China'S Manufacturing Needs Urgent Attention

With the continuous appreciation of RMB and rapid changes in the international market, China's foreign trade export enterprises are facing an unprecedented severe challenge.

Jie Xi min

The seventh China International Consumer Goods Fair ended in Ningbo, Zhejiang.

As the largest and highest scale professional consumer goods fair in China, the volume change will undoubtedly become a barometer of China's foreign trade.

Statistics show that the volume of pactions which has been increasing by an average of twice a year has been flat last year, and the export of home textiles and clothing has declined significantly.

There are various signs that China's foreign trade enterprises are facing an unprecedented severe challenge in the situation of RMB appreciation and rapid changes in the international market.

"Made in China" needs urgent attention.

Foreign trade enterprises encounter "cold current"

Of all the foreign trade enterprises affected, the textile industry is the first to bear the brunt.

Taking Shandong Province, a major textile province of China as an example, under the influence of a series of domestic and international factors, such as strengthening macroeconomic regulation and control, increasing international trade frictions, rising international raw material prices, changing the RMB exchange rate and adjusting the export tax rebate policy, Shandong textile industry is facing a huge challenge.

"It's hard to make money!"

This has almost become the pain of all the bosses interviewed.

According to reports, the proportion of low-end products such as yarns and cloth in Shandong textile and clothing exports is relatively high. The two main raw materials of the textile industry, cotton (15365, -285.00, -1.82%, bar) and chemical fiber prices are rising, making this kind of product almost lose the international competitive advantage, resulting in the low speed growth of Shandong's textile and garment industry at present.

Geographically, Japan and South Korea have been the two main markets for textile exports in Shandong.

But Japan and South Korea's textile market opened very early and basically saturated.

Under pressure, some big enterprises in Shandong are trying to break through the pformation of high-end textile exports by increasing the added value of products, and some small businesses with low efficiency will have to lose.

There are more than 100 original garment factories in Zhoucun District of Zibo, Shandong, and only more than 70 after the Spring Festival started this year.

For the labor-intensive shoe making enterprises, the foreign trade situation is also very grim.

According to statistics, 2000 enterprises in Dongguan, Guangdong, were closed, of which 500 were shoe companies.

Similarly, as a major province of China's export trade, Zhejiang's export data show a sharp shock this year. Compared with previous statistics, the data are not ideal, and there has been a distinct decline in some months.

"Internal and external troubles" challenges China's foreign trade

The continued appreciation of the renminbi is undoubtedly a huge challenge to export oriented foreign trade enterprises.

Research data show that the RMB appreciation per 10 percentage point, the growth rate of exports should be slowed down by 3 to 4 percentage points in general.

It can be seen that for those foreign trade enterprises with low added value and relatively small scale, the appreciation of RMB will undoubtedly become a "cold current".

Li Jian, a researcher at the international trade and Economic Cooperation Research Institute of the Ministry of Commerce, said in an interview with reporters that the global economy, including emerging economies, will inevitably enter a downward stage, which has greatly affected the export of foreign trade.

The global economic slowdown and weak market will further increase trade protectionism in some countries, and the trade barriers and frictions against Chinese export enterprises and commodities may become more severe.

At home, inflation expectations seem to have taken shape, and the increase in production costs of export enterprises is mostly between 10% and 35%.

On the one hand, the rising cost has led to an increase in capital demand; on the other hand, tight monetary policy has evolved to control the amount of loans in some places, resulting in a large gap in the liquidity of foreign trade enterprises, which restricts the growth of import and export volume.

Li Jian thinks.

With the implementation of a series of macro-control measures such as export tax rebate since last year, the profitability of foreign trade enterprises has been greatly tested.

Therefore, under the influence of internal and external factors, foreign trade enterprises are not only squeezed by the market and profit margins, but also struggling with the choice of industries and supply of goods.

Optimizing structure is the way to break through.

Jin Baisong, a researcher at the Ministry of Commerce and international trade and Economic Cooperation Research Institute, said that changing the industrial structure and producing and exporting products with high technology content and high added value has become a top priority.

The key to optimizing the structure is to encourage enterprises to innovate independently, pform traditional production processes with advanced technology, focus on developing middle and high-end products, upgrade products, and enhance the international competitiveness of products.

Enterprises that rely on imported raw materials and parts for production can be converted into processing because processing fees are exempt from VAT.

At the same time, we can implement the strategy of "going out" and guide some advantageous enterprises to aim at the peripheral countries below our labor costs and go out to build factories.

For the current situation of RMB appreciation, experts suggest that enterprises should export to the non US dollar area as far as possible, choose currency settlement which is independent of US dollar fluctuation, and make settlement in advance; we can also adopt RMB's long-term settlement to hedge RMB in the future through the bank's lock in exchange rate, so as to lock in the future RMB income.

In some cases, some localities and some foreign trade enterprises are keeping an eye on the changes in the domestic and foreign markets.

Such as Lu Tai and other large textile enterprises, purchasing large quantities of cotton (15365, -285.00, -1.82%, bar), machine parts and accessories, dyestuff and other materials from abroad can offset the adverse effects of RMB appreciation to a certain extent. Shandong Dai Yin group has established a sole funded garment factory in Sri Lanka, and its products are sold all over the world.

It can be predicted that after this round of "painful changes in thinking", "made in China" will be able to highlight the tight encirclement and make a smooth trip to the world again.