Export Data News
- Exporters adapt to yuan appreciation
Date: 9-Oct-2007 Sources: (Shenzhen Daily)
LOOKING at China's snowballing trade surplus since its exchange rate reform in July 2005, one might think the appreciation of the yuan, also known as renminbi, had gone largely unnoticed by the country's exporters.
Yin Mingshan, chairman of Chongqing Lifan Group, China's largest private motorcycle manufacturer, noticed that pressure from the rising yuan had never ceased to ease up. 'The impact is tangible and costly,'he said.
The self-made entrepreneur who started from scratch 15 years ago earned 78 million yuan (US$10.4 million) less from exports worth US$318 million after the yuan rose by 4 percent against the U.S. dollar at the end of last year.
By August this year when the yuan had gained more than 9 percent accumulatively to reach 7.57 yuan against US$1, five of Chong- qing Lifan's smaller domestic rivals had folded.
Lifan foresees motorcycle exports slowing from last year's 30 percent rise to 25.5 percent this year.
Instead of complaining as the yuan strengthens, however, many enterprises, including Lifan, rise to the challenge and seek to check exchange rate risks through all available means, such as cost efficiency and technological innovation.
China's exports have grown to US$546.7 billion in the first half of this year, a rise of 27.6 percent from the same period last year, bringing the aggregate surplus to US$112.5 billion, up 83 percent.
'We should give credit to our exporters, who bear the brunt of China's exchange rate reform as a stronger yuan squeezes their profitability and dampens their competitiveness in world markets,'said Tan Yaling, a research analyst with the Bank of China.
China scrapped the yuan peg to the U.S. dollar and linked it to a basket of currencies in July 2005 so as to allow the currency to float in line with market changes. But a daily floating band was imposed to ensure only a gradual appreciation. This encourages exporters to become more competitive through quality, brand reputation and technology.
'If the yuan had gained 20 percent overnight, a legion of Chinese enterprises would have gone bust. Now we have time to adapt, upgrade our production and get stronger,'Yin said.
Yin's company has registered 3,807 patents at home and abroad, the most among all domestic automobile companies. Its flagship product, the Lifan 50-200ml Single Cylinder Gasoline Engine, and motorcycles were sold to more than 100 countries in Southeast Asia, West Asia, Europe, Africa and South America. It has also begun producing sedans.
The sense of the urgent need for changes is prevalent among China's exporters, especially in such traditional sectors as textile.
Yu Yimin, general manager of Soho International Group, which deals in natural silk fabrics, said his company had developed an obsession with innovation, which it considers the only way to survive.
'Importers would just say 'No way' and walk out on us if we hinted at a price hike as competition is fierce in China, but if we have something unique, then it strengthens our hand,'Yu said.
Sponsor Results:
