Home / Knowledge / News / Textiles / Export-oriented enterprises in clutches of appreciation
Export-oriented enterprises in clutches of appreciation
Jul '08
RMB appreciation has accelerated at an uncontrollable pace since 2008. Statistics released by China Foreign Exchange Trading Center shows that the mid-price of RMB against the US dollar was 1:6.861, representing an accumulated appreciation of more than 6 percent from the end of last year.

This means that the level of appreciation in the first 6 months was equivalent to that of the whole of 2007. It is believed that initiation of RMB reform mechanism on July 21, 2005 has led to this trend of appreciation in the yuan-dollar exchange rates.

RMB appreciation against US dollar which was 3.3 percent in 2006 has gone up significantly after entering 2008. Starting from this year, the exchange rate broke through the marks of 7.2 and 7.1 in less than 100 days. All of this has had a negative impact on the export making enterprises whose profit margins have seriously deteriorated.

To worsen the situation, the central bank announced on June 7 that the RMB deposit reserve ratio will be increased by one percentage point. This tightening of monetary policy has become a cause of worry for enterprises, especially in the textile industry who are already in a disastrous state.

This decision will starve the industry of funds as a portion of resources with the banks will be sucked up due to the order.

Moreover, the State Development and Reform Commission has issued a notice, deciding to increase the prices of petrol and diesel by 1,000 yuan per ton. As a consequence, transportation costs have expanded even further which would in turn put pressure on prices of raw materials and finished products.

However, a study done on the textile enterprises reveal that they are unwilling to bear the price rise. Besides, most of the units are undergoing maintenance while a number of others in Guangdong and Fujian province have closed down.

On the other hand, the industrial producer price (PPI) also rose by 8.2 percent in May creating new records in recent years. Even in chemical category, prices of almost all the products have increased except for polyester filament which declined by 4.6 percent.

Clothing category also marked a year on year drop of 1.5 percent as prices fell by 1.6 percent. All of the above adversities explain clearly that the textile industry of China is reeling under global economic turmoil caused by sub prime credit crisis in US. This in turn is throwing SMEs on the edge of bankruptcy.

Fibre2fashion News Desk - China

Must ReadView All

Textiles | On 24th Jun 2017

Applied DNA to tag cotton for 2017/18 US ginning season

Applied DNA, provider of DNA-based supply chain security,...

Apparel/Garments | On 24th Jun 2017

NPD Group launches Trend Tracker for apparel trends

Global information company the NPD Group has launched Trend Tracker,...

Textiles | On 24th Jun 2017

Cotton USA’s first innovation competition in UK ends

Cotton USA has announced the successful close to its first innovation ...

Interviews View All

Karan Suratwala
Key Textile Accessories Private Limited

Chinese imports are destroying the supply chain

Dharmendra Shah
Ozone PB Spintex Limited

‘We have made huge investments to ensure quality yarn production.’

Anshul Sood

‘Indian footwear market is nascent and largely a trend follower’

Marten Alkhagen
Swerea IVF AB

Marten Alkhagen, Senior Scientist - Nonwoven and Technical Textiles of...

Giorgio Mantovani
Corman S.p.A

Giorgio Mantovani, MD of Corman, with a presence in both Milano and New...

Larry L Kinn
Suominen Corporation

Larry L Kinn, Senior Vice President - Operations Americas of Suominen...

Rupa Sood and Sharan Apparao

Nayaab, an exhibition meant to celebrate Indian weaves, is in its second...

Igor Chapurin

"Now we can see the Russian trend in international fashion. And Russian...

Pranav Mishra

Designers Pranav Mishra and Shyma Shetty’s Huemn is known for its...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


Letter To Editor

(Max. 8000 char.)

Search Companies


news category

Related Categories:
June 2017

June 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.


Browse Our Archives


E-News Insight
Subscribe Today and Get the
Latest News Update in Your Mail Box.
Advanced Search