The depreciation of the RMB is not significant and has limited benefits to foreign trade service companies.

Last year, under the influence of multiple factors such as cost growth and the impact of e-commerce, the operating situation of the clothing industry was very pessimistic. However, the recent depreciation of the RMB against the US dollar seems to have given the market hope of recovery in the apparel industry.
According to data released by the China National Commercial Information Center this month, the retail sales of the country’s 100 major large-scale retail companies increased by only 0.4% year-on-year in 2014, showing a slowdown for the third consecutive year since 2012. Among them, the retail sales of clothing products increased by 1% year-on-year, down 4 percentage points from the same period last year. Clothing retail sales fell by 0.3% year-on-year, 3.7 percentage points lower than the same period last year.
Industry insiders said that judging from the overall situation of domestic textile and garment enterprises, the proportion of exports and domestic sales is roughly 50:50. The continuous appreciation of the RMB has indeed put many export enterprises under heavy pressure. On the one hand, the depreciation of the RMB against the US dollar will help textile companies reduce costs, improve product competitiveness, and obtain more orders. On the other hand, it will help obtain exchange gains.
However, an industry analyst from a securities firm told reporters that it is doubtful whether the depreciation of the RMB against the US dollar will become a trend. In addition, judging from the current situation, the depreciation is not large, so the positive effect on textile companies is very limited. “The costs of labor, raw materials, capital, etc. are all rising. In comparison, the depreciation rate is not very large.”
Analysts in the industry also said that what is more important at present is that the comprehensive cost of domestic textile companies is much higher than that of Southeast Asian and South Asian countries such as India and Vietnam. Taking Vietnam as an example, the shoemaking industry is currently its third largest export industry. In terms of footwear products, statistics from the Vietnamese customs department show that in 2013, Vietnam exported approximately US$10.32 billion in shoes, a year-on-year increase of 18%. In the first half of 2014, Vietnam’s shoe exports were approximately US$4.6 billion, a growth rate of more than 20%. Due to low labor costs, Southeast Asian export products are highly competitive and have attracted many orders from foreign companies. In the first half of 2014, Nike, Adidas, Puma and other companies have transferred a large number of their orders from China and other places to Vietnamese factories for production.
According to the above-mentioned analysts, the direct connection between the increase or decrease in corporate orders and the fluctuation of the RMB exchange rate is not significant.