China's small enterprises are being are seeing their profits gradually squeezed by the slow rise of the Renminbi, business people have warned at the Chinese Export Commodity Fair.

"Our profits are being eroded by the appreciation of the Chinese currency," Zhang Shuhua, general manager of Dalian Tongsheng Co., said.

The company dealing with beans and canned foodstuffs is based in Dalian, in northeast China's Liaoning Province. It was among 13,600 companies represented at the trade fair in Guangzhou, capital of Guangdong Province.

The fair, a biannual event launched in 1957, consists of two phases: manufactured goods, textiles and garments, foodstuffs and medicines in the first phase from April 15 to 20; and souvenirs, gifts and household commodities in the second, from April 25 to 30.

Businesses have been under continuous pressure since the Renminbi began to appreciate last July.

"Some small businesses are barely holding out, though the currency is floating within a relatively narrow range," Chen Yang, vice-general manager of Guangdong Chaoliu Group, said.

His firm is based in Fengxi Town, Chaozhou City in Guangdong, which is home to several hundred ceramics producers.

The company's products include ceramic arts and crafts, household items and building materials.

"Gas for ceramics production has risen by 50 percent since the appreciation and profits are dwindling with every rise in the currency," said Chen Yang.

Efforts to widen profit margins through price rises had little effect.

Chen said major Chinese ceramics producers had raised export prices by about 20 percent, but only a few enterprises at the fair, which is China's leading platform for export commodities, ???have been able to raise prices for novel products by five to 10 percent.((what is meant here? Does novel here mean "new". If they are new, how can the prices rise? Or does it mean "one-off" or "limited production"?))???

"It will be difficult for many enterprises to survive," Chen said.

Yang Shengjun, vice-president of the China Association of Import and Export of Foodstuffs, Animal Products and Local Specialties, said, "Since the beginning of the year, many exporters have been beset with problems such as trade barriers, scrapping of tax refunds and levying of export duties. The currency appreciation is just the last straw."

Anticipating further appreciation, exporters have been cautious about making orders.

"We made orders month by month so as to avoid losses from exchange rate changes,"((Surely exporters "take orders", rather than "make" them? Or are they making purchase orders? Why are they being cautious? Does it not make sense to take as many orders as possible before appreciation? Are they cautious because they set prices in foreign currencies? This needs explanation.))??? said Jia Tongqing, sales manager with a cashmere company based in Erdos, Inner Mongolia Autonomous Region.

"The government should maintain the basic stability of Renminbi, so enterprises have more time to adjust export strategies and build up export stocks," said Li Yushi, vice-president of the Research Institute of Foreign Trade and Economic Cooperation under the Ministry of Commerce.

Foreign buyers are also hoping the Renminbi stabilizes.

"Our Chinese suppliers are under major pressure from appreciation. If the pressure increases suddenly, we will probably lose many of our clients," said Peilin Yang, general manager of the China branch of QVC, one of the top 10 retailers in the United States, which annually purchases more than 800 million U.S. dollars worth of Chinese goods.

Source: Xinhua