Orders surged 100%, but profits plummeted! Cross-border sellers exclaimed: How can people live like this? !

Lu Jun runs a company that makes audio products in Shenzhen. 90% of the company's orders are export orders, mainly to Europe, the United States, Japan and South Korea.

Since the outbreak, as China's resumption of work and production has been significantly faster than the world average, a lot of demand for audio products has poured into China. The company's warehouse is full of products that are about to be shipped. As the year draws to a close, everyone is working overtime. Lu Jun told reporters that their orders have been scheduled until the end of April this year.

Although the number of orders has skyrocketed, their income is not as high as they imagined. The main reason is the recent sharp appreciation of the RMB.

Li Hongxi is also troubled by the rising exchange rate. His company is engaged in cross-border e-commerce business. These days he is worried about paying his employees' salaries because there is not much RMB left in the company's books.

On May 27, 2020, the offshore RMB exchange rate against the US dollar began to "rebound" from the low point of 7.1954 in the year, and this momentum has not stopped since the beginning of 2021. On the first working day of the new year, the RMB central parity rate against the US dollar was 6.5408; on January 11, the RMB central parity rate against the US dollar was 6.4764. Li Hongxi calculated that if he exchanged 100,000 US dollars now, he would lose 70,000 to 80,000 yuan compared with June last year.

Cross-border e-commerce sellers often produce in China, but receive orders from overseas. They receive US dollars, but purchase materials and labor expenses must be paid in RMB. As the exchange rate continues to rise, currency exchange has become a matter of constantly eating up profits. How to reduce the impact of exchange rates on profits? Many sellers have their own "tricks".

On the first working day of 2021, Lu Jun's most important task was to re-determine the order price. Because the orders were all denominated in US dollars, but the purchase of raw materials required RMB. In order to reduce losses, Lu Jun and his colleagues in sales and finance came up with four or five plans. The important basis for them to decide the price increase of products was the expectation of the exchange rate in 2021 .

In addition to adjusting order prices to hedge against exchange rate risks, some cross-border e-commerce sellers have also changed the timeliness of order quotations, shortening them from one year to six months or even three months . Although this may weaken customers' confidence in the company, in the case of such drastic exchange rate fluctuations, ensuring profits has become a top priority.

In addition, some companies are also working hard to change their payment models and pay suppliers of raw materials and other materials in US dollars to avoid losses caused by currency exchange.