Price increase is not emboldened at the time of transformation (Figure)

In the autumn Canton Fair, Mr. Wu, the head of Quanzhou Auto Parts Trading Co., was frowned upon. What made him headache was how to quote with foreign customers. “If the newspaper is high, the customers will lose, and the report will be low, and the original meager profit of the company will be *** Appreciate the value of a piece and companies will be unprofitable."

The China**** Center announced on October 11 that the median price of the US dollar against *** was 6.6732. In one fell swoop stepped into the 6.67 mark, a 98 basis point higher than October 8 (6.6830), once again set a record high since the exchange reform in 2005.

General trade is the most passive Recently, Quanzhou Foreign Trade and Economic Cooperation Bureau issued a report on “Analysis and Countermeasures on the Impact of the New Round of Exchange Reform on Foreign Trade and Economic Cooperation in the City”, pointing out that the appreciation of *** has different effects on different trading methods and on processing. The impact of trade is relatively small and has a greater impact on general trade. It is understood that the city’s general trade accounts for about 85% of the total export volume, so the impact of foreign exchange settlement after exports is more obvious. Taking the June and July of this year as an example, the city's general trade export was 1.446 billion U.S. dollars, while the exchange rate of the U.S. exchange rate changed from 6.8275 to 6.7898, and the city’s general exporting enterprises reduced revenue by a total of 0.55 billion U.S. dollars.

In addition, from the perspective of export commodities, the appreciation of *** has a greater impact on textiles, clothing, shoes, bags, and ceramic resin handicrafts, which are low in technology, low in added value, labor-intensive, and relying on low-cost advantages. Such export enterprises are generally in a state of low profit and are sensitive to changes in costs. A slight change in the exchange rate will severely squeeze corporate profits and even cause losses.

According to a research report, about 57% of small and medium-sized export enterprises have an after-tax profit rate of less than 5%. If *** accumulates a 3%-5% appreciation, this part of the company will be in a state of low profit and loss. Since June 19 this year when the central bank launched a new round of exchange rate mechanism reform, the *** has appreciated by more than 1.7%.

The adjustment of product structure is the key to a domestic shoe company has provided a copy of the data. Taking the ordinary female shoes with an ex-factory price of US$15 as an example, from 2006 to 2008, the raw material price rose from US$10.05 to US$10.85, and the labor cost was from US$2.23. Rose to 3.3 US dollars and so on. Even if the unit price of exports rose to 16.2 U.S. dollars, the gross profit of these shoes dropped from 1.1 U.S. dollars to 0.7 U.S. dollars. Coupled with the continued appreciation of the *** reduction of 0.29 US dollars, the export tax rebate reduced profits of 0.3 US dollars, a pair of shoes before the profit before tax, from 1.2 in 2006 to 0.21 US dollars in 2008.

"A year of hard work resulted in a loss of money." Mr. Wu had a hard time chatting with reporters. "Low value-added processing products simply do not have the ability to raise prices." From the perspective of the Canton Fair, The reporter also found that it is generally innovative products that use new materials and new technologies.

Under certain circumstances, the appreciation of the renminbi will reduce the profits of exporting companies and at the same time force the transformation of enterprises. “In the long run, the exchange reform is an excellent opportunity for the city to adjust its product structure and upgrade its industrial level.” A related person from the Municipal Bureau of Foreign Trade and Economic Cooperation stated that for export companies, the increased costs will force companies to eliminate backward products and increase products. High value-added goods exports. Companies will focus more on deep processing, brand marketing and R&D. The pace of changing foreign trade growth will be faster.

Make good use of settlement tools to avoid risks "Actually, to cope with the appreciation of ***, companies can start from both inside and outside, first increase the added value of products and enhance their bargaining power; at the same time, they should also be good at using various settlement tools." Huaqiao University Professor Chen Jinlong of the School of Business Administration said.

"Enterprises insured by export credit insurance can use foreign exchange policies to convert foreign currency to foreign exchanges and use them to lock in exchange rates in advance to avoid exchange rate risks," said a person from the Foreign Trade Bureau. In addition, promoting cross-border trade settlement is also a good way.

At present, the city has selected 977 enterprises that have submitted the first batch of export goods trade settlement trials. “After the list of pilot enterprises has been approved, companies can use *** for settlement of export goods,” the source said. Relevant information shows that settlement with *** can save 3% - 5% of the cost. “In order to persuade overseas customers to accept *** settlement, companies can try to adjust export prices and share the cost savings with trade partners to achieve a win-win situation.”

“In addition, the use of forward exchange settlements, currency swaps, currency options, and other currency derivatives to guard against exchange rate risks, timely locking of forward exchange rates can also avoid the risk of large exchange rate fluctuations, thus locking in profits.” Industry insiders said. (This article source: Quanzhou Evening News reporter: Liu Wenyan)