The Uncertainty Of Exchange Rate Adjustment Will Bring Greater Challenges To Enterprises Than Appreciation.

Rise or not?

This is the most pressing issue facing the renminbi at the moment.

But the problem before Dongguan enterprises has gone beyond simple appreciation or no appreciation.

In 2005, the Dongguan enterprises, which had been scalded by the first appreciation of the renminbi, are now extremely sensitive to the exchange rate. Now they are waiting for the landing of the "appreciation boots".

Yesterday, this newspaper specially appointed many industry associations responsible person, the labor-intensive enterprise representative and the newspaper column columnist participate in the business forum, understands the enterprise mentality, explores the countermeasure.

In the past, raw materials and markets of Dongguan enterprises were "two out of doors", but now they are mostly purchased from raw materials, and products are sold outside.

These enterprises are injured or heavier in the process of RMB appreciation.

The traditional hedging of foreign exchange, the price of raw materials and the price increase of products may not play a hedging role.

The uncertainty of exchange rate adjustment will bring greater challenges to enterprises than appreciation.

RMB appreciation or not

Core tip: will the renminbi appreciate in the future?

Although the Chinese government has repeatedly stated that the renminbi does not have the conditions for appreciation, it has its own views in the minds of entrepreneurs and experts.

In their view, when the Americans appreciate the appreciation of the renminbi to the political level and turn it to the Congress, the pressure of appreciation will be bigger and bigger, and the expectation of appreciation will be stronger and stronger.

Lu Qingpeng: as for the issue of RMB appreciation, we began to pay attention since the beginning of last year.

The core issue of RMB appreciation is whether the renminbi will appreciate or appreciate this year.

Personally, I think the pressure on RMB appreciation is relatively large.

There are two reasons, one is the external pressure.

Last night, there was news that Americans were working on a plan: if the renminbi did not appreciate in 90 days, what should we do?

What do we do if we do not appreciate in a year?

It seems that the pressure exerted by Americans is very great.

Another reason is the requirement of China's economic growth mode. For some industries that need adjustment, the appreciation of RMB has the function of adjustment.

So overall, the appreciation of the renminbi is a major trend. We estimate that within 3 months, the renminbi will probably enter the path of appreciation.

Zhang Kai: it is a matter of time to estimate the appreciation of the renminbi, because the appreciation of the renminbi is no longer a problem of the market, but has become a political issue.

On the other hand, Americans claim that they will increase tariffs if they do not appreciate, so the pressure on RMB appreciation will be great.

At present, the upper level is also conducting stress tests on enterprises, but no one can tell when to appreciate.

The Canton Fair is about to start. Maybe it will be a signal that enterprises can get some information from the Canton Fair, and we can also see the attitude of foreign buyers to the appreciation of the renminbi.

Feng Yanquan: Americans have to do something that will not stop until they reach their goal.

So if we do not appreciate, Americans will keep chasing.

Moreover, I reckon that Americans need to solve the problem and the demand for this appreciation will not be small.

Now that the economy has just recovered, it is very troublesome to encounter RMB appreciation at this juncture.

However, from the government level, the government still attaches importance to foreign trade exports, but the focus and direction are gradually changing.

Last year, we held a foreign fair in Dongguan and made a press conference in Beijing the other day.

There are also Guangzhou goods north, which are guiding enterprises to domestic sales.

Our company's business has also shifted from the past counselling enterprises to the domestic sales of counselling customers.

And I am more concerned about another issue.

It is whether the renminbi will depreciate when it appreciates abroad.

Judging from the process of the first wave of RMB appreciation, there is such a characteristic that domestic prices are rising at that time, and this is the last thing we want to see.

Too much export enterprises can not support.

Core tip: no one can tell how much it has gone up.

But we are worried that the US will solve the domestic problems by putting pressure on the renminbi, which may not be too small.

Chinese manufacturing enterprises, including Dongguan enterprises, are still the biggest competitive force with the advantage of production cost. If the profit margin is very limited, if the RMB appreciation is too large, enterprises will not be able to bear it.

He Zhiyuan: now the domestic production enterprises, the basic raw materials and production links are completed in the domestic, so if the RMB appreciation is too large, then export enterprises can not stand.

This time, the RMB appreciation should be expected not only to 3-5 percentage points, or even to 10 percentage points. In this case, the profit margin of the manufacturing enterprises, such as our textile and garment industry, is too small to estimate the appreciation of the renminbi.

Huang Xinwen: actually this is the reality. Appreciation is affirmative.

Before I worked in the furniture industry, the last appreciation of the renminbi began in 2005, when nearly 3000 furniture enterprises in Guangdong were closed down because of the appreciation of the renminbi.

The reopening of this appreciation is determined by the law of economic development and the embodiment of the value of the renminbi.

On the other hand, the appreciation of the renminbi has risen from the Sino US trade issue to the political level.

The appreciation of the renminbi is much larger, which is more determined by market factors.

But even if we just go up a few points, I'm afraid the enterprise will not be able to bear it.

Many enterprises are living on tax rebates.

Now labor employment costs have risen by about 20%, and enterprises themselves are facing great pressure.

Personally, I think it is unlikely to raise 10% at once.

If so, many processing trade enterprises have no room for survival.

Lu Qingpeng: the last round of RMB appreciation began in 2005. The RMB rose from 8:1 to 6.8:1 against the US dollar, rising 20%, 4 years, an average annual appreciation of 5%.

2008 -2009 is a relatively low time for China's economy. Many enterprises are small profits. The appreciation of the renminbi has put pressure on them.

Some data show that there is a positive correlation between exchange rate and profit.

I think the Chinese government has seen this too, so I reckon that even if the RMB appreciates, it should be less than 3% this year.

Feng Yanquan: in fact, the appreciation of RMB not only affects the profits of enterprises, but also is harmful to exports. It also has a direct impact on attracting foreign investment.

I invested in an investment project in Huizhou before. The investment of this project reached 30 million dollars, and 20 mu was bought for investment. The investment in the early stage was over 8 million yuan. Everything was all right, waiting for the Americans to pay.

However, the board of directors of the US company assessed the project and found that the appreciation of the Renminbi made them lose 20% of their investment, so the project was aborted.

At that time, about 5000000 yuan of land deposit was left.

Too much uncertainty about RMB appreciation

Core tip: RMB appreciation is undoubtedly a great blow to export enterprises.

For the two enterprises outside the country, their raw material import and product export may be affected only by labor and water and electricity charges, but now most of the labor-intensive enterprises in Dongguan are materials purchased in China, and their products are exported to foreign countries, which is greatly affected by the appreciation of the renminbi.

So what worries enterprises is that the expectation of RMB appreciation brings too much uncertainty.

Zhang Xinhua: the appreciation of RMB has brought too much uncertainty to enterprises.

The original order may be one year or one quarter, and now it can only shorten the term of the contract because there is too much uncertainty.

In addition, the change of orders also brings inconvenience to the employment and production arrangements of enterprises. Now Dongguan's employment is more difficult and the cost of labor is also increasing, so the smaller orders will affect the production arrangements of enterprises.

Huang Guangpei: the old people's mobile phones produced by our company are imported from Europe, and their products are also exported to Europe. Therefore, the appreciation of the renminbi will not be too great, and the impact will only be artificial, hydropower and other aspects.

He Zhiyuan: we believe that the appreciation of RMB will have a great impact on our industry.

The previous wave of RMB appreciation has made some changes in the structure of our industry, and some enterprises have withdrawn from the industry because of profits.

Moreover, the appreciation of the renminbi may not be a short-term process, so enterprises will always be affected by the appreciation of the renminbi.

At present, more than 80% of the raw materials in textile and garment industry are purchased in China. It should be said that the profit margin of the industry is not high, and if the RMB appreciates 10 percentage points, the impact of the enterprise will be great.

There are also industries and enterprises that will benefit from the appreciation of the renminbi, but mainly in metal mining, petrochemical and other industries, and enterprises in these industries are monopolies.

If a vote is to be held during the two sessions of the NPC, there will be more opposition to the appreciation of the renminbi, because more representatives from the monopoly industry.

However, small businesses with the greatest impact on appreciation have no say in the matter. They do not know how to express themselves, nor do they have such channels.

Gao Yupeng: the result of RMB appreciation is a direct reduction in net profit.

In 2005, the first wave of RMB appreciation, many textile and garment enterprises are really uncomfortable, has been burned.

The expectation of RMB appreciation has made many companies dare not take orders.

But the impact of RMB appreciation is not all negative.

For example, after the appreciation, our enterprises imported machinery and equipment cheaper, and could replace labor and improve technology.

There are three elements in the operation of textile enterprises, namely, Japanese equipment, Hongkong's design and labor force in the mainland.

Enterprises can use the opportunity of RMB appreciation to buy Japanese equipment, such as "island essence" loom, which may cost RMB hundreds of thousands of yuan / Taiwan.

Zhang Kai: foreign investment in China is due to factors such as cost. Now that the appreciation of RMB and labor costs rise, foreign investment may be more likely to be a big market for China.

What should I do?

It's not easy to cut costs and raise prices.

Core tip: RMB appreciation, how to do business?

When hedging, shortening the payment period, lowering purchasing prices and switching costs are not feasible, it seems that the cost reduction and pfer cost will become the last way out. But how can China's manufacturing made so hard to destroy its reputation?

He Zhiyuan: in the face of RMB appreciation, enterprises can take some measures.

One is the use of foreign exchange tools by the moderator just now, hedging.

Foreign exchange hedging is a zero sum game.

We are small businesses. We can't play with those professional bankers.

Zhang, manager of gold electronics, said that we should try to shorten the payment cycle.

This is what every enterprise pursues, but it often fails to achieve it.

On the contrary, enterprises often say that their own money has been delayed.

From the perspective of industry chain, the risk of hedging appreciation is to pfer some pressure to raw materials suppliers and customers, but it is very difficult to lower purchasing prices and raise prices for products.

The only thing SMEs can do is reduce costs.

The result is likely to be a shoddy use of raw materials and a decline in the quality of products.

When I was in Dubai, I saw some clothes in the local Carrefour, the ingredients were cotton and the price was very cheap.

A cheaper 16 Di lamb, or RMB 30 yuan, is 36 yuan, which is a little more than 70 yuan. At that price, my own company is definitely unable to make it.

But in fact, carefully looking at cloth is actually polyester.

This way, it is very likely that the products we export are getting worse and worse.

Zhang Xinhua: April is the Canton Fair immediately. We have been blowing the wind with customers over the past year, and the feedback we received is not very strong.

Both artificial and raw materials have appreciated in price.

But our customers are not European and American, and bargaining with European and American customers may be difficult.

Huang Xinwen: to sell domestic products is a way for many enterprises to deal with export difficulties and RMB appreciation.

But when I met with Dongguan furniture enterprises, I invested tens of millions of yuan into the domestic sale in one year, but I didn't get the result. Because the export time was long, the design and marketing were handed over to outsiders, and the products and promotion did not match the domestic market.

During this time, we are planning a thing to combine many brands in Dongguan and Guangdong to make a brand alliance, for example, in the clothing industry, it is easier to get a breakthrough in the domestic market.

Zhang Kai: China's financial market is not sound, the market mechanism is not outstanding, hedging tools and other tools exactly like Mr. He Zhiyuan said just now, the effect is not obvious.

In western countries, after the financial crisis, the US dollar depreciated, but after the debt crisis, the euro depreciated and the US dollar appreciated immediately. The market mechanism was very obvious.

In addition to the issue of RMB appreciation, it is worth our enterprises' attention that the exchange rate of some emerging markets is also very risky.

Recently, we have studied the exchange rate of emerging markets, and the exchange rate fluctuations in Brazil, ASEAN and the Middle East are very obvious.

Take Brazil as an example, many international economic organizations believe that Brazil will drive market growth in South America, but last year Brazil's exchange rate fell by 18% to 4%, with a volatility of more than 20%.

Zhang Xinhua: our company does more in emerging markets like South America, Middle East and ASEAN.

Indeed, what Zhang Kai assistant said just now.

A Brazil customer once imported a batch of products from us through the letter of credit, but when the goods arrived, the other side refused to pay. In the end, the product pressed the port and finally returned. The cost was higher than the value of the product.