The impact of RMB appreciation on China's electronic manufacturing industry

Electronic information product manufacturing industry (including software industry) is the pillar industry of the country, the whole industry in 2004 sales revenue reached 2 trillion and 650 billion yuan, the added value reached 565 billion yuan, accounting for 4.5% of GDP; at the same time, the electronic information products manufacturing industry is a major export Chinese, exports in 2004 amounted to 207 billion 500 million yuan, accounting for export 1/3. It is no exaggeration to say that the impact of RMB appreciation on the electronic information products manufacturing industry is directly related to the overall trend of the national economy. This article from the production and sales (stock) and investment (incremental) two angles, a preliminary analysis of the impact of RMB appreciation on the electronic information products manufacturing industry. Production and sales: export profit margins decreased

After the appreciation of the RMB, the RMB will increase the cost of goods, if the export price unchanged, will reduce the profit margins of export commodities, export enterprises. The prices of imported goods, calculated in Renminbi, will fall, increasing the purchasing power of the importing enterprises, which will benefit the importing enterprises. Detailed analysis of China's electronic information products export structure.

China's export of electronic information products has two characteristics, can be simply summarized as two high. First, the high proportion of imported materials processing trade exports. In 2004 China export of electronic information products, feed processing trade $153 billion 960 million, accounting for 74.2% of total exports; processing trade $30 billion 670 million, accounting for 14.8% of total exports; general trade exports $16 billion 30 million, accounting for 7.7% of total exports; entrepot tradebonded area exports $6 billion 60 million, accounting for 2.9% of total exports. Two is a high proportion of foreign investment. In 2004, foreign-invested enterprises exported 178 billion 10 million dollars, accounting for 85.8% of total exports, of which foreign owned enterprises exports $130 billion 980 million, accounting for 63.1% of total exports; Sino foreign joint venture total exports of $42 billion 940 million, accounting for 20.7% of total exports. State owned enterprises exported $19 billion 450 million, accounting for 9.4% of total exports. Private enterprises exported $6 billion 450 million, accounting for 3.1% of total exports.

A large number of export enterprises in the domestic processing and assembly, China's export trade is mainly to earn the processing fee, rather than product price difference.

In order to simplify the analysis, we assume that: (1) foreign companies mainly hold the U.S. dollar, the domestic enterprises mainly hold the RMB; (two) the proportion of foreign enterprises' localized procurement is 30%, and the proportion of domestic enterprises' international procurement is about 40%. Because foreign funded enterprises and local procurement purchases would need international currency exchange, think of the 30% part in rough foreign sales income will be the impact of exchange rate changes, in the 40% part of the sales revenue of domestic enterprises will be the impact of exchange rate changes. Calculate the purchasing and selling structure of electronic information.

Assume that the international and domestic price rigidity (competition, individual enterprises are difficult to control the electronic information products, so the international price): holdings of foreign invested enterprises, international procurement, international sales, two outside, not affected by the impact of RMB appreciation; international procurement, domestic sales, because domestic prices unchanged after RMB appreciation in dollar terms in the sales revenue and profit will increase; domestic procurement, domestic sales, although the purchase cost increases, but the dollar sales revenue and profits rise; domestic procurement, international sales, product profit will decrease according to the proportion of appreciation, a greater negative impact. As can be seen from table two, the total income of foreign enterprises in the RMB appreciation by the adverse impact of more significant than 16.7%. Similarly, for domestic enterprises to hold the renminbi, the domestic procurement, domestic sales part is basically not affected; international procurement, domestic sales, profits will increase; international purchasing and sales, because the purchase cost reduction products to offset the decline in export profits, little effect; domestic procurement, international sales, profits will decline. As can be seen from table two, the negative impact of RMB appreciation on the total income of domestic enterprises is significantly higher than that of the 5.5%.

Overall, 22.2% of total revenue, that is, a little more than a little after the appreciation of the RMB will decline in profits, it should be said that the impact on the total income is limited by the. The 22.2% part belong to the international sales, according to the 2004 data is equivalent to 34.3% of total exports, which exports in 1/3 will significantly affected, this ratio can not be ignored.

Comprehensive operational risk management

Setting up the awareness of exchange rate risk and constructing the international purchasing and selling system under the floating exchange rate.

Under the floating exchange rate, the enterprise must change the idea, pay attention to the exchange rate risk, especially to the international purchase quantity big enterprise, the exchange rate change has the very big influence to the enterprise purchase cost and the sales profit. Therefore, on the one hand to strengthen the ability to predict the fluctuation in the international market for different products, money market international procurement and international sales plan in advance, to keep the initiative in monetary payment; on the other hand to enhance the exchange rate risk management capabilities, increase the exchange of knowledge member understands in the purchasing group or the marketing team, in a timely manner following the international exchange rate changes, the gradual introduction of swap and forward in the international procurement and sales of currency derivatives, to avoid exchange rate risk.

(two) to enhance the ability of technological innovation, enhance the brand's international reputation and reputation, and reduce the adverse impact of the weakening of labor cost advantage.

Enterprises should increase investment in research and development, improve the level of technological innovation, further increase the technological content and high added value high proportion of export commodities, get rid of relying solely on low labor costs, cheap international competition situation.

To gradually operate from the product to the operating brand