US Debt Rating Downgrade, Affecting Textile Exports "Nerves"

The United States is the second largest exporter of textiles in Shaoxing County, 1-6 months, and Shaoxing county is right.

"90% of exports are in the US market, and all foreign exchange rates are exchanged in US dollars. Our company is too risky."

In August 6th, standard & Poor's, one of the three largest rating agencies, cancelled its US debt rating for 70 years for the first time in 70 years, and lowered the US sovereign debt rating to AA+.

He said: "although the US debt rating has not yet affected our exports, the US economy is weakening and the US dollar is accelerating.

Once upon a time, the US market and the US dollar were all proud of the export enterprises, but now they feel pressure on the export enterprises.

The pformation is directly from the US economy.

Shaoxing's export and foreign trade enterprises are generally worried about the reduction of us credit by the S & P, and they worry that the future exchange rate changes will be even more serious.

In the first half of this year, Shaoxing's exports to the United States amounted to US $360 million.

"The United States has always been a major exporter of textiles in our county, ranking the leading exporter of Shaoxing county."

County Business Bureau official told reporters.

According to the latest statistics, in the 1-6 month of this year, Shaoxing's exports to the United States amounted to US $360 million, and it was second after the UAE.

In the first half of June this year, Shaoxing's exports to the United States increased by only 18.1%, less than the average increase in the county's exports by 24.8%.

"The growth rate of exports to the US has slowed down, which is closely related to the decline in economic development and consumer confidence index."

According to industry analysis, in recent years, the weakness of the US economy has gradually affected its international purchasing power, especially the international buyers such as WAL-MART have reduced the volume of Chinese purchases, which directly affects the export of textile and clothing in our county. For example, this year WAL-MART canceled the purchasing relationship of a garment enterprise in our county for many years, which directly led to the export of the enterprise.

"Credit guarantee" for us customers

The international market can not be easily abandoned. Therefore, how to ensure the risk of the international market, Fujia a home textile enterprise has adopted export credit insurance, to export its own "safety belt".

Not long ago, the home textile export enterprise insured its American customers for export credit insurance.

After the financial crisis, the company adopted export credit insurance in 2009, but mainly focused on high-risk countries such as Turkey.

But this year, according to the requirements of its international business department, the company decided to adopt a "credit guarantee" for the United States and other markets, and take a relatively high premium.

"This is related to the increase in the uncertainty of the US market," the company official said.

Zhou Xiang, director of the Shaoxing Office of China Export and Credit Insurance Corp, told reporters that the number of enterprises exporting credit insurance to American customers is increasing, which is closely related to the recent economic development in the United States.

Locking the exchange rate to reduce the risk

It is an indisputable development trend that the S & P lowers US credit and strengthens the depreciation of the US dollar and the risk of exchange rate is hard to predict.

"To get to know the exchange rate locking matters, can we reduce the exchange rate risk?"

Lai Di Sheng clothing, located in the Qian Qing garment industrial zone, is the largest exporter of clothing in the first half of the year, while the United States is the largest exporter, accounting for over 90%. Therefore, every move in the US market is related to the survival and development of enterprises. The company is responsible for foreign trade export, Mr. Wang told reporters that export enterprises are most afraid of fluctuating exchange rate fluctuations, making it impossible for the company to offer quotations to customers, and exchange rate locking can solve this contradiction better and minimize the cost of exchange rate risk.

Recently, many of the same views with Mr. Wang have been seen by journalists from various banks in the Textile City, and the number of visitors coming to consult with the exchange rate for forward exchange settlement has increased significantly.

"At least twice the number of people who came to consult with us on weekdays," said Miss Li, director of the International Business Department of a bank in Shanyin Road, Keqiao. Not only did the Advisory volume increase, but also the number of applications increased sharply. In July of this year, the bank's exchange rate locking business increased by 120%.

Forced to accelerate pformation and upgrading

Why does the exchange rate fluctuation make Shaoxing textile exports so sensitive?

"The exchange rate has increased by 1 percentage points, and the profit of export enterprises has dropped by 1 percentage points, and these 1 percentage points account for 1/3 or 1/5 of total profits. In the final analysis, our textile has no price" right to speak "in export.

Wang Jianzhong, deputy director of the county commercial bureau, said that the depreciation of the US dollar and the strengthening of exchange rate risk are the faces of the global economy. Our textile exports are also hard to avoid. This will push Shaoxing textile enterprises to accelerate the pformation and upgrading.

During the "12th Five-Year" period, Shaoxing county took the acceleration of enterprise pformation and upgrading as the core theme, and the government was actively guiding. At the same time, the external factors such as the reduction of the US debt rating were forcing the enterprises to actively and independently innovate, improve the competitiveness of products, and take the pressure and power of taking the road of differentiation.

Tian Kun textile production of chemical fiber fabrics and printing and dyeing fabrics, because of rising costs, the accelerated depreciation of the dollar and other erosion of its profits. For this reason, next, the company plans to develop clothing brand, the development of high-end underwear brand.

"Whether production enterprises or trading companies have shown a good momentum of pformation and upgrading."

Wang Jianzhong said.