Exchange rate fluctuations affect foreign trade companies. Alibaba International Station's "Exchange Lock" helps merchants stabilize profits

Exchange rate fluctuations affect foreign trade companies. Alibaba International Station's "Exchange Lock" helps merchants stabilize profits

In 2020 , China's foreign trade rebounded against the trend. Since the second half of the year, export data has grown steadily. Many foreign trade companies have been overwhelmed with orders and goods are in short supply. However, at the end of the year, many companies found that their profits had "shrunk". An important reason behind this is the substantial appreciation of the RMB in the past year.

 

"The epidemic has a great impact on the exchange rate. China's economy rebounded in the second half of the year, and the exchange rate of the US dollar to the RMB dropped directly from 6.9 to around 6.4 . For example, if the company's exports in the second half of last year were 4 million US dollars; after the settlement of foreign exchange, the fluctuation of the exchange rate could lead to a direct difference of 2 million yuan in revenue. " Ms. Zhou of Suzhou Bettery said that although the actual revenue difference is smaller than this figure, it is enough to make foreign trade merchants sigh.

 

From the time a foreign trade company receives an order and signs a contract, it usually takes about two and a half months to purchase raw materials, design, process, and finally transport and inspect.

 

In this process, only the deposit received by the merchant when signing the contract is not affected by the exchange rate. The most direct feedback of the falling exchange rate is that the merchant receives less final payment. In addition, the delivery time is extended due to the impact of the epidemic, and the profit is compressed again.

 

In this regard, Bai Ming, deputy director of the International Market Research Institute of the Ministry of Commerce's International Trade and Economic Cooperation Research Institute, said that the impact of exchange rate fluctuations on foreign trade companies is inevitable . In the event of drastic exchange rate fluctuations , it is recommended that companies lock in exchange rates within an affordable range .

 

Alibaba International Station's exchange rate lock is a product that helps foreign trade merchants reduce the impact of exchange rate fluctuations. This product reduces losses caused by RMB appreciation by locking in the exchange rate for a certain period of time in the future.

 

"In the past, it was just to avoid risks, but last year it directly helped the company to protect its profits." Amy, an operator of Wuxi Sinostar , said that the company used the exchange rate protection product of Alibaba International Station, and 80 % of its orders last year were locked in exchange. Not only that, compared with offline visits to banks, the efficiency of online exchange locking has increased by more than 90 % .

 

The person in charge of payment and settlement business at Alibaba International Station suggested that merchants can consider avoiding risks from two aspects: first, agree with buyers in advance to settle in RMB; second, use products such as exchange rate lock to avoid exchange rate risks.


Alibaba International Station

exchange rate

Exchange rate lock

<<:  Sports brand Gymshark is valued at $1.4 billion, but its founder used to be a delivery boy?

>>:  How to save those sellers who are driven crazy by “follow-selling”?

Recommend

What is wlure? wlure Review, Features

wlure is a global online retailer dedicated to pro...

Vietnamese social e-commerce startup Mio receives $1 million in seed round funding

Vietnam is one of Southeast Asia’s fastest-growin...

What is InstaFollow? InstaFollow Review, Features

InstaFollow is a mobile app for Instagram. Its mai...

Is the asset-light model suitable for Amazon?

According to this definition, Amazon in the past ...

What is Xinhua Logistics? Xinhua Logistics Review, Features

Xinhua Logistics (Shenzhen Xinhua Logistics Co., L...

What is Splitit? Splitit Review, Features

<span data-docs-delta="[[20,{"gallery"...