Business / Economy

Slide in exports as yuan depreciates confounds experts

By Shi Jing in Shanghai (China Daily) Updated: 2014-03-12 07:21

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Slide in exports as yuan depreciates confounds experts

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The yuan appreciated rapidly in 2012, which meant some export-oriented companies suffered huge losses. Zhu's company was among those affected, though not to a large degree.

"Even though it was not a big amount of money for us, we still hope to see the yuan remain stable. Otherwise, company owners will be disconcerted and won't know what to do," he said.

Learning from the past few years, Zhu has come to realize that export-oriented companies should no longer rely on exchange rates. What the Chinese chemical industry needs most at present is a thorough restructuring instead of closing down smaller and less environmentally friendly companies and expanding the capacity of larger companies, which is currently taking place, he added.

Of course, there are companies that have looked further ahead and applied themselves accordingly.

For example, although exports of Chinese textile products remain on the whole gloomy this year, Gu Zhongwei, general manager of Wuxi-based Handa Enterprise Fabric Department, said his company is doing quite well so far this year, largely because of a restructuring that started two years ago.

"The yuan has been appreciating in the past few years - and extremely rapidly last year. This is really bad news for export-oriented companies, which are labor-intensive and are heavily dependent on exchange rates. So, two years ago, we started an inner restructuring to digest ever-soaring costs such as labor and confront the volatile exchange rate," said Gu.