Man­u­fac­tur­ers fail to profit from weak yuan

China Daily (USA) - - BUSINESS - By JING SHUIYU andZHONGNAN in Guangzhou

Chi­nese ma­chin­ery man­u­fac­tur­ers have found it dif­fi­cult to profit from the re­cent de­pre­ci­a­tion of the ren­minbi in the short term, com­pany ex­ec­u­tives said.

Ex­hibitors from the ma­chin­ery sec­tor at the 120th Canton Fair in Guangzhou, Guang­dong prov­ince, said the yuan de­pre­ci­a­tion, to its low­est level in six years against the dol­lar, had lim­ited ef­fect in boost­ing their busi­ness.

That was be­cause many im­port­ing coun­tries were them­selves en­coun­ter­ing de­pre­ci­a­tion pres­sures on their cur­ren­cies — and some do­mes­tic man­u­fac­tur­ing ri­vals had in­sti­gated a price war.

“Some of our clients in In­done­sia, for ex­am­ple, are ex­pe­ri­enc­ing tough cur­rency de­pre­ci­a­tion pres­sure against the dol­lar, so they were re­luc­tant to spend and put off big pur­chases in the past few months,” said Xiao Dan, gen­eral man­ager with Wuxi Ki­por Power Co Ltd in Jiangsu prov­ince.

Even though many ma­chin­ery man­u­fac­tur­ers are un­der pres­sure to in­crease profit, China’s ma­chin­ery ex­ports only grewby 3 per­cent on a yearon-year ba­sis be­tween Jan­uary and Septem­ber.

China’s in­vest­ments in rail­way projects in African coun­tries in­clud­ing Nige­ria, Ethiopia and Dji­bouti have also boosted ex­ports of the coun­try’s power gen­er­at­ing equip­ment, con­struc­tion ma­chin­ery, telecom­mu­ni­ca­tions, rail­way ve­hi­cles and sig­nal sys­tems.

“Log­i­cally speak­ing, ex­porters should profit more from a bet­ter price when the yuan de­pre­ci­ates,” said Ji Sun­min, deputy sales di­rec­tor of Suzhou Jind­ing Ma­chin­ery Man­u­fac­tur­ing Co Ltd.

An­other prob­lem was that in­ter­na­tional buy­ers were push­ing down prices as the yuan de­pre­ci­ated. How­ever, they sel­dom raised their prices even when the ex­change rate re­cov­ered, said He Hui, sales man­ager at Fu­jian­based United Power Equip­ment Co Ltd.

In the long run, the yuan de­pre­ci­a­tion could have some im­pact on for­eign trade growth, as the pro­cess­ing trade re­mained a larger pro­por­tion in­China’s trade struc­ture, saidHuang Song­ping, spokesman of theGen­eral Ad­min­is­tra­tion of Cus­toms.


Vis­i­tors at the ma­chin­ery sec­tion of the Canton Fair in Guangzhou, Guang­dong prov­ince.

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