PPE

Zhejiang export shoe enterprises fight “exchange rate war”

since September, with the rise of RMB exchange rate, the profit of leather shoes export is only 1-2 percentage points. 1f deducting the increase of production cost caused by RMB appreciation, the net profit will be negative. 1f the US dollar exchange rate continues to decline and the RMB further appreciates, a large number of small and medium-sized enterprises may close down in Zhejiang, a major foreign trade province dominated by low-end manufacturing industries

according to the research results of the banking research center of Central University of Finance and economics, about 57% of the small and medium-sized export enterprises’ profit margin after tax is less than 5%. 1f the RMB appreciation is 3% – 5%, these enterprises will be in a state of low profit and loss. Since the central bank launched a new round of RMB exchange rate mechanism reform on June 19 this year, RMB has appreciated by more than 1.7%, and the “critical point” is approaching< According to the sample survey conducted by the Department of Commerce of Zhejiang Province, one third of the nearly 1500 key monitoring enterprises in Zhejiang Province made a year-on-year decrease in profits from January to July this year due to the fact that the increase in export prices could not fully absorb the rising costs. But it is worth noting that if the RMB continues to appreciate, even if enterprises lock in the settlement exchange rate of 60% orders, the exchange rate loss corresponding to the remaining 40% orders, coupled with the rising labor costs and raw material prices, can still "eat" most of the profits and affected by the appreciation of RMB, the production and operating costs of enterprises are further increased. 1n order to avoid risks, on the one hand, many Zhejiang merchants avoid taking large orders with long delivery time and large quantity, on the other hand, they develop new products to increase prices. At the same time, the “lock in exchange rate” (loan and repayment in foreign currency) model, as well as financial derivatives such as forward, swap and option are also favored by some Zhejiang businessmen< The export-oriented strategy of Zhejiang is difficult to sustain, and it is imperative to coordinate two kinds of international and domestic resources and two markets to implement the competitiveness oriented strategy. The proper appreciation of RMB can form a "forced" mechanism, forcing enterprises to transform into emerging industries, or upgrading to the high end of the value chain by increasing R & D investment

Back to list