On 20th, July, RMB against US Dollar in the middle price is 6.4592, setting new records again. Since the beginning of this year, with the inflationary pressure, economic growth saw a slowing trend. Meanwhile, that RMB exchange hit high records largely put pressure on textile industry this year.

Appreciation of RMB, in a sense, means that export price of China’s textile products is less competitive than before. According to the research, each 1% appreciation of RMB will result in 2%~6% decline of margin in textile industry. And 5%~10% appreciation of RMB will cause 10%~60% decline of margin. Therefore, appreciation of RMB will inevitably affect those who mainly rely on exportation; especially those provide a comprehensive range of fabric labels for foreign clients.

Appreciation of RMB influence on textile export is manifested as follows:

1. Weaken price advantage

Appreciation of RMB relatively increase export cost of textile. Only by increasing export price can enterprises maintain certain margins. From the prospective of small and medium-sized enterprises, raising price is bound to weaken the competitive advantages in the international market. The result is that textile exports will be restrained.

2. Further intensive Competition

The RMB exchange rate adjustment hits tremendously mainly those bulk and low-grade textiles, which are flagship products of small and medium-sized enterprises. Accordingly exports pressure will greatly increase. Exportations like fabric labels have quite low profits. If the cost were higher than before, lesser profits can manufacturers get.

3. Declining export margin

Appreciating of RMB pushes foreign currency for exports to rise. If the international market kept the same price, less export profit would be made. In fact, many foreign trade enterprises deal with exchange rate changes by raising price in an attempt for maintaining meager export profits. However, most of them will not get their way. For example, rather than digital products with huge research funds and high cost, fabric labels are low-cost products, even if the price is raised higher, they still have little profits. Moreover, at present, foreign clients are hard to fully undertake the cost due to appreciation of RMB by raising price.