Double Erosion Of Cost And Exchange Rate Changes: Yiwu'S Ability To Break Foreign Trade Predicament

In May 6th, the pilot reform of Yiwu's international trade was officially launched.

This means that after Shanghai Pudong New Area and Tianjin Binhai New Area, Yiwu will become the tenth "Zhejiang new economic zone" in China.

As the only comprehensive county level national strategic level reform pilot in China, Yiwu is behind the opportunity of China's foreign trade pformation.

The prophet of warm spring duck.

In the process of China's foreign trade pformation, the large and scattered small and medium-sized enterprises first felt the coolness.

The Ministry of Commerce's first quarter foreign trade report shows that factor cost has entered a rising period.

Yiwu's small commodity market with a daily traffic volume of 210 thousand passengers is considered to be China's right.

Over 10 years of business in the foreign trade business, he has moved from the old market in Yiwu to the new market, and now he is doing the jewelry business in the Yiwu small commodity market.

Looking at the foreign buyers coming and going, the feeling of dry construction is much lower than that of last year.

In this market area of about 4000000 square meters, more than 20 employees in 62 thousand business places are getting tighter.

Due to the high sensitivity of the foreign trade situation, the merchants in Yiwu's small commodity market first felt it.

In fact, since the second half of last year, merchants have clearly felt the pressure of raw material costs.

In addition, Zhao Ping, deputy director of the consumer economy Department of the Ministry of Commerce and trade research, said that "the expectation of external market currency appreciation and the pull of internal market costs", these two factors are seriously eroding the profits of small and medium-sized enterprises, and this kind of foreign trade situation is difficult to change at the same time.

Busy for a year without making money

"Business is better if prices fall, but business is difficult to raise prices."

Trading in jewelry made of natural materials such as sea shells and corals, like most of Yiwu's Small Commodity City (600415) merchants, began to understand the upward pressure on prices from the second half of last year, and the pressure to pmit to downstream customers is very difficult.

The cheapest Shell Necklace now sells for 0.95 yuan in the dry Jian Ying shop, which sells for about 0.65 yuan last year.

The cost of the necklace rose nearly 50% due to the increase in raw material prices and labor costs.

"More than 30%, foreign customers can not accept it, let alone 50%."

He also understands that the cheaper the product is, the greater the price increases will be.

Gan Jianying introduced, "a necklace manual processing costs at least a few cents, we can keep the price unchanged before, because the labor force can keep the price low, but now even the small factory old lady is not willing to accept such a low salary."

In order to retain customers, Gan Jianying has been digesting the cost pressure for a long time after the cost rise.

"In order to retain customers, we dare not go up in price."

Sha Xiaoqing, a "small green ornament" located in the small commodity city area, told reporters that "we have to face the competition of these shops, so we can only give profits to foreign buyers."

"Jingxin toys" Co., Ltd., a small commodity city, has been running a variety of dolls for a long time. Xie Zhiqin, the boss, said, "now the foreign trade business is not good enough, and sales volume is flat with the first half of last year, which shows that the operation is very good."

But because of the decline in profits of each product, even if it is flat, profits will be much lower than the first half of last year.

"We didn't make any profit last year," Xie Zhiqin said. "Profits in the first half of the year are subsidized to the second half of the year."

In the second half of last year, Jingxin toys sold slightly better than the first half of the year.

Old products have no room to raise prices.

Price increase is a game process.

Because the bargaining power is not strong, the pmission process of price rise is always very slow.

As the price of raw materials fluctuated strongly at the end of last year, the product of dry Jian Ying was forced to raise its price. This process is not easy at all.

When the first price increase was made last year, the overseas customers of dry Jian Ying could not accept it.

"He told me to slow down and make the order."

Two months later, the customer came to China again and found that the price had not gone down, but it had gone up even more.

Until the third price rise in the market, the customer accepted the fact that the price was rising.

But the number of orders has shrunk.

"The purchasing power of foreign buyers goes down, and when costs increase, they often choose to buy 2/3 of the original quantity, or less."

Because of the slow process of pmission of price, in order to retain customers, in the process of price pmission, these enterprises often have to give profit to the customers.

"If we go up 20%, we'll take half of our customers."

Xie Zhiqin told reporters that customers sometimes do not buy it.

From the point of view of foreign customers, "if the price increases of a product are around a few cents, maybe they can accept it, but they have to raise their own freight."

And the depreciation of the US dollar also has an impact on them. If the price goes up by 30%, it means that the price of a product will increase by one dollar, which is totally unacceptable to the wholesale buyers. "

Sha Xiaoqing told the daily economic news reporter that many foreign buyers have been dormant in the Yiwu market for a long time.

Therefore, for foreign customers, the elasticity of product price increase is very limited.

"In general, we first press the price ourselves, but we really can not afford it, so we will raise the price to our customers."

Xie Zhiqin said.

Market smell is a straw.

"Looking for moderate materials to replace high priced materials before, or reducing the size of new products, so as to ensure that the prices of new products can not differ significantly from those before prices rise."

Xie Zhiqin told reporters, "after raising prices, many customers shake their old products, we recommend them to new products, the price of new products can often make them heartbeat."

Xie Zhiqin regrets that once the factory does not have such innovative ability, it will face the risk of bankruptcy.

Unlike traditional trade enterprises with order processing, Yiwu's foreign trade enterprises have the advantage of direct communication with the international market because they are in the Yiwu market, thus mastering market information.

Zhao Zhongxiu, Dean of the Institute of international trade and economics of the University of foreign trade and economics, pointed out that "the enterprises engaged in foreign trade processing have gradually lost their channels and market information, and have been in the low end of the world division of labor for a long time."

"The Middle East market has always been our major customer, but this year's Syria war has led us to an order of 1/10 containers."

Xie Zhiqin said, "but we found the India market and produced many new products for the India market.

The large orders in the India market ensured our sales in the first half of this year.

Similarly, with the low cost advantage of competition, because of the sharp smell of the market, these small and medium-sized enterprises can expand the living space under the circumstance of various unfavorable factors superposition.

Public data show that Yiwu's market exports to 215 countries and regions of the world, the market outgoing degree of 65%.

It also includes suppliers of more than 20 000 enterprises nationwide.

Lu Dingjun, a consultant to the Yiwu government, said that the construction of the international means of production market will promote the comprehensive reform of international trade.

"In the overall layout of the international means of production market, Yiwu will focus on the construction of 6 major plates, namely, the massive data storage and information processing center, the supply of raw and auxiliary materials, the supply of complete sets of machinery and equipment, the supply of spare parts and assemblies, the supply of measuring tools, and the information release platform of Yiwu index."

It is understood that an area of 2.6 square kilometers, the construction area of 2 million square meters of suppliers, product display pactions and supporting projects are being built locally.

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The situation is not optimistic in the second half of the year.

Since the financial crisis in 2008, foreign markets have begun to languish. Recently, foreign trade practitioners have worked harder because of rising raw materials and exchange rate changes.

Now is the pition period of these foreign trade enterprises. They have almost chosen the small profits but quick turnover.

Xie Zhiqin said, "profits began to decline from the original 10%~15%, and now some of the profits are only 3%.

We don't dare to mention what profits we need now. We just want to keep our capital.

According to the Ministry of industry and information technology, in the first two months of this year, the loss of small and medium-sized enterprises above Designated Size reached 15.8%, and the amount of loss increased by 22.3%.

"In order to ensure market share, many enterprises choose not to make profits in the short term."

Zhao Ping, deputy director of the Ministry of Commerce, Department of consumer economics, said.

Zhao Zhongxiu pointed out that small and medium-sized foreign trade enterprises in Zhejiang and other places are facing a dilemma: they are constantly losing money, but they can not stop immediately, otherwise the losses will be greater.

In the process, these enterprises need to increase the price of their products abroad, including product upgrading and product quality.

According to the Ministry of commerce data, the average profit margin of China's export enterprises in 2010 was 1.47%, lower than the average profit level of industrial enterprises. In 2011 1~2, the export profit margin further dropped to 1.44%.

From Guangdong, Zhejiang, Jiangsu, Liaoning, Sichuan, Hubei's 6 major export provinces, foreign trade research shows that about half of these enterprises have lost profits and increased their losses.

When labor-intensive products are still mainstream, how to increase the demand for stable small commodity orders and lengthen the trade chain, Zhao Zhongxiu pointed out that more sophisticated management from the government is needed, so as to ensure the vitality of the micro body.

Zhang Handong, director of Zhejiang international economic and Trade Research Center, analyzed the characteristics of small commodity trade in Yiwu, such as small scale, more trade subjects and frequent pactions. The contradiction between developing foreign trade export and strengthening the market supervision by government departments has existed for a long time.

He believes that the small commodity trade in Yiwu is known as "market purchasing trade". It refers to the import and export trade between enterprises and individuals at home and abroad through negotiations in the small commodity market. Therefore, the pformation of trade mode needs to emphasize that trade regulation is more streamlined and effective, and government departments have stronger service functions.

Zhuo Yongliang, director of Zhejiang development and Reform Research Institute, analyzed that Zhejiang's import and export trade is in urgent need of pformation. First, we need to speed up the export of mechanical and electrical products with lower paction costs. Two, we need to expand the export market. Three, we need to expand imports. Four, we must speed up the establishment of a large trading system integrating industry, trade, logistics and distribution services.

Policy dynamics: changes in the mode of market purchasing in Yiwu

Customs authorities are exploring ways to establish a new mode of customs clearance.

We should uphold and improve the simplification of commodity classification, and actively promote various measures for trade facilitation and trade liberalization, and study the establishment of supporting trade platforms and carriers such as comprehensive bonded zones, import duty free zones and export processing zones.

We should support the development of import and re export trade, and manage the import commodities of Yiwu's import commodities Museum in accordance with the longest period (two years) of the regulation of import exhibits.

In terms of inspection and quarantine, we should explore ways to adapt to the inspection and regulation of the characteristics of small commodities export, promote the independent declaration mode, deepen the reform of the classification management system of export entities, reform the management system of customs clearance documents, and dispose of the unqualified products of inspection and quarantine.

For reputable customers, we should explore and reduce the number of sampling lots, reduce the number of sampling samples per time, reduce the items and indicators of commodity inspection, and conduct more stringent inspection measures in the case of finding problems or increasing risks.

In terms of Taxation, we should explore ways of formulating tax exemption records for export goods, and implement a no tax or no tax refund policy for the purchase of goods exported to Yiwu by foreign trade companies set up in Yiwu, and record them to the competent tax authorities within the prescribed time. We should implement a value-added tax policy for the above non tax free goods exported by Yiwu operators, and at the same time, innovate the management measures for the general taxpayers in the market.

In terms of foreign exchange, we should explore the formulation of no export verification under the "market purchase", cancel the settlement of individual foreign exchange settlement accounts in Yiwu, print export declarations, and allow qualified individuals to open foreign exchange settlement accounts.

We encourage the promotion of market purchase and trade settlement.

We should gradually relax foreign exchange conditions and exchange quotas and liberalize small foreign exchange.

In terms of industry and commerce, referring to the international practice, we should explore the qualification of foreign trade of natural persons, permit the application of individual business license, support foreign enterprises to set up branches in Yiwu and give them the right to operate foreign trade.