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.$ h i$ R2 G& ~& w) J
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.
0 w" N# B, D$ S9 Y r 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.
$ ^7 o7 \: O) L! F 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.
! _% U! T. M o* l% P, _0 A Companies used to signing longer-term orders are well aware of the risks.
' y" U8 @ q4 {- J. H: _' F 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.
R) _- U2 E" Y' q9 D2 l "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.
) y' G) _/ F( [6 _1 t "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.
& j& ]+ c# t/ s3 ^8 y Smaller export firms may find it hard to weather further appreciation.
9 n" Q$ a% H6 y5 }: t. J "I think some small exporters will eventually be phased out due to decreased profit margins," said Zhuo.0 E9 i& K4 e8 Y {* F/ m6 H
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.- ]& p8 J. W( F7 V( N( S- A
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./ C) U% ?$ T0 S, H7 S( D; t' d" Z
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 |