RMB Appreciation And Profits Of Export Enterprises Suffer From "Exchange Killer"

Since 2008, the appreciation of the renminbi has accelerated, resulting in the loss of foreign exchange, which has added to this small profits export enterprises.

Although a variety of measures can temporarily alleviate the losses caused by exchange rate fluctuations, these measures are only an expedient measure relative to the enterprise's continuously compressed profit space.

How to fundamentally solve the problems of survival and development faced by Chinese export enterprises is imperative for industrial pformation and upgrading.

Exchange losses have become the "biggest killer" of corporate profits.

"The prices quoted in the previous quarter are still being implemented, and the foreign exchange rate we have quoted has been far from the original quoted price when we export to the foreign exchange market."

A business owner in Zhejiang made a rough calculation. The contract period was $1 million for 6 months, and the value was about 7200000 yuan at the beginning of the year. When it reached the payment period, it only had a value of about 6800000 yuan, which shrank by 400 thousand yuan.

"For some enterprises, exchange losses have become the" biggest killer "of squeezing profits.

Zhang Xianping, an analyst with Donghai securities, who is studying export enterprises, said that from the signing of contracts to the export, the export enterprises had a large span of time, which was greatly influenced by the fluctuation of exchange rate. The acceleration of the appreciation of the renminbi meant that the profits of the exporters with dollar denominated will be directly suffered by the exchange losses.

Reporters learned that the average profit margin of textile and garment industry was around 3%, while in 2008, the yuan appreciated 4% against the US dollar in the first quarter.

This is also confirmed by many garment exporting enterprises in Zhejiang: "the impact of exchange losses on profits exceeds the impact of the export tax rebate rate reduction.

At present, the average monthly appreciation of the RMB against the US dollar is 1%, and a contract loss of 3 months will reach 3%.

Reducing exchange losses is "expediency".

Zhang Xiaoji, Minister of the Ministry of Foreign Economic Research of the development research center of the State Council, recently reminded that the cost pressures of export enterprises are on the rise and profit margins have dropped markedly.

In addition to exchange losses, the rapid appreciation of RMB has weakened the price advantage of export products, and indirectly reduced the profit margins of enterprises.

Taking the textile and garment industry as an example, according to the relevant departments, the sales profit margin of the garment industry will drop by 1% to 4% when the value of RMB rises by 1%.

Therefore, in order to save profits from the "first killer" exchange losses, many export enterprises begin with adjusting product prices.

"The price of products has been raised, but many orders have been lost."

A person in charge of clothing export trade in Zhejiang, Eral, said: "with European merchants, we will try to demand settlement in euros, and the risk of the euro exchange rate is much smaller than that of the US dollar".

According to statistics from the State Administration of foreign exchange, since 2008, the value of the RMB has depreciated to about 1.3% of the euro, with a monthly fluctuation of about 0.4%.

"Dealing with old customers usually locks on a rate acceptable to both sides of a paction."

The head of the sailing company said that the current export contract period is generally within 3 months, and the exchange rate risk is relatively controllable.

"Negotiate with the client ahead of time, and make more payments when settling."

"Although various measures can reduce some exchange losses, the reason for the compression of profit margins is not only the acceleration of RMB appreciation."

Yu Zhongying, Professor of China Economic Research Center of Fudan University, pointed out that the development environment of export enterprises has changed dramatically: in addition to the appreciation of RMB, the price of raw materials has risen rapidly, the human cost of enterprises has risen sharply, and the cost of pollution prevention has increased.

"The previous development is too smooth, and the tremendous changes in the environment make it difficult for enterprises to resist."

Expanding profit margins and upgrading industries

"If export enterprises can have their own brands, their profits will increase to about 6 times that of the current ones, and they will be able to cope with the appreciation of the renminbi, the cost of raw materials and energy and so on."

Zou Jianhua, executive director of the China World Economic Association and professor of Zhongshan University, studied the industrial economy of the Pearl River Delta for a long time. He recently visited the more than 170 enterprises in the Pearl River Delta region and said: "in the long run, solving the problem of low profits of most export enterprises can only rely on the upgrading and pformation of industries, and the establishment of private brands."

According to the press, most of the export enterprises in China are processing enterprises without their own brands and low added value of products. Only 10% of the profits can be obtained in the whole industry chain, while the brand enterprises occupy more than 50% of the profits, and the sellers occupy more than 30% of the profits.

"If enterprises do not carry out industrial upgrading and build their own brands, they will not be able to become bigger and stronger."

Professor Zou Jianhua said.

"This requires the joint efforts of the government and enterprises."

Professor Yu Zhongying, Professor of China Economic Research Center of Fudan University, suggests: "on the one hand, we need a long-term strategic plan in policy, and give enterprises a steady and gradual pformation opportunity during adjustment. The adjustment should not be too large. On the other hand, enterprises need to speed up their own innovation capacity building and speed up industrial upgrading."

"Enterprise upgrading is not just upgrading from technology."

Professor Zou Jianhua emphasized that enterprise upgrading should start from four aspects: enterprise system, technology, product and market concept.

"Especially the enterprise system, taking the PRD as an example, many enterprises are still in the initial stage, and it is urgent to establish a modern enterprise system."

Professor Zou Jianhua believes that upgrading products must focus on cultivating products that can meet export needs and meet the needs of the domestic market, rather than just "sell abroad".