RMB exchange rate re innovation of textile and garment export differentiation

May 22nd, data from the China Foreign Exchange Trading Center show that the central parity of RMB exchange rate of 1 U.S. dollars to 6.1904 yuan, compared with the previous trading day up 7 basis points, two consecutive days of foreign exchange rate reform. Many experts and scholars pointed out that the appreciation of the RMB to endanger China's export trade, continue to appreciate is tantamount to suicide.
Since the exchange rate reform in 2005, the textile and garment industry has been facing the impact of the appreciation of the RMB against its performance. Time flies, time flies, looking at the current industry companies, whether they have been able to resist the strong risk of exchange rate changes?
Foreign trade enterprises generally under pressure
Due to the large export dependence, low average profit margins, the negative impact of the textile and garment industry by the appreciation of the RMB can not be ignored. For product sales prices in foreign currencies or linkage with the international price, and raw materials are purchased from outside, on the one hand, textile enterprises need to consider purchasing cost reduction is sufficient to make up due to product sales prices caused by the loss, on the other hand, even though both the decline of similar magnitude, the appreciation of the renminbi will also lead domestic enterprises in RMB denominated profits decline.
According to the relevant agencies estimate that the RMB appreciation of 1%, cotton textile industry operating profit will decline by about 12%, down about 8% of the wool textile industry, clothing industry fell by about 13%.
On May 21, China's Foreign Investment Research Institute president tanyaling [microblogging] in the Sina blog wrote an article pointing out that, at present China's trade status than the downturn relatively better, but stable and upward period compared to is not good, even further deterioration. This is a great relationship with the exchange rate, the RMB appreciation does affect the export trade. More importantly, China's trade is mainly processed and processed on behalf of processing, the increase in the cost of RMB appreciation, the international market can not choose our products. In addition, many foreign trade enterprises through the RMB settlement tools, market spread space and other short-term factors, the use of regional and regional disparities, the short-term profits, but not take into account the real needs of the real economy.
A shares leading switch to hedge
Faced with the risk of RMB appreciation on the export business, A shares of the leading listing Corporation in the clothing industry has been actively gradually transformation, the negative impact of the smaller.
YOUNGOR (600177.SH) in the 2012 annual report, the company stripped part of the profit of the OEM export business and reduce the textile processing business, garment business restructuring, transformation and upgrading achieved remarkable results. Reported, the company's clothing business accounted for the proportion of the main income of 46%, accounting for 54% of real estate development. Shanshangufen (13.66,0.00,0.00%) (600884.SH) will also lithium battery materials and investment into the parallel with the clothing of the three main business, 2012, lithium battery materials company revenues accounted for than is 44.69%.
Part of the textile industry listing Corporation is facing a grim situation. As the export-oriented textile enterprises, in 2012 the operating performance of the Lutai (000726.SZ) appeared to fall for the first time since listing, the company in its annual report pointed out that company export revenues accounted for more than 70% of the company's total revenue, and products are mainly sold to the international market; sales income in dollars and, was achieved through imports and the company used mainly machinery and equipment, most, exchange rate fluctuations larger, conversion of the company for measurement of RMB products export income produced some negative effects.
Small and medium-sized enterprises trapped?
According to media reports, with the continued appreciation of the renminbi, textile and garment industry production orders to large enterprises to focus on the trend obviously, the increasing pressure faced by small and medium-sized enterprises, the appreciation of the renminbi little effect on the small orders the production cycle is short, but significantly increased of the long production cycle and a large amount of orders.
Huachuang securities textile and garment industry analyst Tang Shuangshuang to the reporter said, in the face of the appreciation of the renminbi exchange rate risk and overall textile and garment enterprises of the pressure is still relatively large. For the appreciation of the RMB, the company is doing the main foreign exchange hedging, although the risk of a certain degree of risk, but also a loss of the phenomenon. "In general, the appreciation of the renminbi is the problem, but not the biggest problem, the biggest problem is rising labor costs, the downturn in overseas economies, the main problem is the demand." Tang Shuangshuang said.
A shares of listing Corporation as the industry leader, better than small and medium enterprises, because the order price can be locked in advance, the general will take into account exchange rate fluctuations. In the face of rising labor costs, boss of the company to take such as to overseas factory move cost savings, Tang Shuang Shuang, for example, "for example, to Cambodia, Vietnam and other Southeast Asian countries, where labor costs low and because of domestic and imported cotton quota restrictions, on the other side imported cotton, raw materials, artificial over there, the cost will save a lot."
The pressure of small and medium enterprises is relatively large, Tang Shuangshuang told reporters, there are some companies have lost but still alive, basically rely on some export tax rebates to support".