RMB Appreciation Calls for Companies’ Strategic Change
Source: CNTEX Date: 2007-04-25
On April 16th, the average price of exchange rate between US dollar and RMB is 7.7220 Yuan, which means the RMB appreciation has exceeded 5% after the reform of exchange rate for the first time.
In the short four months since entering 2007, the new highest record of the average price of RMB exchange rate has been broken for 23 times and 5 times only in April.
Textile industry feels an ache
On April 18th, Ji Zhujun, director of trade development department of bureau of commerce in Hunan province expressed that the appreciation of RMB had already affected lots of industries in Hunan province including textile industry, light industry, steel industry and etc., especially “the low-profit textile industry and light industry”.
“Above 5 percent appreciation of RMB means our loss of 0.35 Yuan per 1 US dollar achieved by exportation.” said very frankly Yu Zhicheng, general manager of Hunan Textile Import & Export Company. From last year, the Textile Import & Export Company has been confronted huge pressure for living.
“It is very difficult for us to maintain the available share of the market” introduced Yu Zhicheng, at present, the exports of the Textile Import & Export Company has decreased by 20%%. In the first quarter of this year, the company has accomplished exports of 16 million US dollars, over 2 million US dollars less than accomplished in the same period of last year.
According to the analysis by Yu Zhicheng, textile product itself is a low-profit industry, in addition, Hunan province is a central province in China with the textile exportation cost 2%% higher than in the costal regions，and textile product is confronted with less space for living and development under the pressure of RMB appreciation.
An analyst expressed that the appreciation of RMB was to make the powerful momentum of exportation in light and electromechanical fields frustrated in our country. Ji Zhujun also confirmed that besides textile product, steel the commodity exported in quantity traditionally would also experience some shock. However, comparatively speaking, steel industry is better than textile industry cause “there is still some profit”.
However, Ji Zhujun considered companies “do not need to be frightened by the appreciation of RMB”. Speaking in the positive view, RMB was to greatly accelerate the adjustment of exportation structure in Hunan province as well as the brand development. Yu Zhicheng also expressed that, at present, the Textile Import & Export Company was trying its best to improve brand value, control the cost and expand the share of domestic market aiming at realizing the sustainable development of the enterprise.
