It is fifth day in straight for RMB appreciation that sets a new high against U.S. dollars since 2005. This means profits lost for those small and medium sized enterprises reliance on foreign trade. We try our best to maintain the production, otherwise another round of employment will come, said some of leather goods makers in Guangdong province.
Wages are growing at least 30%, 200% increase in certain key position this year. With huge growth of orders since second half of last year we can manage the hiking in the production costs, but fluctuation of RMB is beyond our control, they said.
A recent report on impact of RMB appreciation to exporters shows that only 4.95% of surveyed companies can take up the appreciation rate of 5-6%, 39.7% can stand up the 2% of RMB appreciation, and 33.8% of enterprises can accept 2-4% revaluation. The report said the net profit for more than half of these enterprises is less than 5%.
One of companies in Dongguan city that processes leather products for Mercedes-Benz, Volkswagen told the reporter that although all the business in leather goods sector is good beyond our expectation in the first half, our profit cut by 2% as RMB revaluation, some of them are considering to transform production or update products.
It is not so easy for most of small and medium sized enterprises to expand in internal market, because that requires high investment on marketing, not mention the intensive competition. We do not know where we shall go, but must gradually increase our business in internal market, the leather goods companies told the reporter.
