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    Chinese Leather Traders Plunge Into Ruble

    2009/3/10 0:00:00 10225

    Leatherwear

    The global financial turmoil is passing through Russia. Since August of last year, Russia's ruble began to depreciate continuously.

    So far, the ruble has lost 55% of its total value, and the rouble has fallen from 28:1 to the current 36:1.

    The ruble crisis not only made Russia's ordinary people live frugally, but also made thousands of Chinese leather traders in Russia suffer heavy losses.

    The Xinji leather trader stopped watching and waiting. "The contrast is too big. At the beginning of last year, we were still worried about not getting the order. Now we have orders and we dare not answer it, because the ruble depreciated too quickly and we lost one piece."

    Recently, Mr. Chen, a Xinji businessman who has been engaged in Russian fur trade for many years, told reporters that from the end of last year, his factory had entered a semi shutdown state because some old customers had to pick up the list, otherwise they would completely lose the market.

    The rapid depreciation of the rouble resulted in the price rise of China's exports to Russia. The cost of the same commodity, ruble before depreciation, was 10 US dollars (about 240 rubles), and the selling price was 12 US dollars (about 288 roubles). After appreciation, the cost did not change, and it remained unchanged at 10 US dollars. However, if the exchange rate was settled at 1:36, the selling price would be 432 roubles.

    In recent years, Xinji fur clothing products occupy almost half of the Russian market. Nearly 1000 leather traders in Xinji have engaged in wholesale leather clothing in the most famous container market in Moscow. The sales radius has extended to the whole Eastern Europe. However, since the second half of last year, with the sharp depreciation of the rouble, the domestic economy of Russia has been deteriorating, and the "big market" is no longer prosperous.

    "The situation is not good this year. According to past practice, every year before April is the peak season for leather clothing sales, but this year the market has been very cold in the past two months. The sales volume of the entire leather industry in Xinji has dropped by more than 1/3 compared with previous years."

    Jiang Zhongxing, director of the Xinji based office in Russia, told reporters that although Xinji businessmen have been rolling around in Russia over the years, they are very sensitive to the market changes, but the economic crisis this time is really beyond imagination. Many Xinji leather bosses are forced to take measures to stop production or reduce production.

    According to his understanding, the mentality of these leather bosses is very rational now, "no one will blindly put into production, but how much they can produce."

    The enterprises began to turn to the domestic market and the slump in the foreign market, and more and more leather enterprises began to turn their attention to the big cake in the domestic market.

    "In the past, when the domestic leather industry was hot, the total market share was over 100 billion yuan, but only later, the trade with Russia rose, and most leather enterprises gave up the market."

    According to Jiang Zhongxing, many leather enterprises in Xinji are undergoing pformation. Some big enterprises have set up R & D centers in Beijing and Shanghai since last year, aiming at market development in the domestic market.

    He called for the adjustment of the export tax rebate rate. "Now we are reflecting it step by step. We hope that the state will be concerned about the plight of the industry and raise the export tax rebate rate of the leather industry 11% as quickly as possible."

    Jiang Zhongxing told reporters that last year, after adjusting the export tax rebate rate, the leather industry increased from 9% to 11%, but compared with the export rebate rate of 15% of many garment products, there was still considerable room for improvement.

    The newly launched light industry revitalization plan supports the revival of light industry from three aspects of Taxation, capital and public services.

    The introduction of this plan is a good shot in the leather industry. According to the reporter, whether the tax reduction has become the most concerned problem for the entrepreneurs in leather industry.

    More clothing investment information, click here to enter the responsibility editor: Wang Xiaonan

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