Exchange Rate War &Nbsp; &Nbsp; Export Shoe Enterprises Suffer From Both Sides

Corporate defense:

On November 11th, as the currency war became more and more popular in the media,

Look at exports: enterprises will get "complications".

Li Haijun, the manager of the Department of international trade, one of the top shoe companies in Zhejiang, said that AOKANG, a shoe Limited by Share Ltd in the world, had no choice but to say that the profits were thin.

He said that foreign environmental protection requirements have increased, resulting in increased packaging costs, as well as increased labor costs caused by shortage of migrant workers.

"But this is not the most important thing. Returning home is the most worrying thing to see," Li Haijun said. "Most of the business of the company is settled in US dollars, and when it comes to the settlement of foreign exchange, the problem immediately becomes apparent.

"The exchange rate of RMB against the US dollar may be 6.8 a few days ago, and now it is 6.6. The difference between the 0.2 is that the money is much less."

Now Li Haijun has become a "specialized household" of exchange rate, and will pay attention to the latest exchange rate of RMB every day.

"Although these may not be too much loss, the profits of shoe companies themselves are not high," Li Haijun said. When the exchange rate of RMB against the US dollar remained at 6.8, the gross profit of shoemaking enterprises was less than 20%.

And because of the appreciation of the renminbi and other factors, this year's profits continue to decline is affirmative.

The current estimate may fall by about 5 points.

In 2009, AOKANG accounted for 50% of its business in Europe, compared with 60% in the past.

AOKANG is taking a middle and top grade route abroad, and the currencies such as the US dollar are weakening, so that the demand of foreign customers will soon drop. "People can't buy shoes but they can choose cheaper shoes."

Li Haijun said, this highlights a problem, China's low cost advantage may be challenged again, the era of processing may never return.

At present, many foreign shoe making companies have turned to Indonesia and India.

Look at imports: American goods are most benefited.

Dwight Perkins, director of the Institute of East Asian Economics at Harvard University, said that the companies affected by the appreciation of the renminbi were mainly those whose cost was affected by cheap labor, such as some clothing and footwear companies.

The United States naturally ranks among the beneficiaries of the appreciation of the renminbi.