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  • RMB appreciation Affect the PCB industry
    Date :2010-4-29


    General Administration of Customs announced in February, China's export value was 181.43 billion U.S. dollars, compared with the same period last year surged 45.2%. Before the financial crisis compared to February 2008, an increase of 9%, with exports up 8.2% and imports up 9.8%.


        Substantial growth in China's foreign trade and international economic conditions pick up, the gradual recovery in external demand and the low base last year and relevant factors. It also indicates China's strong economic recovery, but some scholars believe that China's strong growth in exports, or to speed up appreciation of the renminbi back to the pace of channel.


        Strong growth in foreign trade and the yuan may rise again on the rebound phase of the PCB is still what impact will the industry, PCB industry, how to plan ahead then?


        Data show that China PCB industry, most large companies for export-oriented enterprises, the cost of RMB appreciation to the inevitable increase in exports, while export earnings in foreign currency profits were converted into a corresponding reduction in the RMB. Usually, if the appreciation of the yuan for every 5% increase in annual exports will reach tens of millions of cost.


        In addition, due to the impact of industry trade practices, export products have some big money settlement account of time-release, the appreciation of the yuan means that foreign currency-denominated receivables (claims) the corresponding depreciation. If an enterprise has thousands or even billions of dollars in accounts receivable balance, the appreciation of the RMB exchange rate will be increased losses. Therefore, companies can balance the foreign currency debt obligations or use of various financial instruments (including derivatives), risk aversion, but will increase the cost of the corresponding financial costs.


        From the point of view of imports, although the appreciation of the renminbi business to some extent to the cost of imported equipment and raw materials procurement dropped, PCB production in RMB-denominated supporting auxiliary materials, labor costs higher percentage share of production costs offset the lower costs of imports advantage. At the same time appreciation of the renminbi on the PCB industry also impact the end customer. Machine makers such as Electronic procurement costs due to imports, manufacturers of electronic devices on foreign demand, but also directly affect the sales of domestic manufacturers.


        Immediately on whether the yuan revaluation, the Chinese Minister of Commerce Chen Deming said that China's exports also need 2 to 3 years to fully recover to pre-crisis levels. At the same time, he stressed that any change in China's exchange rate policy, will be "gradual and controllable."


        It also said that if the yuan's appreciation pace of gradual and controllable, it will help companies increase the cost of the corresponding gradual digestion. The appropriate rate of RMB appreciation slowing, but also conducive to rapid growth of corporate control operating costs, to avoid large swings in business results will help PCB industry, long-term development.


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