“The company has prepared in advance for the ‘retreat’ activities at the end of the year, which can be regarded as ending the peak shipping season of previous years ahead of schedule.”
Exports related to the “stay-at-home economy” such as bicycles and small household appliances continue to be hot. For example, what Meng Zhuo, manager of Anhui Garment Import and Export Co., Ltd., said is another state of export-oriented manufacturing companies.
Under the multiple pressures of high freight rates, rising raw material prices and the continued appreciation of the RMB, this is a conservative response made by Meng Zhuo’s company, and it is also quite popular in this peak season, which is not so busy for some industries. It is a typical wait-and-see state.
Loss of tens of millions in one peak season
From the low at the end of May to rising all the way up to now , the RMB exchange rate has recently risen to around 6.5, entering the “6.5 era.”
Based on the exchange rate of RMB against the US dollar on May 27, which was 7.1765, the RMB has appreciated by more than 8% so far.
Meng Zhuo told reporters that the company’s export volume during this peak season (July to October) is approximately US$150 million, and the settlement time is generally one month or 45 days behind the shipment time. According to each Calculating the U.S. dollar exchange gain and loss of 0.20, the loss would amount to 30 million yuan.
“I don’t even want to settle foreign exchange! But I am afraid that the value will continue to appreciate later.” Xiao Xiao, the marketing director of Shanghai Haifeiou Crafts and Gifts Co., Ltd., who was quite conflicted about the appreciation of the RMB as early as September, was also quite helpless. .
The appreciation of the RMB alone has swallowed up most of the net profits of low-profit foreign trade products such as fabric dolls and clothing fabrics. Coupled with factors such as raw material costs and freight price increases, the bargaining power has been reduced. If they are not strong, their losses can be imagined.
Meng Zhuo said that the company usually adopts currency lock measures for some orders, but these are not enough to offset the impact of this wave of rising raw material and transportation costs.
Fortunately, Meng Zhuo’s company decisively stockpiled some down when the down market was at its lowest. “The down stocked at low prices offset the losses caused by the appreciation of the RMB.”
At the same time, although the sharp appreciation of the RMB is detrimental to exports, it is significantly beneficial to imports. Therefore, the company increased its import efforts this year and doubled its import growth. “Last year our imports were US$26 million, and this year they were US$60 million, an increase of 131%.” Meng Zhuo said that, taking into account several factors, the company’s performance this year was not satisfactory.
Li Yanting, deputy general manager of Xuzhou Hyland Sauna Equipment Co., Ltd., told China Business News that the appreciation of the RMB will naturally put pressure on companies. At the same time, the recent heavy snowfall has caused the price of Canadian lumber to rise. So they had to notify customers of the price increase.
“For small price fluctuations, we try our best to tap potential internally to make up for it. If the fluctuations are relatively large, we can only communicate candidly with our customers to let them understand our difficulties and let everyone share the responsibility.” Li Yanting felt comforted. What’s more, the epidemic has made their cooperation with customers closer than before.
For example, during the recent appreciation of the RMB, Li Yanting negotiated with customers, each bearing half of the increased costs caused by exchange rate fluctuations, and raised the price by 5% to 10%. The reason for bargaining is that they have launched more new products this year. “Customers recognize new products, and the price is usually 20% higher than ordinary products.”
Orders “Fly Southeast”
Under multiple pressures, what worries Xiao Xiao even more is the decline and loss of orders.
Xiao Xiao told reporters that this year’s Christmas season is not so busy. The reason is that under the background of the epidemic, many European countries have restricted large-scale Christmas-related activities to late December. “The original plans of purchasers have It has been cancelled, especially the Christmas gifts, which have shrunk a lot.”
At the same time, they have already launched new products for the spring and summer of 2021, but they are faced with customers’ more cautious and scattered ordering methods. “Customers choose more styles, but the number of orders for a single style has shrunk by two-thirds compared with previous years.” Xiao Xiao said.
In addition to being “price bargained” by customers, orders that have almost been negotiated on price may still “fly away” suddenly.
Xiao Xiao gave an example: “We discussed an OEM project for an American chain brand before. The price was almost the same. In the end, the customer still considered factors such as production capacity and trade friction and chose Vietnam. Factory.”
However, as my country and the trade ministers of the ten ASEAN countries, Japan, South Korea, Australia and New Zealand jointly signed the “Regional Comprehensive Economic Partnership Agreement” (RCEP), many foreign trade companies are facing A benefit.
Xiao Xiao slightly regretted: “It’s a pity that our main exports are to the European and American markets.” However, since the beginning of this year, the company has quadrupled its domestic sales orders compared with last year, which has made up for the sharp drop in export revenue in time.
Zeng Xiansheng, general manager of Suzhou Mengshi Intelligent Vehicle Technology Co., Ltd., told China Business News that the signing of RCEP will benefit the transfer business of export companies that have set up factories in Southeast Asian countries such as Cambodia and Vietnam.
He proposed: “The United States has now increased tariffs to 25%, and the European Union also has anti-dumping. It was relatively vague before, but now it can openly send Chinese materials to ASEAN factories for assembly.”
In a global situation that is full of uncertainties and remains severe and complex, a large number of time-tested foreign trade companies are becoming more and more mature and showing resilience in the process of looking for opportunities in crises.�
“We will only think about how to reduce losses under the current situation. If there is time to complain, it is better to think of more solutions. Exchange rate fluctuations and changes in the international situation are major trends that are beyond our control. You just have to adapt.” Meng Zhuo said. </p
