What impact will Brexit have on Keqiao textile companies?

At present, the British “Brexit” incident seems to have come to an end, but the butterfly effect caused by this incident is far from over. The EU stock market has been turbulent, the pound exchange rate has plummeted, and the funds of Chinese companies in the UK have shrunk and other problems have continued one after another. It can be seen that the British “Brexit” event has spread far and wide. What we want to discuss today is the impact of this incident on the import and export market of Keqiao, a textile region far away in China.

The British and EU markets have always been the main markets for Keqiao District’s mid- to high-end textile exports.

The reporter checked the Keqiao District’s foreign export market summary table in 2015 and found that nearly 500 export companies in Keqiao had trade relations with the United Kingdom, among which, “Quntai Textile”, “Kaiming Textile”, “Xinxing Foreign Trade”, etc. The annual export volume of the three trading companies to the UK exceeds US$10 million.

The reporter also found that in 2015, Keqiao District’s exports to the UK reached US$260 million, while exports to the EU market were US$1.2 billion, accounting for about 12% of Keqiao’s export market. It can be seen that the UK occupies a pivotal position in Keqiao’s export market to the EU.

As we all know, the UK is a country with relatively high trade freedom in the EU and even the European market. Therefore, some of the products exported by Keqiao to the UK use the UK as a “bridgehead” and then radiate to other EU countries and regions. . So, in the face of Britain’s big move of “Brexit”, can Keqiao companies still remain calm?

Kaiming Textile is a major exporter in Keqiao District, and its export volume ranks among the top in Keqiao District. The British market has played a role that cannot be underestimated. Last year, the company’s export volume was nearly US$13 million, making it Keqiao’s second largest exporter to the British market. “The company insists on innovating fashionable fabrics, which has greatly expanded the demand of British customers.” Luo Haiming, general manager of Kaiming Textile Co., Ltd., told reporters that the British market was the main “springboard” for its layout and development of the EU market in the past two years, so it is currently more concerned about Changes in the pound exchange rate.

Compared with Kaiming Textile Company’s long-term presence in the British market, Yingfeng Textile Printing and Dyeing Co., Ltd. located in Binhai Industrial Zone entered the British market relatively late. “Our company’s fabrics focus on British independent brand clothing, and orders are relatively stable. The annual export volume is expected to be around US$5 million.” Fu Shuangli, general manager of Yingfeng Printing and Dyeing Company, said. After the Brexit “boot” was implemented, it had little impact on its exports. However, the exchange rates of pounds, euros, US dollars, etc. fluctuated greatly, which worried him. “Whether you are an importer or an exporter, the risk of exchange rate fluctuations will increase, which will inevitably affect trade.”

In this regard, the relevant person in charge of the Keqiao District Commerce Bureau also agreed that the economic impact of Brexit on the EU may affect the exports of enterprises.

“For a long time, the EU has adopted technical and tariff barrier policies against my country’s textile and clothing products. Especially in terms of tariff barriers, the tariff burden of our export companies is 12% to 20% higher than that of European companies. Today, the UK Brexit has caused financial and economic turmoil across Europe, which will indirectly affect our textile and apparel exports.”

Looking at the overall situation, the impact of the “Brexit” event on China’s economy in the short to medium term will revolve around the exchange rate. In the short term, exchange rate changes may trigger capital outflows.

But in the long run, the Brexit incident and the split of the European Union may bring a new period of strategic development opportunities to China, and will also bring a new pattern to Keqiao companies exporting to the United Kingdom and the European Union. The EU has continuously set up trade barriers against China in recent years. The split of the EU may allow China to gain a greater voice and better trading conditions on the international trade stage.

In this regard, Keqiao Enterprises can wait and see what happens and continue to improve its own strength during this transition period in order to show off its presence on the international stage in the future.

AAA

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