Yiwu'S Footwear Industry And Other Enterprises Are Caught In A Strange Circle.

Hong Chengfang is very entangled recently. Christmas is approaching.

The appreciation of the renminbi is the main reason why he dare not accept the order.

However, this is only a part of his distress. What is more distressing than these is the main toy crafts.

"Only RMB appreciation this year, my profit loss has reached 3%. In addition, cotton has also seen a surge this year, or nearly 30%, with little profit. We really can not make any further orders. The order is sure to be a loss."

As for what to do next, Hong Chengfang showed that he could wait and see, or the factory would stop production and leave immediately.

Hong Chengfang's embarrassment is only a microcosm of Yiwu businessmen in Zhejiang. Under the dual pressure of RMB appreciation and rising raw materials, they are in a dilemma.

Orders become hot potatoes.

This year, the US dollar has continued to depreciate, which is close to Hong Chengfang's "critical point" for the appreciation of the renminbi. His products are mainly exported to overseas markets such as Europe, America, Japan and Japan.

After August, the RMB went all the way, which made Wang Chengfang anxious that there were millions of dollars in the European and American markets that had not been recovered. These are the Christmas gifts orders under 6 and July this year. According to the contract, it is now time to check out. In November 10th alone, Hong Chengfang's profits shrank by about one hundred thousand yuan (RMB).

"We appreciate the appreciation of the renminbi, but now it is difficult for us to cope with the rising price of raw materials."

He said.

Since the second half of this year, the prices of raw materials such as fabrics and cotton needed by Hong Chengfang factory have risen sharply. The fabric has risen from 11 yuan / meter at the beginning of this year to the current 17 yuan / meter, and cotton has risen from 16 thousand ~1.7 yuan / ton in September to 28 thousand ~2.9 ten thousand yuan / ton today, and the rate of increase has exceeded 60% in one month.

"When the previous manufacturers quote us, they will inform you in advance that they are generally valid for one month, but September is valid for 20 days. After that, the validity period has been shortened, and the offer is only valid in the morning or afternoon.

On the morning of 10, it was also told that the domestic cotton would increase by 500 yuan per ton.

He said.

Now is the time when the domestic market is selling well. According to the situation that the order has been received, by the end of the year, Hong Chengfang will need nearly 100 tons of cotton as raw material, and only buy cotton raw materials. Hong Chengfang will have to pay more than 800 thousand yuan (RMB).

Yiwu is the largest export base for Christmas products in the world. Half of the world's market, 70% of the US market, and 40% of the Christmas products in the European market come from Yiwu.

There are nearly 400 households and enterprises producing and selling Christmas products in Yiwu, of which more than 200 are production enterprises, and the annual output value of Christmas products is over 2 billion 500 million yuan, with annual sales of over 2 billion yuan.

According to Cai Qinliang, vice president of Yiwu Christmas products industry association, Hong Chengfang is not a case. According to past practice, many export orders are under the first half year. At that time, the impact of exchange rate fluctuations on enterprises is not very obvious, but with the cost rise, the profit margins have been greatly reduced.

However, since the appreciation of RMB is not expected, and the total cost of raw materials and staff salaries is increasing, enterprises are not optimistic about market expectations for next year, so the mentality of many production enterprises is complicated.

Price increase and Hedging

In an interview with reporters in Yiwu, reporters learned that the stability of the RMB exchange rate in 2009 helped a lot of these export enterprises and reduced the losses caused by exchange rate changes.

In addition, from November 2008, the export rebate rate of Christmas gifts increased from 11% to 13%, which virtually increased their profits.

Many businessmen in Yiwu International Trade City showed that before the yuan appreciated, he also dared to adopt the "lower imperial court", which would help customers to sell.

But this year since the start of the exchange reform, the appreciation of the renminbi continued, coupled with the increase in raw materials and labor costs and other factors, the advantages of the export tax rebate before is no longer, now is not to let customers profit, but to raise prices with customers.

In this regard, Cai Qinliang said, the price of raw materials will not come down, the dollar will depreciate in the future, so the cost can not be reduced. Therefore, many enterprises have been caught in a dilemma between the high cost and the imperial court, the narrowing of profit margins and the maintenance of customer relationship.

One of the Countermeasures for enterprises to deal with exchange rate changes is to follow suit, and the exchange rate will rise, and the price of products will rise.

For the specific adjustment of product prices, the strategy of "small step and fast run" is adopted to adjust the pace of exchange rate changes.

But now, in view of the appreciation of Renminbi and the rising cost of raw materials, it is no longer possible for many enterprises to raise their prices to reduce their losses.

"Since the reform in June, the appreciation of the renminbi has been close to 3%. In the past few months, the average monthly export volume is more than 10 million dollars, because the RMB appreciation has lost about 300000 dollars per month."

Wu Junjie, general manager of Ningbo double deer battery import and export company, showed in an interview with our reporter.

In order to reduce losses, double deer can only weaken the effect through hedging of futures market.

Hedging refers to taking futures market as a place to pfer price risk, making use of futures contracts as a temporary substitute for buying and selling commodities in the spot market in the future.

"RMB appreciation is too fast, for us, in recent months, I do not sell batteries, I only buy zinc raw materials to hoarding money."

Wu Junjie said, "but this is a short-term behavior, not to make money, just to stabilize the cost needs."

Li Haijun, director of import and export affairs of Zhejiang AOKANG footwear Limited by Share Ltd international trade department, also told reporters that they would make a prediction of the exchange rate trend and raise their quotations appropriately when signing the contract, but this is not a good way to increase the price in the low consumption capacity, and even affect the market share. This will greatly affect the profit space and even lose some orders.

Avoiding the US and selling Europe

In April last year, the State Council made a decision on the pilot of RMB settlement in cross-border trade in 4 cities of Shanghai and Guangdong provinces.

With the promotion of RMB settlement in the above 4 cities, the six departments of the state jointly issued a notice in the middle of this year, and the pilot area of RMB settlement for cross-border trade was extended to 20 provinces and municipalities such as Beijing, Tianjin, Jiangsu and Zhejiang, and Ningbo was also ranked among them.

Since then, the pilot of RMB settlement for cross-border trade in Ningbo was officially launched in June 23rd.

Ningbo SEER group is one of the first batch of cross border trade RMB settlement experimental units in Ningbo. According to Wang Caihong, vice president of the group, there are few enterprises using RMB settlement, mainly in Southeast Asia. Although the RMB settlement policy for cross-border trade has been introduced, there are still operational problems: a href= "http://brand.cnxz.cn/kenol/" target= "_blank" > Kangnai waits!

Wang said.

Although many companies are using the forward selling and selling of foreign exchange, insiders say that such financing tools such as Forfetin and forward settlement and sale of foreign exchange have strict requirements for enterprises and customer qualifications, and not all enterprises can use them.

Qian Tianfeng, general manager of Yiwu excellent import and export company, indicated that because of the fact that the RMB appreciation was not expected, customers generally chose to have long-term settlement. However, for the "locked exchange rate", because many companies were purchasing orders, the amount of each purchase was small, so they had not been implemented.

It is understood that because of the recent appreciation of the renminbi mainly against the US dollar, there has been little change in other currencies such as the euro, and some have even depreciated. Therefore, many gifts manufacturers in Yiwu are beginning to avoid the US market and vigorously expand the business of some non US dollar economic zones such as Europe and Russia.

Cai Qinliang said that although Yiwu's exports of Christmas products to more than 100 countries in the world, but more than half of the past has gone to Europe, the Middle East, Southeast Asian countries.

The high degree of market concentration can easily hamper the further development of Christmas toys in Yiwu.

This year, the capacity of emerging markets such as Russia, India and Brazil has increased by nearly two times, which is a good time to pfer the market.

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Several factors affecting foreign trade enterprises

Negative factors

First, RMB appreciation.

Since the second half of this year, the renminbi has been rising all the way. In November 10th, the exchange rate of US $1 was RMB 6.6450 yuan, the highest point since the revaluation of the central parity of RMB against the US dollar.

Second raw material prices rise

In the third quarter of this year, the textile raw materials market, with the exception of acrylic fiber, was again promoted.

Cotton and staple fiber prices rose more than 10%, especially polyester staple, the most powerful, up to 21.30%.

In polyester filament, DTY was the biggest increase, and the number of nylon filament increased by FDY.

Third increase in labor costs

In the beginning of this year, under the dual function of Foxconn incident and labor shortage, the wages of manufacturing industry showed a general upsurge. The number of workers in many cities across the country raised the basic wage of front-line workers, which greatly affected the manufacturing industry.

Positive factors

Export tax rebate

In November 2008, the export rebate rate of Christmas gifts increased from 11% to 13%, which virtually increased the profits of enterprises.