As the yuan continues to show further signs of appreciation, exporters at the China Import and Export Fair in Guangzhou are already starting to feel the heat.- F* I8 w2 E6 T
Many firms, reluctant to sign long-term contracts due to fluctuating exchange rates, are defending their turf by shifting to short-term contracts. One such exporter is China Xingxing Group Co, a Taizhou, Zhejiang Province-based manufacturer of household refrigerators and freezers.
8 Q+ E. H' J0 \% \ Xingxing Group's Managing Director Chen Minghai said his company now only accepts short-term orders, according to a report from the Chinese-language newspaper, China Enterprise News.- }' n$ X- H. S* ~+ d
Prices for longer-term orders will be calculated accordingly to avert exchange risks and any orders longer than six-months will be turned down, Chen was quoted as saying in the report.6 c( {- J/ ^: w' w2 M# V& D, Q
Companies used to signing longer-term orders are well aware of the risks.
+ Z8 j( a& V$ }4 H2 _$ u Zhuo Min, marketing manager of vacuum exporter TEK Electrical (Suzhou) Co, told the Global Times that currency appreciation has had an impact on the way they do business.
( a( W V0 G0 Y1 V, m! a0 {0 a "Yuan appreciation poses a threat to all export-oriented companies. However, we are not planning to shift to short-term contracts. We want to maintain good relations with our clients," said Zhuo.5 W( A7 q0 F. ~
"Currently we can still digest yuan appreciation, however, in the long run, if the appreciation is beyond the capacity of the company, we will find a way to deal with the problem," he said.1 }2 M7 y {" ?
Smaller export firms may find it hard to weather further appreciation.
! a- P$ x9 o% E$ ~8 f1 d% k "I think some small exporters will eventually be phased out due to decreased profit margins," said Zhuo.
! }( ?6 @5 d; c; A: m TEK Electrical, which has exported vacuums to developed countries for more than 10 years, may now venture further into the domestic market to avert export risk exposure.
! S$ R- w" m0 y- T+ G: i0 M Domestic sales of several of its models have increased at an annual growth rate of nearly 150 percent. "The domestic market has huge potential," said Zhuo.
- L6 z) k' d3 P7 `4 Q* {9 a! L0 P, C" J3 ` The trade event, also called the Canton Fair, is divided into three weekly sessions that run through November 4. Some 70 percent of all 23,599 registered |