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The Impact of the Rising Exchange Rate between China and the U.S. on the Packaging Industry

  • source:huaisheng
  • Time:04/11/2018
We are a custom gift box supplier and the 99% of the business sales are trading business with foreign countries.So we care more about the exchange rate between China and the U.S..Recently,the exchange rate floats obviously.What is the impact for our printing and packaging industry?
After "dive" more than a month later, the exchange rate of the renminbi rose again at the end of March. In just two trading days, the maximum increase in the exchange rate of the offshore yuan against the U.S. dollar was around 800 basis points. Both the rate of increase and the rate of increase significantly exceeded market expectations. In the past month or so, the RMB exchange rate trend was generally stable, and CIF prices continued to fluctuate around 6.33 yuan.
As the international trade situation is changing, the renminbi exchange rate has accelerated rapidly. In particular, the offshore renminbi has strengthened strongly by nearly 600 points against the US dollar in a single day, which is irrational. According to a comprehensive analysis of the parties, the sharp appreciation of the RMB exchange rate is still the market since the issuance, and as before several times, the two-way volatility of the RMB following the US dollar remains its main trend. The recent two-day pullback of the RMB against the US dollar has also verified this point. . Of course, in the year of 2018, China’s economy was better than expected and provided fundamental support for the steady rise of the RMB during the year. In general, staged appreciation will not change the trend of the overall stability of the exchange rate. As the exchange rate flexibility of the RMB increases, the two-way fluctuation of the RMB will become more obvious.
Under this circumstance, we custom gift box supplier is walking hard, because the money we get from our clients has become more less and less valuable when we keep the price at the original level. For example, our cooperative unit price for a custom gift box is $1.5, that means when one client orders 10000pcs from our company, we can get the total amount of $15000. In last year, we can exchange all the $15000 into RMB 15000*6.8=102000,but now we can just exchange RMB from the bank RMB94500.There is total RMB 7500 difference. This sounds not really good for our company’s cost control and for employees, the income will get down followed with the total sale amount in RMB.
How can we keep the balance between clients and circumstance?
1. Raise the original price: explain to the old clients the reason and notice them ahead that we will change the price a little because of the exchange rate.Most of the clients can understand and have no complaints and can keep cooperation with our factory. For the new clients, offer them a reasonable price based on the current market.
2. Exchange the money from bank when the exchange rate go up to the previous rate.