The RMB Exchange Rate Soared &Nbsp; Dongguan'S Export Shoe Companies Were Forced To Raise Their Prices.

March 24th hearing

Low end manufacturing industry suffered heavy losses

Cheng Liangbo, general manager of Dongguan Ju Cheng shoe material factory, gave the reporter an account. In the past year, the wages of the workers in the factory rose by 20% to 30%, but the price of raw materials and natural rubber increased by more than 200%. Therefore, as long as the enterprises were faced with the difficulties of losing money, the price of the products increased by 15%, so that the factory operation could be maintained.

He said that the payment usually takes six months or a year to settle, and the exchange rate at the time of settlement is calculated according to the exchange rate at the time of signing the contract. However, because the exchange rate of RMB against the US dollar has been rising, the profit that has already been slumped has fallen sharply or even lost money.

Cheng Liangbo said, now the workers are hard to recruit and can not keep workers without wages. So he tried every means to cut costs from management. Nevertheless, the situation is still not good.

Because of the decline in external profit, Cheng Liangbo said his factory had begun to try to make the list.

"The domestic distributor regards the US dollar as a hot potato and is unwilling to accept US dollars, so as long as the company has a US dollar, we will immediately convert US dollars into Renminbi, so as to avoid the loss of exchange rate fluctuations to the business."

Du Qian, deputy general manager of Dongguan British Delhi Digital Technology Co., Ltd., said that in order to maintain the operation of enterprises in the predicament, the company now diversified operations, processing electronic devices and processing plastic products, and at the same time, according to the seasonal rules, it will also receive internal orders.

Li Daxiao, director of the British Securities Institute, believes that the trend of RMB appreciation has not changed since the recent situation.

In view of this, China's export oriented enterprises will face the dual pressure of labor shortage and RMB appreciation for a long time.

Limited bargaining power

Cheng Liangbo said, according to the current situation, if the price of export products is not raised, the factory can only wait and close, but in fact the bargaining space is limited. Even if the price is raised by 20%, it will make up for the pressure of rising cost, and the profit rate of the factory is still very low.

It is understood that Dongguan's low-end manufacturing industry has almost no bargaining power.

"Last year, the cost of materials and labor costs rose sharply, but our export prices this year have been reduced by only US $0.2."

In order to maintain operation, Du can only make up for the increase in costs by doubling orders.

However, there are also some enterprises who are "strong" because of their brand and technological advantages. The manager of Guangdong EAST power Limited by Share Ltd planning department, Si Liang, said that half of the products were exported to the outside world. However, the appreciation of RMB did not cause much impact on the company. The reason is that the company has its own brand and technology and has pricing power in the international market.

He pointed out that since last year, the export price of the company's products has increased by about 10%.

In addition, in response to the sharp rise in raw material prices, the company carried out strategic procurement in the second half of last year and greatly reduced the cost.

Li Daxiao said that China's manufacturing industry is facing tremendous pressure of pformation. The low end manufacturing industry without technical content can only be passive in bargaining. Chinese enterprises need to create their own brands, increase the added value of products and expand the bargaining power. In this process, enterprises that are able to adapt to changes in the environment and seek innovation and change will stand out and will not be adapted to be eliminated.

At the same time, international commodity prices are soaring, and export oriented enterprises should make proper use of this financial instrument.