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Clothing exporters wary of RMB revaluation
24
Jun '10
Insiders from China's clothing industry believe that export-oriented enterprises from the sector are vulnerable to the impact of changes in the RMB exchange rate, due to their high dependence on foreign market and will also lack bargaining power.

It will have a negative impact on exports of textile and apparel industry if the RMB revaluates and will bring a great impact onto the textile and apparel industry, if the appreciation rate will reach 3 percent by the end of the year.

Calculation shows that the average net profit of the sector is only 3-5 percent at present. The RMB appreciation will not only squeeze already pitiful profit margins of exporters, but export demand will also be impacted and non-competitive enterprises will be first affected.

Meanwhile, the Yuan revaluation will lead to a passive restructuring of textile industry, RMB appreciation will create a forced mechanism on companies, those enterprises not carrying out industrial upgrading and structural adjustment will be eliminated.

In the first five months of this year, China's total textile and apparel exports registered US $70.21 billion, up 19.3 percent year on year, May textile and apparel exports reached $16.422 billion, up 12.89 percent from the previous month, and 33.45 percent year on year.

The industry expects continued double-digit growth in textile and apparel industry but at the same time, China's textile and apparel exports still face many pressures with unfavorable factors, such as rising costs, increasing competition, the appreciation of the RMB.

Fibre2fashion News Desk - China

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