RMB Appreciation, China'S Shoe Enterprises Export Price Advantage Is Challenged

The appreciation of the renminbi and the slowdown in the US economy have led Chinese exporters to face the "big test".

The US subprime debt crisis is leading to signs of weakness in the US consumer market, and Chinese companies in the US as the main export market have been implicated.

"The growth of US retailers' same store sales has slowed down sharply, the share price has fallen sharply, and the competition and profitability of the enterprises have been under great pressure."

A purchasing manager of Staples, a large office goods retailer in the US, told reporters that China's exports may be faced with the danger of shrinking orders and shrinking profits.

But what is even more worrying is that the risk of international orders shifting is increasing.

Traders showed that China's manufacturing price advantage is receding because of the reduction of China's export tax rebates and changes in processing trade policies. "Buyers no longer put eggs in one basket, and began to train suppliers in other regions like India and Vietnam."

The negative effects of the subprime debt crisis on China's export to the US subprime debt crisis are expanding to the consumer market.

According to the data released by the US Conference Committee, the US consumer confidence index dropped to 95.6 in October from 99.5 in September, the lowest level in two years.

"The first thing to do is American retailers."

The Staples purchasing manager said Staples's same store sales growth slowed down, and the stock price fell as it did not meet Wall Street's expectations.

In fact, almost all American retailers have not been spared.

The second largest discount store operator in the US, Target (Takit), has just dropped 4.4% of its third quarter profits. The key is the weakness of the market leading to a decline in sales of clothing and household goods.

The US Department Store Sears Holdings (Sears), home store Home Depot (Jia Debao) share prices have declined this year.

The pressure of retailers has directly spread to Chinese export enterprises.

Chen, a clothing company export department in Zhejiang, said that orders have been decreasing this year, and many enterprises are idle due to the lack of orders.

At the same time, retailers are more sensitive to the prices of Chinese goods.

Because of increased competition pressure, retailers dare not raise prices in the terminal market, but rather attract consumers at low prices. For example, WAL-MART began offering discount products 3 weeks earlier than before.

This makes retailers more urgent than ever to buy at a low price. Faced with rising manufacturing costs this year, they are reluctant to increase their prices.

"Unless it is absolutely necessary, it will endure and endure.

After the factory asked for a price increase, the buyers will make a new round of inquiry for the same suppliers, and choose the factory with low price after full negotiation. The factory that raises the price will be faced with the risk of the loss of orders.

A purchasing manager said.

If WAL-MART asked to maintain the order price last year, Fujian Quanzhou Shun Mei group company gave up the order this year.

The specific impact of the US subprime debt crisis on China's exports is unclear.

But from a macro perspective, the central bank's research shows that the US economy has slowed down by 1 percentage points, and China's exports will decline by 6 percentage points.

In the latest world economic outlook report, the International Monetary Fund (IMF) predicts that the global economy will grow by 5.2% in 2007, of which the US economy will grow by 1.9%, 1 percentage points lower than last year.

The price advantage of Chinese products is challenged by the pressure on the US subprime debt crisis. The greater risk faced by Chinese exporters is that the product price advantage is receding.

Li Yushi, vice president of the international trade and Economic Cooperation Research Institute of the Ministry of Commerce, believes that the current export impact on China is more internal, including the export tax rebate reduction, processing trade policy adjustment, as well as RMB appreciation, raw material prices and wage increases.

"The export tax rebates for ceramic products dropped from 13% at the end of 2006 to 8% in July, and dropped to 5% in January this year. There may be no tax rebate in January next year.

In addition, at present, the RMB has been on the rise. Since the exchange reform, the appreciation of RMB against the US dollar has increased by more than 10%.

Our exports have little profit.