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Mass-produced goods to feel highest impact of revaluation

24
Mar '10
With the gradual recovery in global economies, exports from the textile and apparel industry have also gradually bottomed out. Data reveals that China's total textile and apparel exports reached US $28.242 billion in 2009, up by 28.98 percent year on year.

Experts are of the opinion that revaluation of the Yuan is the most worrying factor, since most of the exporters are working on wafer thin margins, because of rising costs, which the are not able to pass on to the buyers.

They note that the industry will basically run into losses, if the value of the Yuan is increased by 5 percent and will generate impact on more then 20 percent orders and if the Yuan is appreciated by 8 percent, it will affect 40 percent of orders.

The Government is repeatedly saying in public that the state will maintain the stability of the RMB exchange rate, but major institutions expect the Yuan to appreciate between 5 to 8 percent and most of them are making preparations to reduce the impact.

The experts are expecting the revaluation to take place somewhere in the second-half of 2010 and have exhorted textile and clothing exporters to factor in the same, while accepting new orders for deliveries in the second-half of the current year.

High-value product exporters however are not worried by the development, since the customers they service will adjust to the revaluation, but the worst impact could fall on the mass-goods producers, where there is little room for making adjustments.

Fibre2fashion News Desk - China


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