Profit squeezed by textile enterprises to support foreign exchange reform

Locked exchange rates, price increases, exports to domestic sales, and the rise in costs caused by the appreciation of the renminbi, many textile and garment export companies have adopted the above "trick" to deal with. The recent appreciation of the renminbi has accelerated. On Friday, due to the sharp decline in the U.S. dollar against major currencies, China’s foreign exchange trading center reported a middle exchange rate of RMB against the US dollar of 6.772, a sharp increase of 138 basis points over the previous trading day, breaking the 6.78 integer mark, and re-establishing the 2005 exchange rate. The new high since the change.

This is undoubtedly aggravated by the textile and garment industry, which has been overwhelmed by the cost of raw materials and labor. Zhou Xiaonan, deputy general manager of Ramada Line Co., Ltd., said in an interview with the reporter of the First Financial Daily yesterday that if only the unilateral pressure on the appreciation of the renminbi can withstand textile companies, but the cost of raw materials and labor will continue to rise. Businesses have some problems.

Customs statistics show that the total value of textile and apparel exports in May this year was 16.43 billion U.S. dollars, an increase of 33.5% year-on-year. Among them, textile exports increased by 42.36% year-on-year, and apparel exports increased by 27.69% year-on-year, and the growth rate was significantly faster than the previous four months. From January to May of this year, the cumulative increase in textile and apparel exports was 19.3%, while the increase in exports of textiles and apparel was 29.7% and 13.1% respectively.

Zhou Xiaonan told reporters that the recent increase in export growth has not only been related to the increase in orders from overseas customers, but also related to the fact that export companies themselves expect the appreciation of the renminbi and tighten shipments. Due to the accelerated development of apparel manufacturing in Southeast Asia and other regions, the purchase of textile raw materials in China has increased, so textile export conditions can also be, but the price increase space is very limited, this year due to labor costs increased by 10% to 15%, coupled with the rapid rise in raw material prices, gorgeous The line has already adjusted the price of the product twice. It is currently up about 15% from the same period of last year. It is almost impossible to raise prices again. The pressure on the appreciation of the renminbi can only be solved by the company itself. The company has already used the bank in the near future. Financial instruments will lock the exchange rate to 6.7 this year. As long as the appreciation of the renminbi is within this range, the company will be less affected.

As early as April of this year, Guangdong Textiles Import & Export Co., Ltd. has signed a hedging contract with the bank and will fix the RMB exchange rate at 6.72 in the coming year. Zhong Haosen, general manager assistant of the company, told reporters yesterday that the monthly exchange rate was different. The bank was very smart. It locked it at 6.8 in June this year. It locked at 6.79 in July and it was 6.72 in March of next year. Look, the appreciation of the renminbi has exceeded some expectations, but the impact will not be too great. For example, if a pair of jeans earns 5 cents, it is now about 2 cents less profit.

Zhong Haosen also said that although there were many export orders in the recent period, they gave up a lot because of price reasons. With various costs still showing an upward trend, it is probable that the growth rate of exports in the second half of the year will slow down from the first half of the year.

With the increasing pressure on export costs, Mao Xiahua, director of the trade management department of Shanghai Pegasus Import and Export Co., Ltd., used yesterday's “step by step” to describe the current difficulties in textile and garment exports. “It is very difficult to increase prices to overseas customers, especially the European market is still sluggish. It is difficult to increase prices in this situation. However, it is even more difficult to expand domestic sales. We have been working hard for a year to expand the domestic market. There is still no improvement. For our long-term export-oriented companies, the lack of experience in domestic sales requires a very long period of time. We still rely on export orders for the time being. In the face of the issue of RMB appreciation, we have also locked in the exchange rate.” Mao Xiahua said .

The problems of cost pressures faced by eastern coastal textile companies can be overcome by transferring industries to the central and western regions. The Ministry of Industry and Information Technology issued a statement on the 2nd that it will use financial and credit funds to support the merger and reorganization of enterprises in the eastern textile industry with those in the Midwest and Northeast China to guide the transfer of the textile industry to high-end industries and accelerate the pace of industrial upgrading.

Zhong Haosen has just returned from Xinjiang. He reflects that the local government very much hopes that eastern enterprises will invest in cotton mills in Xinjiang. As for whether the company has an investment plan, Zhong Haosen declined to disclose.