The U.S. dollar fell across the board in 2017. Dragged down by the fall in the 10-year U.S. bond yield, the U.S. dollar index fell by about 10% since 2017, which may be the largest annual decline since 2003. The fall of the US dollar also represents the appreciation of the RMB.
In this regard, through interviews with a number of listed companies in the textile and apparel industry, we found that in the face of the decline of the U.S. dollar and the appreciation of the RMB, domestic textile and apparel companies have adapted and have different response plans.
One A-share listed company in the textile and apparel industry said: “The appreciation of the RMB will have a negative impact on the entire textile and apparel industry. However, since the company’s orders are growing steadily in 2017, the company’s performance is still good.”
Gross profit margins of listed companies are mixed
Some people in the industry speculate that if the RMB appreciates by 1% every time, the sales profit margin of the textile industry will drop by 2% to 6%. If the speculation is true, if the RMB appreciates by 5%, the profit margin of the textile industry will drop by at least 10%. Therefore, if the RMB appreciates by more than 10%, the impact on textile companies will be obvious.
In this regard, some analysts have given countermeasures to avoid the risk of the U.S. dollar exchange rate falling as follows: “Actively explore new foreign markets and reduce dependence on the U.S. dollar; rationally use the financial derivatives market to avoid exchange rate risks; choose ‘hard currency’ as the settlement currency. kind.
In 2017, when the U.S. dollar fell across the board and the RMB appreciated, the domestic textile and apparel industry performed mixedly. Judging from the existing Flush statistics, in the first half of 2017, nearly half of the A-share listed companies in the textile and apparel industry saw a decrease in their foreign main business gross profit margins, and the other half of the listed companies saw an increase in their foreign main business gross profit margins.
Regarding this phenomenon, we have learned from a number of listed textile and apparel companies and industry insiders that among the current listed companies in the textile and apparel industry, some listed companies have adopted hedging and other methods to compensate for exchange rate changes, while others have not. Take relevant response measures to exchange rate changes.
One of the insiders of a listed company in the textile industry said that due to the large export volume of the company, the company adopts methods such as hedging to cope with exchange rate changes, so the impact of the decline in the US dollar on the company will not be too great.
In addition, some people from listed companies in the textile and garment industry said that since the company’s raw materials and intermediate products come from abroad, and most of the products are sold abroad, the decline in the US dollar exchange rate and the appreciation of the RMB will have little impact on the company.
In fact, when faced with the same problem of RMB appreciation, different companies have different ways of dealing with it.
In addition to the above-mentioned company response methods, it has also been found that some listed companies have adopted the practice of switching from overseas to domestic sales, or will open up new foreign markets.
“After the previous weakness in foreign markets, the company began to shift to the domestic market early. In addition, the company also increased the added value of its products through industrial upgrading. These can offset losses from exchange rate changes.” This is what a person related to a listed company in the textile industry said explain.
It is worth noting that, in addition to the above-mentioned companies adopting various methods to deal with losses caused by exchange rate changes, some listed companies also stated that they did not take many countermeasures. A relevant person from the listed company said frankly: “The company has not taken any measures against the decline of the US dollar, but the company’s orders have been growing steadily in 2017. Therefore, although exchange rate changes have had an impact on the company, the company’s performance is still increasing steadily.”
The above statement has been recognized by some foreign trade companies. Some foreign trade people said that the most important thing at present is to have orders, and more orders can make up for exchange losses.
In addition, facing the constant changes in the exchange rate, most textile and garment companies have adapted to it. Some foreign trade people said: “The appreciation of the RMB means making less profits. If the profits are really small, just raise the price slightly. The rise and fall of the exchange rate is normal. , you have to adapt slowly.”
In fact, domestic textile and apparel companies have experienced the appreciation of the RMB exchange rate many times and have different response methods. “Foreign trade export companies that cannot adapt have already closed down.” Industry insiders said.
The growth of the textile and apparel industry has turned from negative to positive
It is worth noting that although the US dollar plummeted in 2017, the total export volume of the domestic textile and apparel industry in 2017 was the first year to show year-on-year growth after achieving two consecutive years of negative growth.
According to the statistical bulletin of the General Administration of Customs, based on customs statistics, the total national textile and apparel exports from January to December 2017 were US$266.95 billion, a year-on-year increase of 1.53% (a year-on-year increase of 4.35% in RMB), reversing two consecutive years. year decline situation. Among them, the total textile exports were US$109.77 billion, a year-on-year increase of 4.46% (a year-on-year increase of 7.42% in RMB); the total clothing exports were US$157.178 billion, a year-on-year decrease of 0.42% (a year-on-year increase of 2.31% in RMB). In December 2017, the country’s textile and apparel exports totaled US$24.016 billion, a year-on-year increase of 2.51% (a year-on-year decrease of 0.77% in RMB). Among them, textile exports were US$10.161 billion, a year-on-year increase of 10.98% (a year-on-year increase of 7.43% in RMB); clothing exports were US$13.855 billion, a year-on-year decrease of 2.91% (a year-on-year decrease of 6.03% in RMB).
According to analysis by industry insiders, the monthly export value of clothing is under obvious pressure, and the volatility is higher than that of textile exports. The main reason is that Southeast Asia and South Asia represented by Vietnam, Bangladesh and other countriesThe country is making every effort to obtain large-volume, medium- and low-value-added clothing orders from developed countries, posing a huge challenge to my country’s garment industry exports.
This person believes that the positive growth in the industry’s export value in 2017 mainly comes from the contribution of quantity growth, rather than the contribution of price (value) growth. The fall of the US dollar may become the new normal, and textile and apparel export companies have mixed feelings
AAA Functional Fabrics Network EGRTHRTH
