What is the Impact of the Continuous Rise of China's Rmb Exchange Rate on Foreign Trade Export-oriented Enterprises?

On September 3, 2020, the ratio of RMB to USD in the international exchange rate was 6.81:1. At the beginning of 2020, the RMB was exchanged for the dollar at 7.1:1.

The RMB continues to rise and has been in a state of appreciation for a long time. What is the impact on China's export-oriented enterprises? How big is the impact?

The economy is intertwined in multiple ways. Domestic trade and foreign trade seem to be two different forms of trade, but they have an inseparable relationship. For foreign trade enterprises, direct losses are profits. At the same time, in order to survive, foreign trade companies will increase their quotations according to the current exchange rate, which will intensify the competition among Chinese export companies in international trade, and will cause orders to decline in a short period of time.

A considerable share of China's economic growth is contributed by foreign trade companies. Once the form of foreign trade companies is too severe, many foreign trade companies will switch to domestic trade.

Also for survival, most of the raw materials of foreign trade companies are traded in the form of domestic trade. These export-oriented companies will reduce procurement costs and also reduce the profits of domestic trade banks. The longer-term impact on foreign trade enterprises. Once the RMB continues to appreciate, the country’s economic development will also change, and it will shift from an export-oriented approach to an import-based approach. Once export-oriented companies experience a sharp drop in orders and staff turnover, even if the follow-up situation improves, these companies will be difficult to maintain.

Dongguan Zhanyi Commodity Technology Co., Ltd. has been operating in the foreign trade market for many years and has a sound management system and scientific prevention capabilities.

The company has established long-term cooperative relations with customers from multiple countries in order to prevent losses caused by the fluctuation of the international foreign exchange market.

The benefit of the risk management mechanism established by the company and its customers is that within a certain range of fluctuations in the foreign exchange market, both parties will not bring frequent fluctuations in business orders and the resulting economic losses.

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