation of the renminbi has little impact on them, such as most private brand clothing manufacturers.

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Obviously, if the RMB continues to appreciate, more and more enterprises will be eliminated, and the appreciation of the RMB will also lead to the passive adjustment effect of the textile industry. The appreciation will form a forced mechanism for the enterprises. If the enterprises do not carry out industrial upgrading and structural adjustment, they may be eliminated, which is more conducive to the expansion of the market share of the dominant companies, and the industry will also reshuffle the cards.

The road is coming out.

Of course, faced with the appreciation of Renminbi, many enterprises have foresight.

Since March, due to the adjustment of the tariff policy and the anticipation of appreciation, almost all operators and foreign businessmen have prevented the information of RMB appreciation ahead of schedule. They have become very cautious and cautious when negotiating business. The number of orders and the frequency of import and export have been reduced. When negotiating business, they consciously increase product prices to avoid exchange rate and tariff risks.

At the same time, some enterprises should pay close attention to the settlement of foreign exchange and face the situation of RMB appreciation at any time, and strive for the fastest rate of exchange.

In fact, many enterprises have long been prepared against the appreciation of the renminbi. They have been trying to pform, adjust the structure of import and export commodities, not to be low-grade and high-end, appropriately increase the proportion of imports, do more import processing business, and do more new projects.

A lot of powerful enterprises have begun to adjust their products and strive to get rid of the low-level price competition mode. With the support of the large-scale and modern industrial base, the export products will be directed to the middle and high-end categories of large scale, specialization, deep processing and high added value.

In addition, in order to effectively break the trade barriers of textile and clothing, many textile and garment enterprises all over the country set up processing trade enterprises overseas, and now the appreciation of the renminbi, the impact of such enterprises is relatively small.

It is understood that at present, many enterprises in many places such as Jiangsu and Zhejiang are already setting up or processing textile and garment processing enterprises abroad.

The purpose of investment of these enterprises has not only considered the use of the raw materials and cheap labor force of the host country and the expansion of the international market, but also to break through the trade barriers.

The game between China and the United States on RMB appreciation will continue. RMB will remain a topic of conversation between China and the United States this year and next.

For China's textile and garment industry, we should recognize the importance of this problem. We should accelerate the pformation of economic growth mode and industrial structure, and further tap the domestic demand market, carry out reasonable industrial pfer and layout, advocate technology and brand innovation, and achieve a more high-end and dominant position in the international division of labor, in the light of the 12th Five-Year plan.