Analysis Of The Impact Of RMB Exchange Rate Fluctuation On China'S Textile And Garment Export Enterprises

In December 12th, RMB Spot exchange rate Soon after the opening, it fell to the lower limit of trading day. According to the foreign exchange rate, the limit point is 6.3613. This is the ninth consecutive day of RMB against the US dollar. After a period of half a year's climb, the fall of the RMB exchange rate has attracted the attention of all parties. Clothing industry It is also regarded as the first beneficiary. However, in Europe and America market Under the background of weak consumption and sharp reduction in export orders, perhaps we should reconsider: how can the RMB exchange rate decline bring some benefits to the textile and garment enterprises? What worries do the enterprises have in the direction of RMB exchange rate?

"One meter sunshine" is hard to save the market

In others' view, the fall in the RMB exchange rate should bring a ray of dawn to the textile and garment export enterprises. Some analysts have pointed out that devaluation of the products which are mainly exported to the products and domestic materials purchased in the mainland, especially for industries with high export dependence, can play a stabilizing role. Including textile and clothing, electronic and electrical appliances, toy shoes and hats, furniture, building materials and construction machinery, and so on, are all benefited industries. However, after a long period of appreciation of the RMB, some textile and garment export enterprises have not been caught up with the recent exchange rate of RMB exchange rate.

"Although I can take a breath, in my view, the depreciation of the RMB can not change the unfavorable situation of the textile and garment export market." "In the short term, the depreciation of the renminbi and the appreciation of the US dollar may increase the profits of the company," said Mr. Ge, head of a clothing trade company in Nantong, Jiangsu. But, if in essence, if the downturn in demand can not be reversed and the enterprises can not get enough orders, then some of the profits from the depreciation of the renminbi will soon be lost with the reduced orders. "

The study shows that the sales profit margin of the textile industry has decreased by 2%~6% per 1% appreciation. At present, the average net profit margin of the entire textile industry is only 3%~4%. According to this law, the depreciation rate of RMB is more than one percentage point, and textile enterprises will have a taste of sweetness. However, in the current severe situation of external market recession and weak consumption in Europe and America, the profit growth of export enterprises or more factors should be considered.

In the course of the interview, many business representatives, like Mr. Ge, held that the small fluctuation of the RMB exchange rate has become a secondary factor affecting exports. Li Yu, deputy general manager of Tianjin new textiles import and Export Co., Ltd., said that in recent years, enterprises did feel the pressure of RMB appreciation. But this year, the pressure has become less prominent. The burden of enterprises now comes mainly from two aspects: the shrinking of overseas markets and the increase of production costs. Shen Quanfang, deputy general manager of Shanghai new textile import and Export Co., Ltd., has been observing changes in the European market. He said: "at present, from the Thanksgiving Day and Christmas orders, the European debt crisis has led to a decline in orders in the European market. The bargaining power of enterprises has been weakened, and more discounts must be allowed to ensure sales volume.

The trend is uncertain to contain enterprises' actions.

The reasons for the short-term devaluation of the renminbi are different from those of the industry. Some believe that this is just the result of the arbitrage of foreign exchange. Some believe that this is because the market is not optimistic about China's economy in the next 3~4 months, resulting in a weaker appreciation of the renminbi. What is different from the past is that the relevant government agencies have publicly stated earlier that the RMB exchange rate reduction is not related to central regulation and control, and is caused by market regulation. The uncertainty of the RMB exchange rate decline and the uncertainty of the future trend make it difficult for the textile enterprises to take action to seize the market opportunities.

Shen Quanfang, deputy general manager of Shanghai new textile, said: "the depreciation of the RMB will definitely bring benefits to the enterprises. Nowadays, the profit margins of textile export enterprises are generally small, and each product can earn a few cents more. Our business pressure will indeed be eased. But the problem now is that there are too many factors affecting the trend of the renminbi. It is very difficult for us to make a judgement about the future, which will affect our timely changes in business decisions.

Shen Quanfang admitted to reporters that the central bank did not explicitly show its intervention in the RMB exchange rate, which made him worried about the downward trend of exchange rate. "Is this a long-term trend or a short-term fluctuation? If it is a long-term trend, we can make preparations in time, appraise the price of products at the time of purchase, and strive for more market share at a more competitive price. But if it is a short-term phenomenon, we will not be able to act now. " Shen Quanfang explained, "if we adjust the price of products at this time, once the RMB exchange rate is back to the rising orbit, then the order shipped at a lower exchange rate will face the risk of reconsideration of the price with foreign businessmen."

According to the reporter's observation, not only is Shanghai new textile spinning, but because of the doubts about the exchange rate fluctuation, most export enterprises' reactions are quite conservative. "The list of export enterprises was bought a few months ago, and the price was priced at the prevailing exchange rate. If the RMB continues to depreciate, it will benefit from the settlement of foreign exchange. But the future direction of the RMB is very uncertain. The current order is bound to rise or fall when it comes to settlement, so we can only wait for it to change. {page_break}

Anticipation is the permanent solution.

In fact, when it comes to exchange rate changes, journalists clearly feel that export companies are not as anxious as they used to be. This is because after several rounds of ups and downs, enterprises that have suffered losses due to exchange rate changes have developed a set of methods to prevent risks. Many textile exporting enterprises have realized that it is better to take preventive measures rather than watch the changes in the exchange rate table every day.

In order to avoid exchange rate risk, the Beijing Zhuzhu Shengshi group, which mainly exported garments to Eastern Europe, adopted the method of RMB quotations and US dollar settlement. Liu Liansheng, general manager of the company, said: "with this method of settlement, we can still guarantee that the price of products will not be affected by the fluctuation of exchange rate when the products of other businesses are revalued. So that products can remain strong competitiveness. It is also understood that some other textile enterprises have adopted foreign exchange arrangements such as early settlement of foreign exchange or exchange rate compensation Memorandum for signing orders to avoid exchange rate risks.

According to the insiders, textile enterprises should actively join the export credit insurance team, and pay a relatively limited and fixed premium to lock in the RMB income in the future. In this way, short-term risk can be shared to facilitate the steady operation of enterprises. Besides, textile export enterprises should also increase the use of financial instruments. At present, financial risk avoidance tools provided by banks to enterprises include forward selling and swaps. These two financial instruments can resist exchange risks.

The trend of RMB exchange rate fluctuation has not slowed down. In the face of the uncertainty of future trend, enterprises should also work hard in anticipating the exchange rate risk.