Textile Industry: The Key Is To Order &Nbsp, And Exchange Rate Stability Is The Most Ideal.

The exchange rate of RMB against the US dollar reached a 0.5% limit line for 9 consecutive trading days. On the face of it, the Shaoxing textile and garment industry relying on export income generation seems to be the first to bear the brunt, but most operators think that:

Entering the December, the spot exchange rate quoted by the RMB actually traded has reached a limit of 0.5% for 9 consecutive trading days.

This is the first time in 3 years since the global financial crisis briefly appeared in 2008.

Shaoxing textile as a revenue generating company

Exchange rate stability is the most ideal.

Shaoxing County Commerce Bureau official pointed out that the export of products and raw materials in the procurement of domestic enterprises, especially for the export dependence of Shaoxing textile and garment industry, the devaluation of the RMB can play a stabilizing role.

But for foreign trade enterprises, more is the stability of the RMB exchange rate.

"The fall of the RMB against the US dollar is always good news for our export trade."

Zhou Bingsong, director of the Department of foreign trade of Hongsheng clothing company, told reporters that the business is nearly 30 million dollars a year.

Orders may be reduced in the short term.

Zhou Peng, sales manager of a printing and dyeing fabric export enterprise in Qian Qing town, Shaoxing, told reporters, "although it can take a breath, the depreciation of the RMB can not fundamentally change the unfavorable situation of the textile and garment export market. The key is that enterprises must have orders to pick up."

Zhou Peng believes that in the short term, the depreciation of the RMB and the appreciation of the US dollar may increase the profits of the company. However, in essence, if the 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.

Each time the price is negotiated, their companies consider that the change of the RMB exchange rate should be controlled between 3%~5%, and the budget is high. They are afraid that the order will be "flying" and that they will lose their own. Therefore, what the enterprises are looking forward to is that the exchange rate will become more stable in the future.

Zhou Peng told us that in recent years, the cost of production has risen and the renminbi has appreciated.

Anticipation of exchange rate risk

Shaoxing County Commerce Bureau official said that the RMB appreciation of 1% per cent, the textile industry sales profit margin decreased by 2%~6%, the current average profit rate of Shaoxing's 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.

The operators of several textile enterprises in Shaoxing say that the small fluctuation of the RMB exchange rate has become a secondary factor affecting exports.

In recent years, enterprises have indeed felt the pressure of RMB appreciation, but this year the pressure has become less prominent. The burden of enterprises now comes mainly from two aspects, namely, shrinking international market and increasing production costs.

Zhou Bingsong told reporters that from the Thanksgiving Day and Christmas orders, the European debt crisis has led to a decline in orders in the European market.

Shaoxing County Commerce Bureau official said that the trend of RMB exchange rate volatility has not yet slowed down, and in the face of uncertainty in the future trend, in addition to watching it change, enterprises should also be expected to guard against exchange rate risk in this aspect.