RMB Accelerated Appreciation &Nbsp; &Nbsp; Export Shoe Factory Closure Tide Will Come.

November 9th hearing from 2005

For example, a shoe factory used to have 1000 workers and 3 production lines, but now there are only 300 people and 1 production lines.

In fact, the same 3 factories do not add up to the size of the previous 1 factories, and actually 2 factories have closed down.

This year's export rebound has given confidence to many shoe factories. But before the shoe maker's laughter came out, the exchange rate began to break through 6.7 and it soared to 6.64. This is a big joke with these poor bosses.

From the general trend, export warming is not necessarily a good thing. On the contrary, Europe and the United States have found an excuse to pressure China and force the renminbi to appreciate.

In June 18, 2010, Obama wrote to the 20G group to let the 18 countries work together to force the renminbi to appreciate. In September 16th, US Treasury Secretary Geithner held a hearing at the RMB exchange rate held in the house of Representatives, saying that the United States would join forces with other countries to exert pressure on China and implied that the appreciation of the current round of the currency should reach at least 20%. In September 24th, the US House of Representatives fundraising committee approved a bill on the issue of China's exchange rate. According to the bill, if the value of a country's currency is considered to be underestimated, the US government has the right to impose punitive tariffs on goods from that country.

Under the enormous pressure from outside, the RMB exchange rate has just soared.

Coupled with the recent sharp depreciation of the US dollar, the continued appreciation of the renminbi against the US dollar is inevitable.

Although Premier Wen Jiabao said in September 22nd that the continued appreciation of the RMB 20% would cause serious unemployment in China and cause social unrest.

But what does it matter to the United States? Is that what they want?

At present, most export shoe factories can afford RMB appreciation of about 3%, and the appreciation of 3% will reduce their profitability by about 50%.

Take an order of 1 million dollars, for example, when the contract is signed, the exchange rate of US dollar to RMB is 1:6.8, after 2 months, the exchange rate is 1:6.6, the difference is 0.2 yuan, and the profit will be reduced by 200 thousand yuan at once.

And the total profit of such an order is only about 3.4 million yuan.

An authoritative report shows that more than 70% of export enterprises can withstand RMB appreciation below 4%.

More serious, however, is that the minimum wage of workers in the country, especially coastal cities, will double in the coming year.

If all of these become reality, more than 80% of the export shoe factories will go bankrupt.

How to avoid exchange rate risk

In the present situation, in order to survive, enterprises have come up with many ways to deal with the problem of "soldiers coming to block and water coming to earth".

First, postponing delivery.

Postponing delivery order is the simplest and most effective way for an enterprise to take short-term action.

A leather shoe export company in Wenzhou has just signed a batch of orders with an American customer in August, requiring delivery within 3 months.

But what he never thought of was that the RMB began to appreciate continuously since September 13th. If the goods are delivered immediately, the company may not earn any money, so the company has been dragging away, hoping to wait for the RMB exchange rate to fall.

But I estimate that the boss will not be able to wait for the day.

Although postponing the delivery date can solve the urgent problem at the moment, it is not a permanent solution after all. If the RMB continues to appreciate, the more the company will be, the more it will lose.

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Two, raise unit price.

At present, more than 90% of China's footwear export industry produces low-end OEM products, and its bargaining power with foreign manufacturers is very weak.

Compared with China, labor-intensive enterprises in Vietnam, India, Pakistan, Bangladesh and other countries have great competitive advantages in price. Chinese product price increases mean loss of orders and loss of market.

China's footwear industry is at the end of the international OEM chain, and it is not easy to raise prices under layers of pressure. But if you want to lose money, you have to raise the price.

A business owner said that the export enterprises, if they need large quantities of orders for many years of cooperative customers, can play the scale effect at the original price and reduce the procurement cost of raw materials.

If it is only a small order, the price will be raised by about 5%.

In addition, try to recommend new products to the old customers. The price of the new products will be raised by about 10%, and the European and American customers can also accept them.

But for new customers, all prices are raised.

If an enterprise can improve the functionality of its products and pform years of experience into a patent, even if it is just a simple practical button or sole, it will also help the company to raise its price.

Three, reduce costs

It is the best way to excavate potential and reduce production cost from within the enterprise itself.

The 1. part is that enterprises can go directly to the United States and Europe to participate in the fairs, and directly look for customers through the exhibition, cancel the links of agents in some international markets, so as to reduce costs and save expenses.

2. the pfer of production chain to the Midwest has also become one of the measures taken by enterprises to reduce costs.

But the cost of these savings may be offset by the increase in workers' wages.

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Four, using financial instruments to avoid exchange rate risk.

Enterprises use the current financial instruments to avoid exchange rate risks, and entrust financial institutions to make long-term forward settlement to avoid exchange rate risks.

However, at present, the export footwear companies use financial hedging products to avoid the risk of exchange rate appreciation.

For example, in 2009, the penetration rate of China's export credit insurance was about 9.7%, lower than that of the world average level of 15%, with the characteristics of low coverage, less service outlets and low overall underwriting ability.

The low rate of insurance coverage is mainly due to the small number of financial hedge products, and the high rate.

At present, most of the small and medium sized shoe enterprises in China think that such financial products are too complex, and the boss can not directly understand them, and the financial services in China are still not able to keep pace with the financial awareness of SMEs. This requires many small and medium-sized private enterprises to find their own way.

The appreciation of the renminbi has made China's export enterprises lose the advantage of low cost competition, but at the same time, it also forced the pformation of export oriented footwear enterprises with an export-oriented economy to enhance their innovative ability and increase their added value.

Zheng Jianrong, deputy director of the Guangdong provincial foreign trade and Economic Cooperation Department, said: "RMB appreciation will directly reduce the export earnings of enterprises.

From Guangdong's point of view, we have a calculation that if the total appreciation of RMB has reached 3%, then the foreign exchange earnings from foreign trade will be reduced by 20 billion yuan, which means that the profits of enterprises will be reduced by 20 billion yuan.

He suggested that enterprises should speed up pformation and upgrading, enhance the competitiveness of products and raise the right to speak.

Professor Lang Xianping's remarks deserve more attention from enterprises. He believes that in the medium and long term, enterprises should pay attention to the integration of "3+1", that is, the integration of order processing + wholesale + retail + production; in the short term, enterprises should understand the crisis and maintain the greatest elasticity earlier.