RMB Exchange Rate Innovation Is High &Nbsp; How Should Clothing Export Enterprises Deal With It?

RMB exchange rate innovation high

According to experts estimates, the general profit of clothing enterprises in Guangdong is around 3%.

The bargaining power of domestic enterprises is relatively low. If the RMB appreciation is 1% now, nearly 20% of enterprises have reached the critical point of profit and loss, then RMB appreciation will be 5%.

Zhou Xiaonan, deputy general manager of Ningbo Huamei Wire Industry Co., Ltd., said that because of the pressure of rising costs, the company raised its prices several times in 2010. The price rise in the previous several years was relatively smooth, but by the end of the year, the price of many export products had risen to 30%-40%, and overseas buyers had begun to conflict with the price, and the new orders became more and more difficult to talk about.

The instability of the RMB exchange rate is even more difficult for many garment exporting enterprises to evade.

In 2010, the labor cost of the domestic textile and garment industry increased by 20%~40% on average, and the prices of production factors such as raw materials and auxiliary materials increased by 30%~100%. After the two exchange rate reform, the RMB appreciated by nearly 3%.

The 108th Canton Fair, which ended last November, has gradually seen that the situation is not optimistic in the coming months.

At the last autumn fair, orders for textile enterprises generally increased by 20% to 30% compared to the same period, and the price range of individual products was even as high as 40%.

However, more than 20% of the increase in foreign prices is generally unacceptable. Some European and American customers have begun to reduce the volume of purchases in China, and some low-end products tend to buy from Southeast Asia.

Such a situation directly leads to the loss of clothing orders from the Chinese market.

Two, how to avoid the risk of RMB exchange rate in clothing enterprises

1. carefully accept long term orders.

Because of the instability of the exchange rate, many garment enterprises begin to stop buying long-term clothing orders before and after the Spring Festival.

Under such circumstances, many short-term clothing orders are easier for garment companies to avoid exchange rate risks.

In particular, small and medium-sized garment enterprises, because of flexible operation, have made some achievements in dealing with short-term orders.

2. flexible use of settlement currency

Clothing export enterprises try to accept only short-term orders, or to make pactions with other currencies which are relatively stable in foreign exchange when negotiating payment with foreign investors and bypass currencies such as the US dollar. This is also a more insurance method.

"We now use three currencies to settle accounts, namely RMB, US dollar and Japanese yen. Assuming that the RMB appreciates against the US dollar, we will reduce the proportion of US dollar settlement and increase the settlement of RMB and yen."

The relevant person in charge of Hubei Mei Dao (Group) Garments Co., Ltd. said that more than 90% of its products were exported to Japan, the United States, the European Union and other places, ranking the top 10 among Hubei's foreign investment enterprises for ten consecutive years.

Li Wen, the International Business Department of Wuhan branch, and the Hubei provincial branch of China Import and export bank, are responsible for the proposal that the enterprise can avoid the loss of profit caused by the appreciation of RMB from the following aspects: first, it is to choose a relatively stable currency to settle the exchange rate; secondly, to lock the exchange rate changes in the signing of the contract; in addition, the forward receivables can also be used in advance to settle foreign exchange.

3. upgrading enterprises

There are two types of enterprises that can adapt to the international market. The first is that enterprises with an average profit of more than 5% have room for relaxation. Two, enterprises with bargaining power can pass on the pressure of cost increase by raising prices.

RMB appreciation will also lead to the passive adjustment effect of the garment industry. The revaluation will create a forced mechanism for the enterprises. If the enterprises do not carry out industrial upgrading and structural adjustment, they may be eliminated, and will be more conducive to the expansion of the market share of the dominant companies, and the industry will also reshuffle the cards.

Many garment enterprises have offset the pressure of RMB appreciation by adjusting the export structure, changing the settlement currency and increasing their own brands, and achieved good results.

Under the background of industrial restructuring, the polarization of export enterprises is intensifying, and the industry will probably play a big shuffle of "strong Heng Qiang and weak ones".

Industrial resources will accelerate to large enterprises.

The instability of the appreciation rate of the renminbi is a warning for the clothing enterprises that rely on cheap to do the international market.