Yuan appreciation affects textile exports

China's textile products are losing markets among foreign buyers because of the appreciation of China's currency, the yuan or Renminbi (RMB), against the US dollar. The textile firms wooing foreign buyers at the 2008 International Textile, Fabrics and Accessories Exhibition held in East China's Zhejiang Province have felt the pinch.

The price of a cotton T-shirt exported to the United States is $3.8 or $3.9 now, 10% higher than before, said Kong Liang, Director of the sales department of Zhejiang Yonglong Enterprise.

The Yuan has gained value of about 18% since 2005. This has made Chinese textile products more expensive. The price advantage has almost vanished compared with products from Vietnam and Indonesia.

With good quality and lower prices, Chinese textile goods are competent. However, the appreciation of RMB has made it difficult for me to cooperate with the Chinese textile firms, said Satish Batavia, a businessman from India. If the yuan hit a new high to reach 6 yuan to the dollar, he would consider cooperating with Vietnamese or Indonesian providers instead of Chinese.

European buyers were not much concerned about the yuan's appreciation, because the Euro has been performing strongly. However, according to Werner Freistatter, an Austrian businessman, many Chinese textile companies planned to raise prices because of rising material and labor cost, which made him hesitate about making decisions.