The appreciation of Chinese currency may lead to great loss of profit margins for plastic products export, warned China Plastics Processing Industry Association (CPPIA) and Guangdong Plastics Industry Association (GDPIA).
In a feature story done recently by “China Petroleum”, the industry journal reported that the two associations estimated that export value would be down by RMB1.2 billion, leading to a profit loss of close to RMB300 million, if RMB is forced to have 1% appreciation.
Based on the same calculation, the 3% or 5% appreciation would result in RMB3.6 billion and RMB6 billion loss in export value. The profits could be down by RMB800 million and RMB1.4 billion respectively.
“The appreciation may marginalize the price competitiveness for Chinese products,” said Fu An, President of GDPIA, “Enterprises not possible to lower prices are urged to focus on brand building by leveraging technology innovations. Only through high product quality and popularity can their products win the market back.”
Jie Hongbo, an expert from the State-Owned Assets Supervision and Administration Commission of the State Council, said the export-oriented plastic product industry is sensitive to currency appreciation. With most deals involving American and European buyers closed at the start of the year, Chinese product manufacturers have to bear huge risks of losing money in the event of RMB appreciation.
Source : http://www.adsalecprj.com