RMB Appreciation Takes Tolls on Enterprises.docVIP

RMB Appreciation Takes Tolls on Enterprises 　　Hu Guang， the owner of a small factory in Shenzhen， Guangdong， has about 30 men work for him. His factory mainly produces connecting lines for industrial devices that are exported to Europe. 　　The May and June were the low season for his factory， and the appreciation of RMB has taken toll on its profits. Fortunately， his factory had begun it long before it and thus is able to survive and even to embrace a good outlook. 　　The appreciation of RMB became a popular topic recently， as the exchange rate created new records. The median price of RMB went through the fastest increase as of April. In April and May， the exchange rate of RMB against US dollars increased by 1.45%， the fastest ever from October 2010. 　　Along with the increasing cost of raw materials and labor force， the RMB appreciation is another problem for enterprises. As experts pointed out， the RMB appreciation apparently has more influence over the industries with little value-added and the long-term orders whose prices are hard to be fixed. 　　 The Shrinking Value 　　After the massive transfer-out of manufacturing， Hu Guang’s factory was one of the few staying in Shenzhen. Influenced by the market， his factory’s profit margin dropped from 30% last year to this year’s 20%. 　　The appreciation of RMB has made its dent onto his business. In June， he tried to improve his offer for a Hollandbased client by 10%， but that was rejected； instead， the customer wanted him to lower the price by 40%. Hu Guang guessed that the recession of the Holland’s market caused by the European debt crisis forced the client to do so. 　　But they cannot avoid loss even if the client did not require lowering the price. When one U.S. dollar could be exchanged into smaller than RMB 6.2 yuan， one of his business orders， which previously valued 10 euro per item， now valued 8 euro per item. “Most of our offers are made with the U.S. dollar， but we also have euro-based prices. The clients t