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RMB appreciation rate of 3% -5%: garment industry is very "sensitive"

By: frbiz

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Because China's textile and garment enterprises to small and medium enterprises based on the sensitivity of a very strong appreciation of the renminbi, in the margins close to break-even point has been the occasion to re-start if this year's appreciation of the renminbi or even accelerated, then most businesses will be "no benefit to be found. " Department of Xiangcai Securities macro-expected appreciation of the renminbi in the range of 3% -5%, and this increases for most businesses is the upper limit of their tolerance range.
Some media recently revealed that the Ministry of Commerce, Industry and Information Technology Department is to conduct stress tests on the labor-intensive industries with a view to clarify the RMB exchange rate changes on textile and garment, footwear, toys, etc. will result in what kind of impact. But the sources stressed that we can because this thoroughly and found that the yuan will rise into the channel: "This is only a forward-looking plans, concrete would not have appreciated is another issue." The message has also been related to association officials confirmed. The source noted that this thoroughly study has been launched in recent months, was not yet aware of clear findings, but their counterparts in several types of labor-intensive products, trade associations rough estimate, the appreciation of yuan for every 1 percentage point, the industry's net profit margin will decline in a direct percentage points, and the current average net profit of these industries is only 3% -5%.
For 3 consecutive months, exports increased
February 2010 textile and garment exports amounted to 12.638 billion U.S. dollars, has been achieved for three consecutive months of positive growth year on year, an increase of 89.34%, substantially more than market expectations. Categories of view, textile exports increased by 78.19% year on year, exports of clothing increased by 96.29% year on year. January-February, textiles and clothing exports increased 39.42%, respectively, and 23.71%.
Demand in Europe and America bottom of the environment, the current domestic export-oriented production orders gradually increased. At present Europe and the United States despite the economic risk of the second bottom, but the employment rate targets stabilized, and there are encouraging signs. The rate of improvement in employment situation, consumer demand will gradually rebound, especially after more than a year consumer spending is shrinking clothes, clothing demand will show a greater degree of rigidity of demand pull. Therefore, future domestic textile and garment export-oriented enterprises will not be down the amount of orders.
With 2009 came the second half of raw material prices, business inventories of basic raw material depletion, higher raw material costs will encourage manufacturers to further price increases, the transfer of raw material cost pressures. Future orders for the domestic textile and garment export prices will be further enhanced. In the case of Chai Sing volume and price, the domestic textile and garment export growth rate will continue to maintain the state does not rule out that if Europe and the United States-than-expected economic recovery in the annual textile and garment export growth is likely more than 10% of the market expectations.
Exports will continue to rise prices of textile raw materials, labor cost increases will erode profits of export-oriented enterprises in order to promote export orders increased the contract price, export price increase will make the domestic textile and garment export value of rapid recovery.
The future, as a further improvement in the global economy, Europe and the United States and other countries data on decline in the unemployment rate, employment improved, consumer spending and the gradual elimination of psychological barriers, the global textile and apparel purchases, especially those of the high-end apparel recovery in demand, the domestic textile and garment exports will gradual recovery.
From the above factor analysis, the domestic textile and garment export product prices will rise next. Either from the cost-push or demand-pull form the global economic upturn, are for domestic textile and garment export prices provided the conditions. The future of textile and garment exports prices will lead to recovery in the domestic textile and garment export value.

Article Source: http://depositarticles.com/

I am a professional editor from China Suppliers, and my work is to promote a free online trade platform. www.frbiz.com/ contain a great deal of information about digital food thermometer , mini loaf pans welcome to visit!

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