The current export situation of Jinjiang Shishi textile and clothing industry when the RMB “breaks 7”
2008 is destined to be an extraordinary year for China’s foreign trade exports, especially traditional textile and apparel exports. It was no longer calm before, but this year it has set off layers of waves. Various influencing factors are coming like waves, impacting my country’s textile and clothing exports. The turbulent waves also hit Shishi and Jinjiang beside Quanzhou Bay. The turbulent waves can be divided into four levels based on the degree of direct impact on exports, that is, based on the decision-making process of foreign merchants:
The levels are the levels with the most direct impact on exports, among which the factors are: : RMB appreciation, international market environment, etc. The international market environment includes: trade barriers, anti-dumping, international markets affected by the subprime mortgage crisis, etc. These factors directly affect the export business of my country’s textile and garment enterprises, that is to say, whether foreign merchants should import Chinese textile and garment products and how much they should import. , the first thing to consider is these factors.
The second echelon of factors has a less direct impact than the second echelon. The factors include: rising raw material prices, corporate employment, corporate changes and other factors. These factors affect the price, quality and other aspects of textile and clothing products. They are what foreign merchants should consider after considering the hierarchical factors. They are important factors that determine the size of the business volume.
The third level of factors is peer competition, including competition between enterprises, competition between regions, competition between countries, etc. After foreign merchants understand the situation of Chinese textile and clothing products, they will “shop around” to find “high quality and low price” products.
The fourth tier of factors is the “story behind” our textile and garment enterprises that foreign businessmen may not know much about. Some of them have less direct impact on exports, but they are so important to textile and garment export enterprises, including : Funding factors, government policy factors, business management factors, etc. Funding factors include: export tax rebates, financing, capital chain, etc.
Next, we will analyze the influencing factors of textile and clothing exports in sequence.
(1) Echelon Factors
1. RMB Appreciation
Exchange Difference Loss Directly Caused by RMB Appreciation
Through on-site research and interviews with relevant personnel from enterprises and government departments, we learned that RMB appreciation causes direct losses to export enterprises due to exchange differences. It is this seemingly small difference that makes a large part of the company’s originally small profits evaporate in vain; and some foreign merchants deliberately extend the contract period or payment period by virtue of their dominant position in trade rights. We want to transfer exchange rate risks to our export companies. As one business owner in Jinjiang said, the appreciation of the RMB against the U.S. dollar alone has cost their company with annual sales of approximately 30 million yuan several million yuan in the past three years, almost wiping out all profits. He later said that if the exchange rate exceeded 6.5, then he would probably stop doing it. It can be seen that the appreciation of the RMB is a very fatal factor for our enterprises. As Mr. Zhang from a tax accounting firm in Shishi City said, the appreciation of the RMB is the direct cause or direct killer of the bankruptcy of some enterprises.
The impact of RMB appreciation on prices
Most of the export products of our textile and garment enterprises are priced in US dollars. The appreciation of the RMB makes our country’s export products relatively quoted in US dollars, thus affecting the price competitiveness of the products. For example, the RMB has accelerated its appreciation against the U.S. dollar since 2019, with a cumulative increase of nearly 7%. This means that the price of export products expressed in RMB at the beginning of the year is now 7% higher than the price at the beginning of the year in US dollars. Coupled with the accumulation in the past few years, our textile and clothing export products are no longer as “high-quality and low-price” as before, and our price competitiveness has been severely weakened. This is undoubtedly a problem for companies that use price as the main means of competition. It is a serious blow to China’s textile and apparel products.
〈3〉The appreciation trend of the RMB exchange rate against the US dollar and the impact of exchange rate fluctuations on market confidence
The impact in this area is divided into two parts:
First, the impact on merchants
The continuous appreciation of the RMB has led to The price advantage of my country’s textile and apparel export products continues to decline, which is of course very detrimental to foreign merchants who come to China for the “high quality and low price” characteristics of China’s textile and apparel products. ”
The second is the impact on textile and garment export companies.
Faced with the appreciation trend of the RMB and exchange rate fluctuations, companies themselves are also estimating their own operating bottom lines. In our on-site interviews with companies, Many companies have said that they are barely maintaining operations this year, and many orders have no profit at all due to reasons such as the appreciation of the RMB. It can be seen that the appreciation trend of the RMB and exchange rate fluctuations have dampened market confidence.
Response
From During our field research, we found that most of the interviewed companies are quite open-minded about the appreciation of the RMB and believe that the trend of RMB appreciation is irreversible. Through interviews, we learned that companies have also taken some measures. To deal with it.
Measure 1: Tendency to take orders.One of the clothing wholesale markets. Taking the Cross-Strait Textile and Clothing Expo and Casual Clothing Expo as a platform, with Shishi Garment City as the center, it connects Yuanyangchi Fabric Market (one of the four major fabric markets in the country), Taqian Garment Accessories Market, Yangxia Garment Accessories Fabrics Comprehensive Market and Taqian. Former clothing machinery market, Shishi Textile and Garment Business Zone continues to improve. As a brand capital, Jinjiang’s strength in textile and clothing cannot be underestimated, and it has been awarded the title of “National Textile Industry Base City”. In terms of total volume, Jinjiang has many textile and garment enterprises, with Yinglin Town as the center, forming a textile and garment industry cluster area adjacent to Shishi; in terms of enterprise strength, Jinjiang has a series of well-known clothing and textile brands. The well-known Seven Wolves, Jinba, Qipai, Jiumu King, etc. all come from Jinjiang.
The advantages of the industrial cluster formed by Shishi Jinjiang are obvious. In the interview with the company, the person in charge said that generally what the company needs can be purchased by going to Shishi; there is not only a competitive relationship between companies, but also a cooperative relationship. This company may be another company’s Upstream or downstream companies, or two companies, have an outsourcing relationship. However, we also learned from the interview that the textile and apparel sector formed by Shishi Jinjiang also has shortcomings.
3. International Competition
Impact and Response
From on-site interviews, we learned that the rise of these rising stars is both an opportunity and a challenge for our textile and apparel exports.
Challenges: Since these countries have cheaper labor prices and suffer fewer export restrictions, some foreign businessmen inevitably turn their attention to these countries. From conversations with company personnel who have participated in the Canton Fair, we learned that the textile and clothing area of the Canton Fair this spring was very deserted, and many merchants had gone to other countries.
Opportunities: After decades of development, my country’s textile and apparel industry has formed a complete industrial chain system, involving high, medium and low levels of textile and apparel grades, and various textile and apparel products. The overall strength It has considerable competitiveness internationally. Facing these rising stars, the mature system of my country’s textile and apparel industry can complement them. For example, in an interview with Mr. Hou, the owner of a clothing export company in Shishi City, he told us about the complementary relationship in this regard. He said that the level of textile and garment industry in these developing countries is still very low, and the industrial chain has not yet been truly formed. It is true that they have cheaper labor, but their industrial level and craftsmanship cannot keep up. Therefore, many companies in these countries now import large amounts of fabrics from my country and then use labor for processing in their own countries. Therefore, many companies that export fabrics have done quite well in recent years. In addition, Mr. Hou also mentioned that taking advantage of the fact that these countries have less restrictions on textile and clothing exports, some of our company’s export products are re-exported to the export market through these countries. It can be seen that the development of these “rising stars” also contains business opportunities.
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