Cross-border costs have skyrocketed again! Sellers: I worked like a tiger, but I only saw a profit of 25 cents...

Reducing costs and increasing profits is urgent!

Since the global pandemic of the new coronavirus pneumonia epidemic, Chinese companies, backed by their supply chain advantages , have embarked on the fast lane of development of product exports. However, behind the huge profits are numerous risks. The external environment facing China's foreign trade development remains complex and severe . The intricate interweaving of factors such as the game between major powers has intensified international trade frictions. The combined difficulties of skyrocketing raw material prices , exchange rate fluctuations, and rising freight rates have kept costs high. A large number of cross-border people have directly said, "The operation is as fierce as a tiger, but the profit is only 25 cents."

The US is printing money crazily, and the negative impact is evident

Since the outbreak of the epidemic, the United States has started a crazy money printing mode.

As we all know, in March this year , US President Biden signed a $1.9 trillion economic rescue plan in the White House . Biden said that this "historic legislation" with a total amount of $1.9 trillion will provide pillar strength for the reconstruction of the US economy.

In the short term, the US printing money and the Fed's loosening of liquidity will benefit cross-border sellers. The Americans will have more money, which will stimulate shopping. Especially under the epidemic, online sales will usher in an explosion, and the orders of corresponding sellers will also increase . But in the long run, the US's wanton money printing has brought many consequences.

"The United States continues to print money and increase demand , which continues to increase the gap and pressure in the supply chain , threatening the stability of the global economic recovery ." An industry insider said that as the world's major economy, major consumer market and core link of the world's industrial chain, the money creation brought about by the large-scale stimulus funds injected by the United States will lead to inflation and long-term weakness of the US dollar.

For export sellers, under the influence of various factors such as the US money distribution, they are currently facing rising costs in all factors, including rising logistics costs, rising raw material costs, and exchange rate fluctuations.

Raw material price increases, logistics price increases, exchange rate fluctuations ... Foreign trade companies are suffering from multiple cost squeezes

Price increases have become one of the main themes so far in 2021 .

Cross-border logistics prices are spiraling upward, which means that sellers have increased costs. Data shows that compared with before the epidemic, the total transportation cost of plush toys from production in China to reaching American consumers has increased by 650%. " Ocean shipping costs have accounted for 30-40% of store costs , which was only 20% before. " said a small and medium-sized seller.

Hot sales are inevitable. It is reported that in the first three quarters of this year , Giant Star Technology's international shipping costs increased by tens of millions of dollars year-on-year . Although the company has taken price increases for terminal products, it still inevitably affected profits.

In addition to the old-fashioned logistics problems, the rising prices of raw materials also trouble the majority of cross-border people. Recently, the topic of rising raw material prices has become popular again . " Now doing business seems to be trapped in a vicious circle where raw materials are rising, but the prices of things are not rising. My friends are all seeing price increases, but our prices just can't go up . " A cross-border person said that although the price of raw materials has increased, they dare not raise prices for end customers because they are afraid that customers will be scared away by the high prices . Even if the price of newly signed contracts can be increased, the signed contracts cannot be torn up . Because they don't know what the future will be like, they are currently in a state of not daring to accept orders and not daring to make money, but they still have to bear the rent and labor costs, which is really a dilemma.

The skyrocketing prices of raw materials have been widely discussed, and the exchange rate is also a hot topic of discussion in the market . " The exchange rate seems to be able to speak, telling me every day that you are losing money again! ", "The yen exchange rate has fallen to an unbelievable level", "The euro-pound exchange rate today is really terrible"... Recently, export sellers have been complaining about the exchange rate.

It is reported that the impact of exchange rate fluctuations on operating performance is mainly reflected in the price competitiveness of product exports and product procurement costs. If export sellers fail to take effective measures to deal with exchange rate risks, it may have a certain adverse impact on the company's profitability.

A foreign trade person who mainly deals in chemicals said that during the epidemic, the demand for various disinfectants and cleaning agents skyrocketed, and their orders also increased significantly. After reaching a cooperation agreement with the Australian purchaser, the buyer prepaid a 30% deposit and the bulk production began. However, due to the epidemic, the customs and border inspections of both China and Australia were tightened, and shipping was also greatly affected, and the bulk delivery was forced to be delayed. When it came time to pay the balance, the foreign trade person suddenly found that the US dollar exchange rate had fallen sharply from 6.7 to 6.45 due to the crazy printing of relief funds by the United States .

At the same time, the Australian dollar rose against the RMB, from 4.7 to nearly 5.1. The net profit of the goods originally quoted in US dollars evaporated by several points because of the sharp drop in the US dollar exchange rate. If it was quoted in Australian dollars at that time, it would not only avoid the fluctuation of the US dollar exchange rate, but also increase the amount of money received. The increase and decrease in the exchange rate resulted in a serious exchange loss.

In fact, there are countless similar examples. Generally speaking, exchange rates, raw materials and logistics are three major problems that export sellers cannot avoid. When these three factors come into play at the same time, the cost of export sellers is bound to be very high.

To reduce costs and increase profits, cross-border people can do this!

Avoiding cost risks and reducing costs to ensure profits have become a consensus among export sellers.

It is reported that major sellers such as Anker and Zebao have taken many measures to increase profits. In terms of logistics, major seller Anker Innovations said that the company will continue to optimize delivery efficiency and reduce freight costs by improving management capabilities, expanding logistics channels, and setting up overseas warehouses . In the face of the soaring prices of raw materials, Zebao said that it will control the risk of raw material price fluctuations through various means such as strengthening the research and judgment of raw material market price changes, strengthening technological process innovation, optimizing product structure, and improving the depth of cooperation between suppliers and customers.

How to solve the problem of shrinking payment due to exchange rate fluctuations? Export sellers who are accustomed to using traditional T/T wire transfers and US dollar quotations often believe that the US dollar is the world currency and losses caused by changes in the US dollar exchange rate are inevitable. In fact, this is not the case. Payanying, a global cross-border payment platform , said that in the face of exchange loss risks, export sellers can actually adopt the following solutions:

1. Open local bank accounts in multiple countries. If the seller is doing business in Australia, if he opens an offshore bank account in Australia, quotes in Australian dollars, and directly converts Australian dollars into RMB after receiving the payment, he can perfectly avoid the losses caused by the fluctuation of the US dollar exchange rate.

2. Set the validity period and exchange rate range of the quotation. Since the exchange rate changes in real time, there is a currency exchange risk when quoting in US dollars. In order to avoid losses caused by exchange rate fluctuations, the quotation can be set with a "validity period". If the time is exceeded, either the quotation remains unchanged or the quotation is adjusted, which can effectively avoid losses.

3. Use RMB for settlement. China has established 27 RMB clearing banks in 25 countries and regions, covering Hong Kong, Macao and Taiwan, Europe, North and South America, Oceania, the Middle East, Southeast Asia and Africa.

(Scan the QR code to get the limited-time foreign trade cash withdrawal discount immediately)

It is reported that Payoneer can provide foreign trade companies with payment services from local bank accounts in multiple countries, and can help companies or individuals open accounts in nine major economies and countries, including the United States, Canada, Australia, the United Kingdom, the European Union, Hong Kong, Japan, Singapore, and the United Arab Emirates.

Transfer using the local banking system, the funds will be received in as fast as 2 hours, and can be credited in local currency with zero exchange loss. After receiving the funds, you can directly convert them into RMB and withdraw them to the domestic company or legal person's personal account through Payoneer's dual-channel foreign exchange settlement.

In addition, Payoneer accounts also accept overseas RMB payments. The calculation is very simple, which is equivalent to a foreign currency with an exchange rate of 1:1. The operation is the same as other foreign currency settlements, and overseas RMB payments can also be refunded.

At the same time, Payoneer's Pay as You Want product can help you make overseas payments more conveniently and comprehensively, and can also be directly used for domestic and foreign online shopping. It can be said that Payoneer Pay as You Want has taken into account all payment scenarios that may be used in cross-border business!

Please click the link https://register.payoneer.com.cn/solution/b2b/?utm_source=Baidu&utm_medium=search&utm_campaign=brandzone&utm_content=right-banner to register with Payoneer quickly!

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