RMB appreciation compresses China's floor export profits

Increasing pressure on the appreciation of the renminbi has forced some export companies to turn their attention to the domestic market. A floor factory in Jilin Province is such an export company. On the 29th, Mr. Jin, a person in charge of the company’s marketing department, said in an interview that the exchange rate of the RMB against the US dollar continued to increase, and was calculated based on the difference in exchange rates from the beginning of the year to In the case of a change, each export of 10 million US dollars worth of products will earn less than 1.6 million yuan.

During the interview, it was learned that the export pressure brought about by the appreciation of the renminbi caused the export companies' overseas markets to further shrink, and they had to find new sales channels in China. Millions of dollars in losses

Mr. Jin is the head of the marketing department of a wood product manufacturing company in Jilin Province. The company’s main product is flooring. According to Mr. Jin’s introduction, the company was originally a floor factory that specializes in exporting. In the past ten years, He has been engaged in overseas sales during the year. However, since the beginning of this year, the exchange rate of the renminbi against the US dollar has continued to rise. If the floor of the export market is still sold at the original price, the company’s profits will be continuously compressed, and it is now on the verge of cost sales. "The enterprises that are most afraid of exporting are changes in the exchange rate, especially the exchange rate of the renminbi against the US dollar. As long as the renminbi appreciates, corporate exports will suffer. The higher the appreciation, the greater the loss of profits."

"The company's main customers include some European countries, and the United States and Asia have customers in South Korea and Japan. Checkouts with these countries are made through the U.S. dollar, and the company purchases timber and other raw materials through the renminbi, which means that the appreciation of the renminbi is equivalent to products. In a disguised form, he lowered the price.” He calculated a sum for the reporter. On January 8, the exchange rate of the RMB against the US dollar was 6.8279, and on November 29, it was 6.6675. Based on the exchange rate difference of 0.1604, the company exported less than US$10 million per product. The amount of money earned is as high as more than RMB 1.6 million.

Although Mr. Kim is not willing to disclose to reporters what the company’s specific export amount is, he still told reporters that according to the export situation in previous years and the growth of exports in recent years, “a good month’s export value may reach Ten million US dollars, that is to say, the loss caused by the exchange rate changes is not just a 1.6 million yuan. Domestic market opportunities

Mr. Jin remarked to reporters with a bit of helplessness. “Overseas is not like domestic products, especially flooring products such as flooring. There are many requirements and regulations. It is very difficult to get into overseas markets. For example, the company is At the beginning of this year, the entire line of products was re-priced, and in Europe and the United States, including Japan and South Korea and other countries, the development of good prices will not easily be changed, once the price increase means that it will lose a significant portion of customers."

He also told reporters that since the beginning of this year, the exchange rate of the RMB against the US dollar has continued to rise, but the company has not dared to easily adjust the price. The result is that the greater the appreciation of the RMB, the more the company’s profits will be squeezed.

It is in this embarrassing situation that from July this year, the company began to adjust its market strategy, reduce its overseas sales share, and put products into the domestic market. “The domestic market is a big market with many opportunities. The high-end products go very well and the prices are more advantageous,” said Mr. Jin.

Rising pressure on appreciation

In fact, under the ever-increasing pressure of appreciation of the renminbi, export-to-domestic sales have become a means by which a number of export-oriented companies can resolve the pressure of appreciation. On the 29th, during the interview, the reporter learned that many export-oriented enterprises have turned their sights from overseas to China, and the buying potential in the domestic market is increasing day by day. Under the background of the continuous appreciation of the renminbi, the profits from domestic sales are no less than those of foreign countries.

According to Dr. Zhao Guoyu of Tianfu Futures, compared with the overseas market, the domestic consumer market has been fully expanded, and people’s purchasing power has also increased. He told reporters that with the continuous appreciation of the renminbi, many companies that use overseas markets as their main sales channels have felt a great deal of pressure for appreciation. Some of them began to switch to the domestic market and sought greater development in the domestic market.

"In recent years, the purchasing power of the domestic market has been unprecedentedly increased. When high-end flooring products sold overseas are sold domestically, there will be a market. The price of the same products sold in China will be even higher than overseas. For these export-oriented export-oriented enterprises, sales profits may be even greater,” said Zhao Guoyu.