7.15, 7.16, 7.17, 7.18, 7.19…
In the past few days, the RMB has continued to depreciate against the US dollar. On May 27, the onshore RMB fell below 7.17, the offshore RMB fell below 7.19, approaching the 7.2 line in September 2019. If it breaks through this level, it will be the weakest since 2008.
For foreign trade textile companies, the depreciation of the RMB is good news for companies to reduce costs. So is this really the case?
China-U.S. relations are complicated and confusing, and foreign trade recovery is slow
After entering May, as European and American countries gradually unblocked, although there are not many overseas orders currently placed, there are also some The company received the order. However, this depreciation of the RMB is not something to be thankful for for foreign trade companies. First of all, this round of depreciation of the RMB essentially reflects the escalating conflicts between China and the United States. In early May, Trump announced that he would increase taxes on China. And he inexplicably tweeted “CHINA” late at night on the 29th. This series of events makes people have to guess, what else has Trump come up with against China?
China-US relations have repeatedly affected market confidence. For many companies operating in the US market, since the Sino-US trade war last year Since the upgrade, I have deeply felt that the frequency of orders placed by American customers has decreased, and the order volume has also been continuously reduced. Some customers are also looking for new suppliers in Vietnam, Bangladesh and other places.
But it is undeniable that some high-end fabrics with tight delivery times and complicated processes still have to be ordered in China. For example, an Indian customer placed an order for 300,000 meters of fabrics. , the whole process from raw material procurement to printing and dyeing can be completed in Keqiao in 15 days, and it takes 30 days to ship to the port and warehouse. However, it takes 50 to 60 days to place an order of this size in India at the same time. Fast speed, excellent quality and low price are the advantages of Made in China, which other countries cannot surpass. Therefore, Chinese companies do not need to worry too much about Sino-US trade relations. They only need to maintain a normal mind. During this window period, improving the competitiveness of their products is what every textile company should do.
The depreciation of the RMB increases foreign exchange profits, but the price reduction by customers is too obvious!
“For foreign trade companies, the depreciation of the RMB can increase profits when settling foreign exchange, but orders placed now will not increase profits. Because of the account period, most accounts require about 2-3 It won’t arrive until a few months later, and it’s hard to say what the RMB exchange rate will be like by then. What’s more, the trade situation this year is so difficult. There are only a few foreign trade orders. A few thousand meters is already a big order. In this case, you have bargaining power. It must be in the hands of customers.” A boss who has been deeply involved in the textile industry for more than ten years said helplessly. It is true that exchange rate fluctuations will cause some companies to lose a lot when settling foreign exchange, and the timing of foreign exchange settlement is also a test for textile companies. If you fail to grasp the timing of foreign exchange settlement, you may lose money in vain, but if you grasp the timing well, the profits will be huge. Therefore, for Boss Bu, he hopes that the exchange rate remains stable, otherwise he will have to be dumb and eat yellow lotus when settling foreign exchange. Moreover, a sharp depreciation of the RMB can easily lead to inflation, which is very detrimental to the recovery of the domestic economy.
But in the end, for foreign trade companies that currently have no orders to do, the rise and fall of the exchange rate has no effect at all. But we believe that as time goes by, foreign trade will recover slowly. Although the order volume is definitely not as good as last year, “even if orders are received, customers will continue to lower prices, and there will be no profit earned from the exchange rate difference.” Not much. Now that raw materials and labor are also increasing, what we are concerned about now is how to survive this window period.” A cloth boss said helplessly.
Postscript
As time goes by, more and more countries are unblocking and starting to resume normal economic and social activities. Can the foreign trade market in June bring us something What about the little surprise? For today’s textile people, there is an urgent need to break the “no rice to cook” situation. “What we can do now is to actively contact customers and start laying out this year’s autumn and winter fabrics. Hold on, don’t ask for profits, at least you can stabilize this plate.” Indeed, in the post-epidemic era, whoever lasts longer will be the winner! </p
