[A-List] Chinese Exporters Shun Flagging US Dollar in Favour of Stronger Rivals

["Yoshie Furuhashi" <critical.montages@xxxxxxxxx>]

<http://www.ft.com/cms/s/0/95f406ee-fc69-11dc-9229-000077b07658.html>
Chinese exporters shun flagging US dollar in favour of stronger rivals

By Robin Kwong in Hong Kong

Published: March 28 2008 02:00 | Last updated: March 28 2008 02:00

Rising numbers of Chinese exporters are shunning the US dollar or
devising ways to offset the impact of the falling currency as they
confront rising labour and raw material costs at home.

According to Alibaba.com, the online company that matches Chinese
suppliers with international buyers, the vast majority of their almost
700,000 Chinese suppliers no longer use dollars to settle non-US
transactions in order to minimise foreign exchange risk.

"They are moving to euros, pounds, Australian dollars or even quoting
prices in renminbi," David Wei, chief executive, told the Financial
Times. Moreover, he added, prices quoted in dollars were now often
valid for just seven days compared with the 30-60 days common
previously.

The dollar has long been the currency of choice for Chinese and other
exporters around the world. However, the impact of its recent
weakening has led exporters to begin questioning its place as the de
facto world currency.

The renminbi, which western governments have long alleged is
undervalued, thus giving Chinese exporters an unfair advantage, has
appreciated 6.7 per cent against the US dollar in the past six months.
Economists expect it to rise 10-15 per cent against the dollar in 2008
and it is expected to rise a further 10 per cent in value this year,
according to Qing Wang, economist at Morgan Stanley China. He warned
that pace could quicken to more than 15 per cent should inflation in
China, already running at a high level, continue to climb.

Quanzhou Leething Garment & Knitting, a Chinese men's underwear
factory, said it had started encouraging clients to pay in euros
instead of dollars in November. While the Chinese currency has
appreciated against its US counterpart in recent months, it has moved
little against the euro. Orders placed in US dollars are now subject
to having their prices adjusted according to the latest exchange rate
just prior to shipping, said a company spokeswoman.

Dongguan Wang Cai Garment, based in the southern Chinese province of
Guangdong, exports mainly to Europe and quotes prices in US dollars
but this year began updating their quotations every week.

Other companies have taken more unusual approaches, such as setting
their own exchange rates and, therefore, in effect raising prices.

Xiao Zheng, chairman ofDongguan City Shima Toys in southern China,
said its price quotations were valid for three months but were
calculated based on an exchange rate of Rmb6.6 to the dollar.

With the official exchange rate at Rmb7.01 to the dollar yesterday,
this in effect raised prices 5.8 per cent.

"We are thinking about renewing our quotations every other month and
we are also going to offer quotations in euros very soon," Mr Xiao
said.

Bruce Rockowitz, president of the trading arm of global supply chain
company Li & Fung, said many Chinese companies still favoured US
dollars because "everybody is used to using [that currency]. But it
all comes out in the price."

William Fung, managing director of Li & Fung said international buyers
would have to accept higher export prices from China, especially for
goods such as toys that are largely made only in the country.

"The final result is they will buy at a higher price, but at lower
volumes," he said. Mr Fung added that retailers are mitigating the
effects of higher costs by locking in proprietary, or exclusive
brands, which in turn allows them to charge higher prices to
consumers.

Falling at the right time, Page 11

-- 
Yoshie
<http://montages.blogspot.com/>