The impact of RMB appreciation on textile foreign trade enterprises

It turns out that the US dollar is against the RMB, that is, one US dollar can be exchanged for a RMB, and now the RMB has appreciated, that is, now the income can only be exchanged for one US dollar for RMB, which means that the income is reduced.

I am engaged in foreign trade of clothing, and this year is particularly difficult to do business. First of all, the raw materials soared, and then the appreciation of the RMB, the original textile and garment export profits were very low, and it was even more difficult to survive if these two were pressed.

1.The appreciation of the renminbi has made the profits of the textile industry even more meager.

The textile industry is the second largest export industry in China after the electronic communication industry, the export dependence is as high as 51%, according to the calculation of the Textile Industry Association, the appreciation of the RMB by 2%, as China's major exporters of the textile industry exports will be reduced by 2.5 billion US dollars. The textile industry will see a 2% decline in sales margins by 6%. The appreciation of the renminbi has made the profit margins of textile exports that rely on the low-price competition model more thin, bringing greater pressure and challenges to China's textile exports.

For every 1% appreciation of the RMB, the operating profit of the cotton textile industry will fall by about 12%, the wool textile industry by about 8%, and the garment industry by about 13%. If the renminbi continues to appreciate to 5%, it means that most exported textiles are very likely to have "zero profits". Therefore, the appreciation of the renminbi has a great impact on the export profits of China's textile industry.

2.The cost advantage is decreasing.

After the appreciation of the RMB, China's labor force is significantly higher than that of neighboring countries such as India and Pakistan. Therefore, it will relatively increase the cost of China's textiles, and enterprises will relatively increase the quality of export products in the international market, so that the competitive advantage of China's products at low prices in the international market will decline, and exports will be inhibited to a certain extent. After the appreciation of RMB, it is difficult for our original product cost to have a low comparative advantage, and product development, technological transformation and other comparative advantages that affect the competitiveness of enterprises are also difficult to establish in a short period of time, China's textile industry is facing fierce competition and challenges.

3.Direct exchange losses.

In the past, the renminbi was pegged to the US dollar, and the fluctuation range was quite small, which can be said to be a fixed exchange rate. China's textile export enterprises have been accustomed to engage in export business under such exchange rate conditions, because it is a fixed exchange rate, export receipts are almost no exchange risk. In this way, enterprises have formed the habit of "only managing exports regardless of the exchange rate", now the RMB gives up pegging to a single currency dollar, the range of exchange rate fluctuations is greater than before, textile export enterprises must consider the uncertainties brought by exchange rate changes to enterprises, and avoid exchange rate risks as much as possible.

1. Crack down on the export manufacturing industry. The appreciation of the renminbi has led to a significant reduction in the profits of the export manufacturing industry, which used to be 8 yuan for an order of 1 US dollar, but now it is only yuan. The appreciation of the renminbi has led to the closure of a large number of factories in coastal areas, and the investment of funds in the virtual economy such as ** and the property market, fueling economic bubbles.

2. It is conducive to imported goods. When the renminbi appreciates, foreign goods will naturally become cheaper, which will increase the consumption of foreign goods, but it will also lead to a large number of foreign goods seizing the domestic market, which is not conducive to the development of national industry.