RMB appreciation: Small and medium-sized enterprises are looking for ways to break through
The appreciation of the RMB has caused unprecedented difficulties for many small and medium-sized manufacturing companies in the Yangtze River Delta and Pearl River Delta. Appreciation directly compresses profit margins. The cost pressure brought about by rising domestic CPI and labor costs cannot be transferred to overseas buyers by raising prices. What should we do in 2008? Amid the accelerating appreciation of the RMB, many small and medium-sized export companies have no ability to choose between life and death.
Avoidance measures have had little effect
Many entrepreneurs have adopted methods to avoid losses in response to the appreciation of the RMB, but the results appear to be somewhat futile. Xu Jianchang, general manager of Ningbo Shidanu Company, said: “In response to appreciation, companies do not have many clever methods to adopt.” He once suggested that both parties settle in euros, but the customer did not agree. Foreign businessmen are not stupid.
So he could only turn to financial means to avoid losses. He expressed disappointment that he wanted to arbitrage, but the price difference was very small; he could only do RMB forward, and there was also discount. However, these two measures only recovered a loss of 500,000 yuan in one year, which was insignificant compared with the 10 million yuan profit loss caused by the loss of yuan in 2007.
Xu Jianchang believes that if the one-time appreciation of the RMB is in place, the losses he may bear will be smaller because he feels confident in the affordability of his business.
But for many small and medium-sized enterprises, the consequences of a one-time appreciation may be devastating, especially those that purchase exports through trading companies. These enterprises do not have much ability to negotiate prices and avoid losses.
Wang Wengen, general manager of Oaks Import and Export Co., Ltd., also believes that companies cannot afford to take measures to increase appreciation in one step. He analyzed that European companies have large profit margins and standardized competition, while Chinese companies are just the opposite. They develop with meager profits and have irregular competition. A small exchange rate fluctuation will have a huge impact. Therefore, China currently does not have the ability to appreciate too quickly or over-leverage. opening conditions.
The difficulty of scale
Wang Wengen believes that to avoid losses caused by RMB appreciation, companies need to adopt flexible response measures. He introduced that Oaks used to sign annual price contracts with foreign customers, but now it has changed to key customers still signing annual contracts, while small and medium-sized customers sign quarterly contracts.
And more companies are setting their goals to expand their scale and exert economies of scale. Xu Jianchang, general manager of Ningbo Lion Danu Group, said that at present, the wages of domestic employees cannot be reduced at all. When the new labor contract is implemented in 2008, hardware must be paid, which will cost an additional 10 million yuan. There is not much room for the company’s management costs to be reduced.
Therefore, what Xu Jianchang can do is to accelerate scale expansion. Since he expanded the factory scale by 25% in 2007, after hedging the loss of RMB appreciation, the overall benefit still increased by 5%, so He decided to speed up the scale expansion to 30% next year.
Wang Wengen, general manager of Oaks Import and Export Company, also analyzed that the scale in 2008 is also expected to expand by 40% to 50%. But he also said, “The scale has increased significantly, but there is still a question mark whether profits can increase significantly.” He is not optimistic about the answer to this question, “Profits may decline.”
But Wang Wengen It was also pointed out that under the background of RMB appreciation, the industry is accelerating polarization. Large enterprises will become larger and larger, while small and medium-sized enterprises will be absorbed and merged in the face of difficulties. He believes that this process has a positive effect on Chinese enterprises. This is because the reshuffle will reduce the number of companies and curb vicious price competition, thereby regulating industry development and re-increasing industry profits.
Building Brands
Fundamentally, Wang Wengen believes that in order to cope with the accelerated appreciation of the RMB, companies must increase export prices; this requires innovating products; building brands at the same time; and taking the initiative to go overseas. In his opinion, brand building is also the only way for manufacturing in China. “Building a good brand will help increase prices.” Wang Wengen said.
Coincidentally, most of the entrepreneurs interviewed were aware of the importance of brand building. Xu Jianchang, general manager of Ningbo Shidanu, lamented that Chinese companies cannot just be satisfied with having enough food, but must also develop brands and services.
As an export-oriented clothing processing enterprise, Xu Jianchang deeply feels the pain of lack of brand. “Domestic export enterprises in the garment industry mainly focus on OEM production. The sales price of foreign famous brands is often 4 times or even 10 times the ex-factory price.”
The lack of brand makes most Chinese export enterprises rely on OEM The manufacturing industry chain is at the low end and it is difficult to increase profits. But building a brand is no easy task. Wang Wengen, general manager of Oaks Import and Export, said that at present, almost all overseas sales of domestic air-conditioning export companies are represented by foreign sellers, and there is no way to monitor the after-sales service. At present, Oaks has set up an office in Indonesia and will set up overseas assembly plants in 2008 and invest in projects in Vietnam and Dubai. Start taking steps overseas.
If you want to go overseas and build your own brand, you must invest huge amounts of money. Xu Jianchang, general manager of Shidannu, feels confident about this, “I am mentally prepared for the investment and can take joint measures toThe method of mergers and acquisitions should be done slowly. ”
Technological lifeline
But time will be a big problem. “Under the appreciation of the RMB, the price advantage of Chinese air conditioners compared with Korean products has been very small, while product quality is still A big difference. Wang Wengen, general manager of Oaks Import and Export, believes that Chinese manufacturing, which has lost its price advantage, can only rely on improving technology.
Technological innovation has made Oaks feel powerful in the competition. Wang Wengen said that Oaks launches about 30 products every year % of new products, but these innovative products provide about 50% of profits. “The profit impact of innovative products is very large. ”
Zhou Dewen, President of Wenzhou Small and Medium Enterprises Development Promotion Association, believes that technological upgrading is indeed the way out for small and medium-sized manufacturing industries in the future, but at present, the technological upgrading capabilities of a large number of small and medium-sized enterprises are not optimistic. He introduced that because of the The financial strength is not very strong. The original labor methods are outdated and lack advanced technical equipment. Many enterprises rely on manual labor and are labor-intensive enterprises. At the same time, because there are few technical personnel and poor technological innovation capabilities, most of them have low technical levels, so their products The technology content is low, and most of them are traditional products, and they still cannot get out of the vicious circle of low-level competitionAANGMKJLOI87
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