Northern Zhejiang Textile Enterprises "Relative Lock Rate" To Avoid Trade Risk

In April 10th, the central parity of RMB against the US dollar was broken 7 for the first time. Yesterday, the RMB exchange rate against the US dollar continued to fall due to factors such as the fall in international crude oil prices.

Although the appreciation rate of RMB against the US dollar has reached nearly 6.5% this year, Zhejiang's golden San FA new textile group, which is located in Northern Zhejiang, has not easily given up the international market.

In recent days, "golden three hair" and Syria merchants have reached three adhesive lining export businesses, involving an amount of US $150 thousand, which is different from other trade enterprises in the industry. The other party has paid 70% of the contract payment in a week as a deposit, because the business week only takes 15 days, so the exchange rate is less affected.

Chen Liqi, Minister of international trade of "golden three hair" group.

Chen said that after the reform, they immediately launched the new "relative lock rate" new policy, which has already achieved initial results. The relevant data show that only this will save more than 50% of the exchange rate losses for enterprises.

One background is that in the Changxin area of Zhejiang Province, which is also developed in the textile and apparel industry of foreign trade, the statistics of relevant departments are affected by the exchange rate. The profits of nearly 84% enterprises have dropped by more than 10% over the same period, and more than 80% of the enterprises have claimed that the profit margins have been reduced and the space for raising prices is not large.

This is in the face of foreign textile enterprises that are overshadowed. The "relative lock rate" of "golden three hair" attracts the attention of the industry.

"For example, the exchange rate is 6.8 now, and it is expected to be 6.6 after three months. Now, lock 6.7, and sign a forward contract at this price.

In the future, the price may be 6.6, but it may also maintain 6.8. The forward settlement of foreign exchange is only free from the risk of exchange rate fluctuations in the opposite direction.

A staff member of the international bank explained.

Chen Liqi said, "golden three hair" relative lock exchange rate in the form of more diverse.

At a single price, it is stated in the contract that when the US dollar exchange rate falls below a certain point, the settlement price must be adjusted accordingly to resolve the exchange rate risk. At the same time, we should collect as much deposit as possible and reduce the financial cost. In addition, "golden three hair" will completely resolve the foreign exchange rate risk by importing US dollars.

"The relative lock in rate indicates that our products have market competitiveness and initiative in the market. To achieve this, we must rely on the advantages of brand, equipment and new product development."

Chen Liqi said.

An example can be corroborated that in March this year, a customer in Turkey paid 90% of the payment when signing the contract. In the general practice of international textile trade market, only a deposit of 15%-30% will be paid.

In addition, the use of non US dollar settlement has become another way for foreign textile enterprises to seek breakthroughs.

An investigation shows that most of the export enterprises no longer use the US dollar to bargain and settle accounts. Instead, they adopt non US dollar settlement or RMB bargaining and settlement.

Statistics from the Alibaba website show that the overwhelming majority of nearly 700 thousand Chinese suppliers, in order to reduce exchange rate risk as far as possible, no longer settle the non US pactions in US dollars, but choose euros, Japanese yen, Renminbi and so on.

"Golden three hair" has also become a member of the 700 thousand Chinese supplier using Euro settlement.

Chen Leqi said that the import of German precision machines this year began to use the euro to settle accounts. The purchase price was 1 million yuan, now 3 million yuan, and the equipment also increased 3 times with the appreciation.

This pformation has been approved. An industry source said that the export textile enterprises should be able to cope with the impact of the RMB appreciation trend and ask the other party to make payment in advance to reduce the exchange rate changes during the settlement period.

In addition, it can be settled in other major currencies, such as the euro and yen.

The relative lock rate and the settlement of non US pactions with us dollars no longer have allowed "golden three hair" to turn magnificently after the reform.

In the first 6 months of this year, the performance report showed that "golden three hair" still maintained a growth rate of 25%, and foreign trade sales amounted to 22 million yuan.

A message that Chen Leqi expects is that in the first half of the year, textile exports are off season, and the second half is the peak season. The annual growth rate is expected to exceed 30%.