Exchange Reform: Textile Enterprises Face Another Challenge

This is undoubtedly exacerbated by the textile and garment industry, which has been overwhelmed by the cost of raw materials and labor.

Zhou Xiaonan, deputy general manager of Huamei wire Co., Ltd., yesterday interviewed by the first financial daily, said that if only the unilateral pressure of RMB appreciation could be borne by the textile enterprises, the cost of raw materials and labor will continue to show an upward trend.

Zhou Xiaonan told reporters that the export growth has been accelerated recently. Besides having an increase in orders from overseas customers, it is also related to the export enterprises themselves expecting the appreciation of the renminbi and the urgent delivery.

Because of the accelerated development of garment manufacturing in Southeast Asia and other regions, the export of textile raw materials has increased, so the export of textile products is still good, but the price space is very limited. This year, the labor cost has risen by 10% to 15%, and the price of raw materials has increased rapidly. The Chinese and American lines have adjusted the product price two times, which is about 15% higher than that of the same period last year. It is almost impossible to raise the price again. The pressure on the part of the appreciation of the renminbi can only be determined by its own enterprises. The enterprise has recently locked the exchange rate within 6.7 this year by means of bank financial instruments, so long as the appreciation of RMB is controlled within this range, the enterprises will be less affected.

As early as April this year, the Guangdong textile import and export Limited by Share Ltd has signed a hedging contract with the bank, which will lock the RMB exchange rate to 6.72 in the coming year.

Zhong Hao Sen, general manager of the company, told reporters yesterday that the monthly exchange rate was different. The bank was very smart. In June this year, it was locked in 6.8, locked in 6.79 in July, and only 6.72 in March next year. In the past few days, the appreciation of RMB has exceeded some expectations, but the impact will not be too great. For example, a pair of jeans earn 5 cents, and now it is about two cents lower.

Zhong Haosen also said that although the export orders in the near future were quite numerous, they had given up quite a lot because of the price reasons. As the cost continues to show an upward trend, it is likely that the export growth rate will slow down in the second 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 to "take a step by step" to describe the current difficulties in textile and clothing exports.

"It is difficult to raise prices to overseas customers, especially in the European market, which is still in recession. Under such circumstances, it is difficult to raise prices. However, expanding domestic sales is even more difficult. We have worked hard for a year to expand the domestic market. At the moment, we still have little improvement. For such a long time export oriented company, we lack experience in domestic sales and we need to explore for a long time.

For the time being, we still rely on export orders, and in the face of the appreciation of the renminbi, we have locked the exchange rate.

Mao Xiahua said.

The cost pressures faced by the eastern coastal textile enterprises can be overcome by pferring the industry to the central and western regions.

Ministry of industry and information technology issued a 2 day civilization that it will use financial and credit funds to support the merger and reorganization of Eastern Textile Enterprises and the Midwest and Northeast China, and guide the textile industry to shift to high-end areas and accelerate the pace of industrial upgrading.

Zhong Haosen has just returned from his investigation in Xinjiang. He reflected that the local government was very keen that eastern enterprises would invest in cotton mills in Xinjiang. As for whether the company had any investment plan, Zhong Hao Sen refused to disclose.