Foreign Trade Enterprises Face "Long Winter"

This year, the Christmas products industry is facing not only domestic costs but also domestic costs. Rise The pressure is also facing the pressure of exchange rate risk caused by the substantial appreciation of the renminbi. Analysts believe that foreign trade enterprises will continue to face the double pressure brought by the two party as the cost continues to rise and the RMB appreciation will accelerate or become a long-term trend in the second half or even the next few years.

Rising cost of business

In the face of the sharp rise in cost this year, Christmas products enterprises generally reflect the huge increase in the cost of materials, employment and land use, which has raised the total cost of enterprises.

"We are most afraid of the price of plastic, gasoline and paint for the enterprises that make Christmas products and accessories," Ma owner of Zhejiang Yiwu Zhi Bo Christmas crafts factory told the China Securities Journal. Because these three kinds of raw materials account for about 80% of the cost, they will go up high and the cost will be obviously lifted.

The owner explained that plastic is the main raw material for making Christmas accessories, which accounts for about 50% of the cost. Gasoline and paint are used as blending materials for the accessories of Christmas products, and the two accounts for about 30% of the total cost. The three kinds this year Raw material The rate of increase is relatively large. Plastic from last year's 4200 yuan / ton to this year's 4700 yuan / ton, rose by about 12%; paint from last year's 320 yuan / barrel rose to 390 yuan / barrel this year, up nearly 22%; gasoline rose the biggest, from last year's 6 yuan / liter to 8.5 yuan / liter this year, increased by 42%. The cost of raw materials is only about 16% higher than that of last year.

Enterprises generally reflect that, in addition to the higher proportion of raw material cost to total cost, the total cost is boosted, followed by labor cost. The ratio of labor cost to total cost is generally about 10%-15%. Its rise has become the second largest source of higher cost.

"This year, the wages of workers increased from 1600 yuan / month last year to 3500 yuan / month this year, more than doubled. The proportion of wages to costs is about 10%. As a whole, the increase in the cost of raw materials and wages is more practical. total cost It has increased by more than 20% points. The horse owner said.

Wang Jianshu, the boss of Huada handicraft factory in Ruian, Zhejiang, said: "like ours, the proportion of wages to the cost of finished products is higher than that of Christmas accessories enterprises, generally around 15%. Because the finished products are different from the processing parts, the accessories are semi machine and semi artificial production, and the finished products rely entirely on manual labor, so the proportion of labor cost will be higher. The proportion is already high, and wages have gone up a lot. It has increased from 2000 yuan / month last year to 3000 yuan / month this year, up 50%, so that the labor cost this year has increased by nearly 8% compared with last year.

China Securities Journal reporter interviewed found that in addition to the cost of raw materials and labor costs, there is also a rise in rental costs.

The operation of Yiwu Christmas products enterprises is basically a mode of "shop front shop". Most of its shops are concentrated in the two district of Futian, Yiwu, near the center of the city, and most of the factories are scattered in the suburbs or industrial areas that are dozens of kilometers away from the two districts of Futian, and some even in the nearby provinces.

Chen Jinlin, Secretary General of Zhejiang Yiwu Christmas products industry association, explained: "Futian two district is close to the city center, convenient transportation, and it is good for foreign businessmen to come here to see the order, so enterprises want to store the store here. However, because the rent is too high, the bargaining price of the enterprise alone is almost useless with the owner. After consulting the owners of the association and the shopkeepers of various stores, the whole area is rented down in the form of annual rent, and then rented to each enterprise, which has already reduced the rental cost for the enterprise. Nevertheless, store rents increased from an average of 20 thousand per year last year to an average of 30 thousand -5 / yr this year, which has risen by more than 50%.

"The plant is located in the suburbs tens of kilometers away because the rent is cheaper than that in the urban area. But even in the suburbs, the rental of factory buildings is still high and rising every year. This year, it has gone up a lot. For example, in an industrial area 40 kilometers away from the urban area, the rent was 12 yuan per square meter last year, rising to 16 yuan per square meter in the first half of this year, up 33%. It is expected that in the second half of the year, it will rise to around 20 yuan per square metre, or 67%, and the annual rent of 10 thousand square meters will reach 2 million 400 thousand. This also led to many enterprises withdraw from production, directly rely on rental workshop to make money. Chen Jinlin said.

"Store rents and factory rents account for about 5%-7% of the cost," said Huang Yunxu, owner of the Bo Xu handicraft company. "Factory rents have gone up too high. Many small businesses like me can't afford to move out of the industrial zone to the rental factories near Dongyang and Wen Zhourui an, which are close to Yiwu."

Increase product pricing power

In addition to the pressure of shrinking profits due to rising costs, the Christmas products industry is also facing pressure from appreciation of the renminbi as a foreign trade enterprise.

Since the further reform of exchange rate in June last year, the appreciation of the RMB against the US dollar has accelerated. In order to reduce the exchange rate risk and export pressure brought by RMB appreciation, Yiwu Christmas products enterprises basically adopted RMB settlement this year, and refused to settle in US dollar.

Chen Jinlin said: "because of the appreciation of the renminbi and the depreciation of the US dollar, 99% of the Christmas products enterprises have joined forces to use Renminbi to settle accounts and refuse to use the US dollar. The reason why the Christmas products industry can choose to settle RMB in a strong way is due to two aspects: first, affected by the foreign economic downturn, many foreign businessmen are biased towards some cheaper mid and low end Christmas products, while Christmas products in Yiwu meet this requirement. Two, the 7 standards set by the Association have improved the quality of Yiwu Christmas products and improved the products in the international market. The competitiveness of the field. And looking at the world, only Yiwu's Christmas products meet the requirements of foreign businessmen.

Teng Tai, chief economist of Minsheng securities, believes that in the context of the appreciation of the renminbi, enterprises should improve their product quality and competitiveness while enhancing their R & D capabilities and brand effectiveness. Only in this way can enterprises enhance their voice and raise their pricing power, so as to reduce the exchange rate risk brought about by the appreciation of the renminbi, and it can also help them. After raising the pricing power and shifting the pressure brought by the rising domestic cost, the profit margins of enterprises will be increased.

Double pressure or persistence

In the first half of the year, Christmas enterprises have been strong enough to face the pressure of rising domestic costs and appreciation of the renminbi. But whether enterprises will continue to face these pressures will become more concerned about them in the future.

Zhang Lei, a macroeconomic analyst at Minsheng securities, said that in the second half and the next few years, enterprises will still face the long-term trend of rising labor costs and rising other costs. The supply of low-end labor will be reduced, so that the labor cost of labor-intensive industries will continue to rise. In addition, the structure of the domestic labor force will also change. The new generation of migrant workers from 80 to 90 will become the main force in the labor market. Their demands will push up the cost of labor force.

Zhang Lei said that with the continuous appreciation of the renminbi, foreign trade enterprises will be more apparent in order to produce orders. After receiving foreign orders, enterprises will strive to complete production at the first time, so as to export as soon as possible, and receive foreign remittance as Renminbi as soon as possible, so as to reduce exchange rate risk.

In addition, he believes that the renminbi will continue to appreciate and will accelerate the transformation and upgrading of enterprises. The appreciation of the renminbi can force the low end manufacturing industry, so that enterprises can move from manufacturing to creation, from the low end to the high-end, thereby expanding the production of high value-added products and improving the profit margins of enterprises.

Teng Tai said that domestic oil prices or downward trend in the second half of this year is good news for enterprises, which will help enterprises to reduce certain raw material costs, and labor costs will continue to grow in the next five years or 13% annually, which means that enterprises will continue to face the pressure of rising labor costs.
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