Difficulties

The reasons for the most difficult moment are as follows:
The first difficulty: the exchange rate rises。
The renminbi hit a new high in the past three years.
On May 25, the RMB rose strongly. Among them, the onshore RMB exchange rate against the US dollar gapped and opened higher, breaking the position and rising by nearly 200 points. The intraday peak reached 6.4016, which was only one step away from the 6.40 mark. At the same time, the offshore RMB exchange rate against the U.S. dollar rose sharply, standing strongly above the 6.40 mark, reaching a maximum of 6.3944. On May 26, the onshore RMB and offshore RMB exchange rates against the U.S. dollar fluctuated and rose. By noon, the onshore RMB exchange rate against the U.S. The exchange rate of the offshore renminbi against the U.S. dollar both rose above the 6.4 yuan mark, entering the 6.3 yuan era.
Looking back, this wave of renminbi rise started in April. Since the beginning of April, the onshore renminbi has risen by 2.18%, which is more than 1,400 points; offshore renminbi has risen by more than 1,500 points, or 2.73%.
Although in the long run, the appreciation of the renminbi is due to optimism about China’s economy, which is considered a good situation, in the short term, it does pose a greater challenge to textile foreign trade enterprises.
Take a textile foreign trade order of 1 million US dollars as an example. When the exchange rate is 6.5, it can settle 6.5 million yuan, and when the exchange rate is 6.4, the foreign exchange settlement becomes 6.4 million yuan, and the difference between them is 10. Ten thousand yuan. After the exchange rate fluctuates, it is also very difficult to discuss price adjustments with foreign companies. At present, China’s textile production capacity is generally surplus. Therefore, overseas buyers have taken the initiative in foreign trade negotiations. When the RMB depreciates, he will request to change the purchase price as soon as the exchange rate fluctuates, but as soon as the value rises, he will not rush to adjust the price. Always textile companies. Now under the influence of the epidemic, foreign trade demand has shrunk more severely, market competition has become more intense, and companies’ bargaining power has become lower
The Sino-US trade rebounded, and the number of sea containers sent from China to the United States increased by 46.5% to 9878334, accounting for about 60% of the Asian traffic. One box is hard to find, and one cabin is hard to find! Frequently exploded and dumped cabinets, shipping costs soared! “Beginning in April this year, the’difficult to find a box’ has once again troubled us. Not only did we not book a container in May, but the asking price for a 40-foot container on the West Coast route was $9,000, which was nearly double that at the end of last year. The factory received it at the beginning of the year. Orders are waiting to be shipped.” A seller couldn’t help calling “too difficult.”
Relevant data show that China’s exports of US textiles in 2020 amounted to 352 billion yuan. It can be seen that the crazy increase in ocean freight and the problem of hard-to-find containers will have a lot of impact on domestic textile companies. It is understood that many local foreign trade companies have received news from customers that they have stopped shipping due to high ocean freight, and the cost has been rising, and profits have been repeatedly squeezed!
The third difficulty: the rise of raw materials is endless
Recently affected by factors such as “supply shortages, inflationary pressures” and other factors, the prices of raw materials such as copper, iron, aluminum, plastics, etc. have continued to rise this year…The industries affected include furniture, home appliances, electronics, textiles, tires, etc.! In recent days, the intention of the national control policy to cool down is obvious, but from the perspective of the global environment, the complexity of external factors can be reversed by our own efforts, which has also led to our inability to solve the current status quo from the upstream. Central policy regulation can only ward off the heat wave of capital speculation for a while, and it is difficult to change the fundamental trend, especially internationally priced commodities such as crude oil and iron ore. From the perspective of the industrial chain, as downstream textile companies, it should be the most painful at present, because they can only “survive in the cracks”. How do you say? On the one hand, the price of raw materials is rising rapidly. At this time, not only the inventory plan must be considered, but also the price transmission work must be implemented. The more the problematic industry chain is, the greater the pressure on price increases will be. The cost caused by the price can only be passively borne part of it, and it will also face a shortage of raw materials. The core of all these problems is the flow of funds. If there is a big deviation in price difference and inventory management, it is very easy to cause a company with a healthy business to collapse.