Export Business Of State Sewing Enterprises: Increasing Advance Payment To Financial Instruments

In China's exports of various types of products, mechanical and electrical products occupy half of the country. Under the environment of RMB appreciation, the mechanical and electrical industry is at the forefront of wartime, facing the test of the war situation.

Because the export volume of domestic sewing machine is large, the appreciation of RMB has great influence on the state sewing enterprises.

In order to cope with the sharp rise of the RMB appreciation and bring about a sharp decline in corporate efficiency, some strategies and measures are summarized, such as the settlement of foreign exchange as soon as possible and the early collection of foreign exchange.

In the past, the average account period of the company was six months to one year, and now it is basically within 4 months. Besides, the proportion of advance payment can also be increased as much as possible.

There are usually several months to 1 years' accounts in the industry, so there is a large amount of accounts receivable. A small fluctuation of exchange rate will have a great impact on the profits of enterprises.

They used to talk about prices once a year with some major foreign customers. Now they are very cautious and dare not make long-term quotations.

For example, orders for next spring will be quoted as usual. But due to the factors of exchange rate changes, the quotation is still on the waiting list.

Another example is the adoption of financial instruments such as bank forward settlement, foreign exchange, futures, options, swaps and other financial instruments to lock in the exchange rate.

According to the current exchange rate of RMB against the US dollar, the exchange rate in the coming year will be relatively low, hoping to reduce the risk.

One way to raise prices is to respond to appreciation.

Of course, step by step improvement, but the price increase is also lagging behind, for example, today's notice to raise prices, at least give customers 1 months as a pitional period, and sometimes customers are reluctant to accept.

After the outbreak of the financial crisis in 2008, the central parity of RMB against the US dollar fluctuated narrowly in the 6.82~6.84 range, and the RMB exchange rate remained basically stable against the US dollar in 20 months.

However, stabilizing the exchange rate can not save the whole industry.

Affected by the price of raw materials, the textile and garment industry in the lower reaches and the sharp decline of foreign orders, the leap has even to be reorganized due to financial crisis.

Until the first half of this year, the foreign orders of most of the electromechanical enterprises in China, including the leap, began to increase, and the development of the industry was gradually rising.

China's sewing industry has excess capacity and low profit margins.

Adjusting the product structure is the only way out for enterprises. By increasing the intensity of new product development to improve the technological content and added value of products and form their own characteristics, enterprises can have strong bargaining power and achieve the purpose of pferring cost pressures to foreign customers, thereby enhancing the affordability of export enterprises.

Compared with the entity electromechanical manufacturing enterprises, companies engaged in mechanical and electrical import and export trade have a deeper sense of RMB appreciation.

The appreciation of the renminbi has caused great challenges to the industry they live in.

RMB appreciation will inevitably cause exchange losses and reduce the profits of enterprises.

Although it has also considered the risk of RMB appreciation by using financial instruments such as forward sales and foreign exchange, the use of these tools requires a certain amount of financial knowledge, and the use of financial instruments is not particularly professional.

Since international trade companies are global sourcing, the appreciation of the renminbi is beneficial from an import perspective.

However, because exports are usually settled in US dollars, even the factories in the mainland, such as Europe, America, Hong Kong and Taiwan, are often required to settle in US dollars.

The main way that the company can take is to try to persuade domestic multinationals to change the way of settlement and use Renminbi to set up value-added tax tickets, so as to avoid exchange rate risk.

At present, five cities in Shanghai, Guangzhou, Shenzhen, Zhuhai and Dongguan have launched the pilot work of RMB settlement in cross-border trade. They have expanded to 20 provinces and municipalities such as Beijing, Tianjin, Zhejiang and Jiangsu.

In the survey of several foreign trade enterprises, it has been found that since 2009, only 22.7% of the enterprises have used RMB cross-border trade since the pilot work of RMB cross-border trade settlement. However, 46.33% of enterprises are willing to use this way to avoid risks.

However, 58% of the enterprises say whether the RMB settlement is used in the actual paction process depends more on the willingness of the paction object.