Struggling Chinese exporters look to Europe and domestic sales

As the value of the US dollar has plummeted against the Chinese yuan, Chinese exporters are resorting to drastic measures, even - gasp! - selling to the domestic market:

The dollar’s fall against China’s currency has been accelerating — it is down 4 percent so far this year, after dropping 7 percent last year. That has left businesses across China nursing losses and trying to figure out how to raise prices for overseas buyers, Chinese executives and sales representatives said in interviews here at the Canton Trade Fair. The fair runs through Wednesday.

Ma Lin Ping, the general manager of Taizhou City Qizhou Industry, said that his company had lost $43,000 on a single deal last year because of the dollar’s tumble against China’s currency, known as the yuan or renminbi.

The company agreed at the end of 2006 to send 16 shipping containers of collapsible wood houses for use in gardens and at the beach. When the company finally completed the deal at the start of this year, the payment was in dollars that had lost nearly a tenth of their value in yuan.

Since the start of this year, “I quote prices in euros to all my European clients,” Mr. Ma said, adding that the company was also starting to make products for the Chinese market.

The article focuses on Europe, with Chinese exporters increasing their sales to Europe and/or demanding to be paid in Euros. As can be expected, major U.S. retailers are very sensitive to any price increases, partly due to the dollar but more likely due to the negative macro-economic conditions facing the U.S. economy as a whole. With profits tight or non-existent to the U.S. market and clients resistant to cost increases, Chinese exporters will naturally seek opportunities elsewhere - Europe and their own domestic economy.

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