The first "Private Sourcing Event" (PSE) in the Pearl River Delta since the Spring Festival was held in Guangzhou yesterday. Our journalist learned from the event that, as the exchange rate of the RMB against USD keeps increasing, it has put more pressure on manufacturers. Therefore, using the Euro and Yen for balancing accounts is becoming more and more popular.

Euro More Effective for Trade

The exchange rate is one the most important factors impacting exports. At the PSE, many retailers and manufacturers shared the view that the exchange rate is having more and more impact on international trade. This is particularly so in recent years as the RMB has been soaring against the USD, resulting in profits for mainland China exporters being squeezed.

Wu Chengzhang, the Deputy General Manager of Neon-Neo Group, one of the top lighting enterprises in Pearl River Delta, said that in order to cushion the impact of the ever-changing exchange rate between the USD and the RMB, some lighting enterprises have started to consider the Euro and the Yen for balancing accounts. The relatively stable Euro rate against RMB is more favorable for Chinese manufacturers. He said: "Buyers understand and the change has been put in place in recent months."

A representative from another manufacturer in Pearl River Delta said that they would persuade their European buyers to use the Euro for transactions.

In addition to the exchange rate issue, rising raw materials costs are causing problems for manufacturers. Craig Pepples, Global Sources' Chief Operating Officer, said: "In face of the ever rising costs, manufacturers are taking the initiative to attract buyers, including paying more attention to product design and adding value to products. As costs keep rising, profit margins for low-priced products will be gone if their prices do not go up as well. But Pepples also pointed out that the increase in export prices should not exceed 10 percent, or else it will be too hard for buyers to accept.