The appreciation of the renminbi, the export processing enterprises in the Pearl River Delta called for bitterness. The reporter recently learned from a buyer's special purchase meeting in Guangzhou that export processing companies began to try to adopt non-US dollar quotes such as Euro, Japanese Yen and Australian Dollar in markets such as Europe, Asia and Australia. At the same time, some factories have raised their quotations due to rising costs due to factors such as the new labor contract law, export tax rebate adjustments and the depreciation of the US dollar. International trade experts believe that China is not a processing base for low-cost products, and the price is appropriately raised. For example, between 5% and 10%, buyers are acceptable.
Exchange rate causes exporter losses
At the procurement meeting, seven multinational companies with annual purchases of US$170 billion came to Guangzhou for procurement. Global Sources Chief Operating Officer Zang Kewei believes that despite the suspicion of a recession triggered by the subprime mortgage crisis in the United States, orders for the Pearl River Delta have not yet been cancelled. However, the exchange rate is a big problem. China has not released the exchange rate control before. The current US dollar has depreciated, and most of the transactions are settled in US dollars. The floating exchange rate mechanism may cause large losses to suppliers.
Last Thursday, the exchange rate of the RMB against the US dollar reached 7.014, and breaking the "seven" was already on the line. So far, the central parity of the RMB against the US dollar has increased by nearly 4% since 2008.
Zhen Mingli Group is a listed company in Hong Kong. It has set up a factory in Jiangmen, Guangdong. Wu Chenglu, the deputy general manager of the business, told the reporter that it takes about six months or even one year before and after the quotation from the buyer to the order. It has been depreciating and will result in very large losses at the exchange rate at the time of the quote. To this end, they have tried to quote in some markets in the euro, yen and Australian dollars this year.
A person from the Guangdong local company Op Lighting International Business Department also said that in order to avoid exchange rate risk, when using the US dollar quote, it is required to negotiate with the purchaser to share the exchange rate risk, while in the European market, insist on using the euro.
Manufacturers start to be tired of new
The reporter learned that with the impact of the depreciation of the US dollar, the new labor contract law and the export tax rebate, the relationship between some processing enterprises in the Pearl River Delta has changed quietly, and it is a bit "like new and old." It is said that buyers can increase the price appropriately. In the past, the conversion rate of supplier conversion buyers was about 30%, but this conversion rate may reach 40% this year. Wu Chenghao admits that the company strives for about 20% of new customers every year to improve the company's profitability.
In addition, given the lower and lower export profits, some factories have also increased their domestic sales. Wu Chengyu said that although domestic sales account for only one-fifth, they plan to reach half in one or two years.
The reporter learned that the exporter's external quotation has also increased this year. According to Wu Chengyu, for example, a luminaire, the retail price in the United States in 2006 was 1 US dollar, and the factory cost reached 1.7 US dollars last year. There is no way to do this without raising the quotation.
The practice of suppliers to raise prices appropriately has also been recognized by some buyers. Brooks East is one of the largest specialty retailers in North America, purchasing a large number of electronic products every year from the Pearl River Delta. The company has 278 suppliers in the Pearl River Delta. Chen Yonghe, president of Asia, said that nearly 30 of the suppliers have closed. If the purchaser does not increase the price, the supplier may not survive. Therefore, the company currently purchases products for about 25%. As for the forecast, the price increase is between 5% and 10%, and the purchaser is acceptable.
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