Recently, the RMB exchange rate has risen sharply, which has attracted close attention from textile people.
The People’s Bank of China authorized the China Foreign Exchange Trading Center to announce that the central parity rate of the RMB exchange rate in the inter-bank foreign exchange market on November 17, 2020 was: 1 US dollar to RMB 6.5762, an increase from the previous trading day 286 basis points, rising to the 6.5 yuan era. In addition, the onshore and offshore RMB exchange rates against the US dollar have both risen to 6.5 yuan.
Textile companies encounter survival challenges:
Prices have increased, orders have decreased, and profits have decreased
Foshan, Guangdong Province Qiangcheng Hardware Industrial Co., Ltd. is a company engaged in clothing accessories (buttons, zippers, etc.) For an export company, Zuo Qianyi, the person in charge of the company, told reporters on the 18th that before November 10, the company had received relatively many foreign trade orders. However, with the recent devaluation of the US dollar and the appreciation of the RMB, no new foreign trade orders have been received this week. Order.
Fujian Shangfei Clothing is a company that produces outdoor clothing mainly for overseas markets. Enterprise, the relevant person in charge of the company, Ms. Liang, told reporters on the 18th that the appreciation of the RMB exchange rate has a relatively obvious impact on the company’s business, and the entire industry also generally feels the impact of the rapid rise in the RMB exchange rate.
Ye Jinfeng, head of a company in Dongguan that mainly produces tablecloths, shower curtains and other products18 Japan told reporters that fluctuations in the RMB exchange rate have a great impact on enterprises. “Mainly reflected in the price increase, fewer orders, and less profits.” He added that small and medium-sized enterprises do not have any hedging plan and are left to absorb the exchange rate difference themselves.
Reduced orders and losses in foreign exchange settlement are common challenges faced by these foreign trade companies. When some companies receive payments from foreign parties for foreign exchange settlement, due to the rise in exchange rates, the actual RMB received has shrunk significantly, which directly affects corporate efficiency and even leads to corporate losses. Ms. Liang told reporters, “In order to avoid this risk, we have to lock the exchange rate, that is, when the exchange rate fluctuates frequently, let the bank handle the exchange rate lock operation for the enterprise.”
Reporters also noticed that those who are more obviously affected by the appreciation of the RMB exchange rate are usually some Price-sensitive companies. A staff member of a yarn foreign trade company admitted that due to competition requirements, their prices are usually pushed down to very low levels by customers. When an enterprise suffers a loss in the RMB exchange rate, coupled with the pressure of rising raw materials and rising sea freight, the operating pressure of the enterprise will greatly increase.
Tan Yaling, president and chief economist of the China Foreign Exchange Investment Research Institute, told reporters on the 18th The reporter said that half of China’s exports are supported by private enterprises. Compared with state-owned enterprises and foreign-funded enterprises, their ability to withstand market risks is relatively weak. The rapid appreciation of the RMB exchange rate has indeed brought great challenges to these private enterprises. “A company that earns 1 million U.S. dollars can get back 7 million yuan when the RMB exchange rate was 7, but now it can only get back 6.5 million. You must know that the profit margins of these companies are very low. The rise in the RMB exchange rate will suddenly surpass them. The cost line even poses a survival challenge to these companies.”
Textile raw materials:
Transfer of orders and skyrocketing exchange rates triggered a rush for fabrics
9 Since March, due to the out-of-control epidemic situation in India, many large-scale export-oriented textile companies in India have been unable to guarantee normal delivery. In order to ensure that supplies during the Thanksgiving and Christmas sales seasons are not affected, European and American retailers have placed many orders originally produced in India. Production was moved to China, and the factory’s turnover soared fivefold.
With the overall recovery of the textile and garment industry, raw materials, cotton yarn, gray cloth, fabrics, etc. skyrocketing, my country’s textile and apparel exports are facing a severe test. The textile and apparel export orders received in August and September may not be executed due to the substantial increase in production costs; on the other hand, some foreign trade companies have received orders for export to Europe, the United States, ASEAN and other countries and cannot find them. Suppliers and manufacturers are processing on behalf of others. Currently, there is a situation where “there are many orders, but few can be received.”
In addition, under the expectation of RMB appreciation, imported yarn is also in a state of not quoting ” “Closed” status. In order to ensure production and delivery, a “fabric rush” has also begun in the textile industry.
According to a survey of more than 90 designated textile enterprises across the country by the China Cotton Early Warning System, In October, textile enterprises’ raw material inventories and textile output increased month-on-month, while yarn and cloth inventories declined.
In October, the price of domestic and foreign cotton yarn rose sharply. The average price of domestic 32-count pure cotton yarn in October was 21,668 yuan/ton, an increase of 3,156 yuan/ton from the previous month, and an increase of 556% from the same period last year.��/ton, an increase of 2.63%; the monthly average price of imported 32-count pure cotton yarn was 21,601 yuan/ton, an increase of 3,006 yuan/ton from the previous month, and an increase of 409 yuan/ton from the same period last year, an increase of 1.93%.
Cotton has entered a rising range since May. According to statistics from SunSirs, from April to September 2020, domestic lint cotton prices maintained an overall upward trend, with domestic lint cotton rising by a cumulative 1,811 yuan/ton, an increase of 16.31%. However, after entering October, the increase in cotton prices suddenly accelerated. As of October 19, the average price of domestic lint cotton spot market was 14,948 yuan/ton, an increase of 2,020 yuan/ton from the price on October 1, an increase of 14.62%; an increase of 17.03% year-on-year. %.
In addition, due to market rumors, affected by the La Nina phenomenon, this year will be 60 During the cold winter that comes once a year, down companies have stockpiled goods, which has led to insufficient supply. The prices of duck feathers and down reached two peaks in May and October 2020 respectively. In early May, the price of white duck down with 90% velvet content rose to 180,000 yuan per ton. It has been rising since August. In late October, it once reached 290,000 yuan per ton. Compared with the price in May, the price increased by 61%. Recently The price hovers around 280,000 yuan. The price of duck feathers has soared to 250,000 yuan/ton in more than a month since mid-May. From July to September, it basically hovered between 200,000 yuan and 270,000 yuan/ton. In October, the price once rose to 400,000 yuan/ton. Yuan / ton.
Although the current export performance of the textile industry is excellent, for some return orders, the textile industry The general judgment in the clothing industry is that it is an “emergency order.” Since there is no advantage in labor costs, it is difficult for these orders to stay in the country for a long time.
RMB exchange rate appreciation
Small and medium-sized textile enterprises cannot compete on price with some Southeast Asian countries
According to According to data from the General Administration of Customs of China, in October, China’s exports increased by 7.6% year-on-year in RMB terms, and have maintained positive growth continuously since April. At the same time, the RMB also began to appreciate strongly. Bloomberg reported on the 18th that there has been a clear correlation between the trend of the RMB exchange rate and the export freight index this year. After China’s export growth accelerated to a new high in more than a year and a half in October, the Shanghai Shipping Exchange’s China Container Export Freight Index in November The further rise to a new high in more than 6 years reflects the strong demand for export orders.
However, in the context of China’s overall export growth, the opportunities for each industry are not equal. Data from the General Administration of Customs of China show that in the first three quarters, mechanical and electrical products, which accounted for 58% of China’s total export value, grew only 3.2% year-on-year. However, notebooks and home appliances increased significantly by 17.6% and 17.3% respectively. Textiles and apparel, which accounted for 20.4% of the total, increased by 5.4% year-on-year, but exports of mask-related textiles increased by 37.5%. The export of medical instruments increased by almost 50% year-on-year.
Although China’s foreign exports have continued to maintain positive growth, the International Market Research Institute of the Ministry of Commerce Bai Ming, deputy director of the institute, told reporters that exports are growing overall, but the performance of each industry is indeed different. Some low-profit foreign trade companies will be significantly affected by the RMB exchange rate, but products that meet market demand during the epidemic have performed well, such as anti-epidemic products and tablet computers.
Bai Ming believes that exchange rate fluctuations are a long-term market risk faced by foreign trade companies, but the RMB The recent rapid appreciation has caught some companies off guard. In contrast, the appreciation of the RMB to around 6.5 has put small and medium-sized textile companies that rely on price to face very big challenges. These labor-intensive products will not be able to compete on price with some Southeast Asian countries due to the appreciation of the RMB exchange rate.
Settlement of foreign exchange? It has become the most painful decision for foreign trade textile workers at the end of the year
If we follow past experience, facing In response to exchange rate fluctuations, textile foreign trade companies generally choose to leave their money, postpone the settlement of foreign exchange, and wait until the RMB exchange rate is low before settling the foreign exchange. But such an idea may be difficult to cope with this round of exchange rate fluctuations:
On the one hand, Compared with other countries around the world, China’s economic performance under the epidemic will only become more and more outstanding, and the RMB exchange rate is still expected to continue to increase in the future; on the other hand, the end of the year is coming, and companies are most short of funds at the end of every year. At that time, cash was required for settlement of goods, payment of wages and other matters, so the settlement of foreign exchange could not be delayed for too long. Therefore, whether to settle foreign exchange has now become a very entangled point for enterprises.
The editor also recommends that textile workers who receive new orders please pay attention : First confirm the fluctuation trend of raw material prices and whether the supply of raw materials is stable, and then determine whether it is necessary to adjust the quotation or shorten the quotation period. In addition, for foreign trade orders, exchange rate fluctuations must also be taken into consideration in the quotation to avoid the profit of the order being increased by the raw materials. , RMB appreciation and other factors were eaten up.
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