Zhejiang Textile Shoes Enterprises: Price And RMB Race

"Over the years, I have been fighting the battle with quotations, and I am too tired."

He Wenwu said.

After months of hard work, the foreign trade clerk of a Ningbo bearing export enterprise resigned to the company in early March.

In the enterprise, He Wenwu's main job is to get in touch with foreign customers and look for orders from manufacturers.

"But in recent years, especially this year, business is very difficult to do."

He said that because the RMB exchange rate continued to change, plus bearing is a small profit industry, "once the price is not good, it is easy to lose money."

The "game" with quotations or RMB exchange rate has now become the norm of Zhejiang's foreign trade enterprises.

Despite their unusual efforts, the results seem to be very small.

Official statistics can be corroborated.

According to Ningbo customs statistics, in February this year, Zhejiang's "foreign trade first city" Ningbo exported 2 billion 648 million US dollars, an increase of -2.4% compared with the same period last year - the first negative export growth for the first month since 2000.

According to the Hangzhou customs, in the first two months, the entire Zhejiang province exported 22 billion 80 million US dollars, an increase of 13.7%, but the growth rate dropped 43.2 percentage points over the same period last year, and it was 3.1 percentage points lower than the national average growth rate. In February, it exported 8 billion 920 million US dollars, down 6.8%.

Game: quote VS appreciation rate He Wenwu admitted that he had done a few "failed business" last year, and the problem was on the quotations.

Every order of a foreign trade enterprise generally goes through the following process: negotiating with foreign customers, confirming the conditions of price and delivery, making the order to the factory and delivering the product.

"Because the process is longer, if the quotation does not run faster than the appreciation of the renminbi, it can only lose money."

He Wenwu said.

For example, the export volume of his previous company was about $5 million a year. In early 2007, the exchange rate of the US dollar to the RMB was roughly 1: 7.8, to 1 at the end of 2007, and the difference was 0.5 yuan. "Because of the change of exchange rate, the company's direct earnings decreased by 2 million 500 thousand yuan.

Of course, the trading process is calculated at the exchange rate of the day, and the actual losses are not so large, but there are also accumulated millions of dollars.

Such examples are everywhere in Zhejiang.

Shen Baozhong, deputy general manager of Hangzhou Textile Corporation, Han Bo international, revealed that the company lost 120 million yuan in 2007 because of its jump in exchange rate.

Cen Guohui, general manager of Ningbo Ning Hing golden seawater heating equipment company, said that the export profit of the company dropped by 2/3 last year.

"Therefore, in the quotation, we must take into account the RMB appreciation factor."

He Wenwu said, "but this is very difficult. The longer the delivery period is, the harder it will be."

To He Wenwu's statement, Li Keshen, a foreign trade clerk of a garment enterprise in Ningbo, has the same feeling.

He told the Morning Post reporter that the company had been quoted and ordered according to the possible changes in the RMB exchange rate within three months, but after 2008, this "advance forecast" has not been able to catch up with the speed of RMB appreciation.

"The only profit that is negotiated is that after a few months' presentation, the appreciation of the renminbi will disappear or even lose money."

Jin Yao, chairman of Zhejiang BABEI group, also said that as part of the US order was signed at 6.7-6.8, if the exchange rate continued to rise, at least 6 million yuan would be lost in the export volume of 100 billion yuan.

Choice: "losing money" OR "abandoning the single" although the exchange rate changes have brought great changes to the small and medium-sized export enterprises in Zhejiang, but this is not all the pressure they bear. The rise of raw materials, labor costs and policy adjustments also embarrass them.

According to the statistics of Wenzhou Municipal Bureau of statistics, in February, the situation of "high output and low output" of the industrial enterprises in the city intensified, which was affected by the price inflation of fuel, power, non-ferrous metals and agricultural and sideline products. The purchase price of raw materials for industrial enterprises rose 8.5% over the same period last month, reaching a new high in three years, while the ex factory prices of industrial products rose only 1.9% over the same month last year. The gap between them increased from 4.6 percentage points last year to 6.6 percentage points.

"This year is the most difficult year for the textile industry. The total cost of the enterprises has increased by 20% to 30%."

Gao Yien, head of import and export trade department of Zhejiang Textile Co., Ltd.

Wang Zhentao, President of AOKANG group, China's largest private shoe enterprise, also said that the cost of shoes products increased by 20% to 30%.

It is understood that the profits of foreign trade enterprises in Zhejiang are generally around 3%, but the exchange rate loss of a delivery cycle in three months or so often exceeds 3%.

Under the pressure of settlement risk and cost pressure caused by exchange rate, some enterprises choose to abandon the order.

"But the decision to abandon the list is not easy to make. Some important customers can not do business.

Losing an important customer may not be redeemed for many years, so you must take the risk of losing money. "

Li Ke, a foreign trade salesman of a garment enterprise in Ningbo, said.

He disclosed that there was a stationery trade company in the locals, and the price of 2 monthly report in 2007 was still sold at a loss in October of that year.

Others are passive "abandoning".

Li Ke introduced that, in order to digest the cost, the company's quotation to American merchants increased by 15% this year, which was basically not accepted, and some orders were pferred to India, Vietnam and other places.

Zhou Jianxiong, vice president of Zhejiang textile import and Export Group Co., Ltd., revealed that the first two months of the year, the company's exports decreased by 7.8 percentage points year-on-year. "Over the past six months, because of the underestimation of the appreciation of the renminbi, enterprises often lose money when they receive foreign exchange, but now it is difficult to get orders after raising the expected appreciation of the renminbi, which is a bit of a dilemma."

Official figures in Zhejiang reflect the situation from one side: according to Hangzhou customs statistics, in the first two months, Zhejiang dropped 4 billion 530 million to the US $4 billion 530 million in imports and exports, the first decline in 11 years since January 1997.

Among them, exports to the US amounted to 3 billion 870 million US dollars, down 4.2%.

1 interview with Wei Zhe: "made in China" advantage is as high as 50%. "On the global trade platform of Alibaba, I often see the manufacturing efficiency and price advantage of different countries. The advantage of" made in China "is not only 5% or 10%, but 40% or 50%.

1688.HK CEO CEO, China's largest e-commerce platform, said in an exclusive interview with the Morning Post reporter.

It is understood that Alibaba executives who have been the main customers of small and medium-sized enterprises are rushing to the 19 cities across the country to cheer up small and medium-sized foreign trade enterprises.

Oriental Morning Post: the East China Import and Export Fair is regarded as one of the barometers of foreign trade.

According to statistics, the eighteenth session of the first ten days of March was 3 billion 678 million US dollars, only 3.52% higher than that of the previous session, of which US $583 million, or 1.5%, is a sign that the high growth cycle of China's exports is coming to an end.

Wei Zhe: there are two questions about the decline in the US dollar.

First, American buyers lower the price of products and raise the cost of enterprises. Second, the proportion of small and medium-sized buyers increases.

According to Alibaba statistics, the number of American buyers increased, but the purchase volume declined.

My understanding is that the proportion of big buyers is decreasing, otherwise the number of buyers will not increase and the volume of trade will decrease.

So the U. S. recession has more impact on big buyers and large suppliers, small buyers and small and medium suppliers will get more opportunities - people may reduce luxury consumption to the United States and Europe, but will continue to buy basic products produced in China, such as textiles and light products.

Oriental Morning Post: influenced by factors such as RMB appreciation, rising labor costs, rising prices of raw materials and increasing environmental pressure, will SMEs in China lose the cost advantage of export?

Wei Zhe: at present, the advantages of "made in China" may be more than 5% or 10% than others, but 40% or 50%.

Moreover, China is not only low labor costs - Africa is lower, but China's most powerful is the establishment of a set of production and supporting systems, such as Zhejiang's "one town, one product", whose supply chain is the shortest in the world, and has already realized zero inventory.

Made in China has won the improvement of production system in the past 20 years, supporting efficiency, which is rarely seen.

The crisis may arise in a certain industry - the enterprises are likely to pfer to the low matching requirements.

Once the US subprime mortgage crisis is spreading, it will be a chance for Chinese enterprises to overturn their battles and reverse the acquisition of brands. Chinese enterprises' overseas expansion can not be simply interpreted as merely going abroad.

Some international brands have OEM before, but now they have the opportunity to buy them.