Source: Yiwu sourcing agent Author: Gary Date: 2011-08-28
No matter how the U.S. debt crisis will end, Yiwu enterprises have taken necessary precautions in the face of the surging amount of insurance against default in the trade with the U.S., which has already gone beyond the total of last year to reach $300 billion, said Bi Shiwei, inspector-general of the Yiwu branch of China Export & Credit Insurance Corporation.
Wang Guanxing, president of Yiwu Xinhao Arts & Crafts Company, pays attention to the reports about American economy on the Internet every day. As one of the largest root-carving enterprises in China, Wang's company has done business with Americans for nearly 10 years. Making profits from Americans is not easy, which requires constant attention to the debt cri si s as well as close contact with U.S. foreign trade companies, Wang said. " The means of settlement for American orders has been changed from CIF into FOB," he added.
Wang has good reason to worry.
Sources from Yiwu Customs say that Yiwu's exports to the U.S. have decreased by 11 . 6 percent in the first six months of this year.
Insurance indemnity amounted to 3.9 mln yuan last month Recently some American companies with good credit have got some trouble. By the end of July, $1 . 5 million worth of exports from Yiwu to the U.S. had received risk early warning. Right in July, the first insurance claim caused by the bankruptcy of an American company was made in the Yiwu branch of China Export & Credit Insurance Corporation. Two clients concerned received an indemnity of 3.9 million yuan.
The U.S. has been among Yiwu's most important export destinations. It was once the biggest importer of Yiwu commodities, whose purchase of toys, Christmas items and garments (knitting) made up large portions of Yiwu's exports. "With such low profits, it's difficult to do business this year.
And I never accept orders with delayed payment," said Wu Ye, a jewelry dealer in the E District of the International Trade Mart. Due to reduced orders from the U.S. and the
requests for procrastinating payment, she is considering export insurance.
Some experts think that it is still too early to discuss the influence of American debt crisis on Yiwu. However, the American orders have experienced subtle changes. In the past, the American orders as well as the quality control were made by Korean and Hong Kong companies.
Now some American companies place orders directly with Yiwu enterprises in order to save money, which is a great challenge to the production and management of Yiwu enterprises. Besides, the payment by letter of credit may not win the favor of Yiwu businessmen.
One-off settlement in RMB widely expected On August 11, the US dollar was down at 6 . 4 yuan. The devaluation of US dollar lets businessmen down again. Influenced by the debt crisis, the devaluation of US dollar is irreversible. And the foreign relatedness of Yiwu market is as high as 65 percent. The profits of export are gradually shrinking with the fluctuation of exchange rate.
In order to make enough profits, some businessmen in Yiwu try to make one-off settlement in RMB. " Last year, Yiwu was selected as one of the pilot cities for cross-border trade settlement in RMB, which was warmly welcomed by Yiwu enterprises. It is a bold trial which constitutes part of the finance innovation of the city's pilot program for the comprehensive reform of the international trade," said the person-in-charge with Yiwu branch of the People's Bank of China. Presently, 16 of 21 banks in Yiwu have international services and the cross-border trade settlement in RMB is experiencing deep reform.
Wang Guanxing told the reporter that he started exploring new markets after the financial crisis and his enterprise could develop in the other two markets in case of continuous feeble demand of American market or US dollar devaluation.
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