Per reporter: Wu Linjing Per editor: Liu Yanmei
Image source: Photo_500617117
The "falling and falling" yen is probably the most interesting trend in the global foreign exchange market recently. Since 2021, the yen has depreciated by nearly 20% against the dollar. On April 20, the yen briefly fell below the $129 mark, a new low since 2002.
At the same time, the exchange rate of the renminbi against the yen also broke through the 20 mark again after 2015.
As a comparison of one country's currency against another's currency, the influence of exchange rates in import and export trade is self-evident. What will be the impact of the yen's plunge on companies, industries, and cities that trade frequently with Japan?
01
"As soon as the yen falls, we earn equals no earnings." The last time business owners expressed such sentiments was between 2013 and 2015, when the yen exchange rate fluctuated sharply. In 2022, this scene is repeated. At the beginning of the year, 10,000 yen could still be exchanged for about 560 yuan, but today, it is only worth 500 yuan.
And do not consider the price of commodities and other factors, from the perspective of exchange rate fluctuations alone, for some Japanese trading enterprises, domestic products may still be on the production line, the previous foreign trade orders have been "eaten" by the falling exchange rate of profits, and even losses. The yen continues to depreciate, at this time is to continue production, or to cut orders? Caught in a dilemma.
Image source: Photo_501995006
Not only some processing enterprises that export to Japan, but also the game industry that goes to sea will also be affected.
Due to the tightening of domestic game market supervision in recent years, many game manufacturers are expanding into overseas markets. According to market research institute Sensor Tower, in 2021, the Japanese mobile game market revenue reached a new high of $18.45 billion, and it is also the second largest market for mainland mobile games to go to sea, second only to the United States.
Last year, a total of 6 products from the mainland entered the top 20 of the annual best-seller list of Japanese mobile games. According to the yuan price, these best-selling mobile games often have hundreds of millions of monthly turnover. Simply calculated, the "diving" speed of the yen exchange rate in the latest month can have a revenue impact on these blockbuster games to reach the level of tens of millions of yuan.
However, for overseas purchasing agents, the new low exchange rate has brought another scene. Koyuki (pseudonym) started a daigou business after settling in Japan. Recently, the yen exchange rate has declined, and the pricing of some counter goods has not risen, so she has repeatedly shouted "buy, buy, buy" on the grounds of exchange rate. On April 23, Xiaoxue sent a circle of friends to say: "The yen exchange rate is low, and it is cheaper to buy now than when the price did not increase a few years ago." ”
From the micro level of enterprises, the large fluctuation of the exchange rate, in the short term, will bring obvious exchange gains and losses, thereby affecting the company's revenue, cost and cash flow; in the long run, the price fluctuations of superimposed commodities will be related to the bargaining power, cost-effectiveness, capital allocation and other aspects of enterprises, especially small and medium-sized enterprises.
Recently, the depreciation of the yen has aroused the concern of investors, who asked listed companies that trade with Japan on the investor interactive platform: Is there a plan for the company's export business to deal with the depreciation of the yen exchange rate? Will the depreciation of the yen have a favorable impact on the import of raw materials and products by the company? With the depreciation of the yen, are your company's assets in Japan ready?
Some companies responded that "the company's export business is mainly settled in US dollars"; some companies said that "the impact of exchange rate fluctuations on the company's exchange rate gains and losses will be greatly reduced by using exchange rate hedging and other exchange hedging tools in a timely manner when necessary".
02
It affects enterprises, and naturally it may also affect local import and export trade with Japan.
Affected by Japan's weak domestic economy and external environment, the yen has experienced several rounds of sharp depreciation after entering the 21st century.
USD/JPY Over the Years Image Source: wind
In 2003, an industry insider from the Zhejiang Branch of the State Administration of Foreign Exchange wrote that "empirical analysis shows that the impact of the depreciation of the yen on exports (of Zhejiang to Japan) is obvious." "In the case of the province's overall foreign exports are growing, exports to Japan have declined year-on-year.
From the perspective of trade mode, the general trade resistance to exchange rate risks is significantly stronger than that of processing trade. In 2000 and 2001, the proportion of zhejiang's exports to Japan in general trade and processing trade was basically the same, 63% and 36% respectively, and by the first half of 2002, under the circumstance that the negative impact of the depreciation of the yen deepened, the proportion of general trade increased and the proportion of processing trade fell.
From the perspective of export product structure, Zhejiang's export products to Japan at that time were mainly textiles and garments, mechanical and electrical products, and food. In the face of exchange rate depreciation, products in different fields have different trends - traditional labor-intensive industries such as textiles and garments have been the most affected, making them once lose the status of "half of Zhejiang's exports to Japan" in the past; on the contrary, the export value of mechanical and electrical products and high-tech products and their proportion have increased significantly.
The Zhejiang Branch of the State Administration of Foreign Exchange analyzed this in the article that the export of mechanical and electrical products and high-tech products can go against the trend because their added value is higher, less replaceable, and easier to "re-price" compared with textile and apparel products.
In the face of the uncertainty of the external environment, the different trends in the industrial structure and product structure of local exports are also reflected in the impact of the second round of sharp depreciation of the yen.
Take Dalian, for example. In 2012, several insiders in the Dalian area of the Chinese Bank wrote an analysis that in September 2012, the yen exchange rate against the US dollar and against the renminbi fell sharply, from the total point of view, the impact on agriculture is not large, the service industry is affected, and the impact on import and export trade is mainly concentrated in the manufacturing industry - concentrated on the processing trade that accounted for about 50% of Dalian's trade in goods at that time.
These Chinese-funded enterprises in processing trade have the characteristics of "small scale, mainly rough processing, and japan-based trading partners, relatively single", distributed in minerals, textiles and garments, petrochemicals, food and other industries. For them, "the yen receipt is almost all the income of the enterprise, the exchange loss directly affects the income of the enterprise, and some enterprises have a stage loss" "In the face of the sharp depreciation of the yen, it seems to be a little panicked."
The impact on local processing trade was eventually transmitted to Dalian's annual foreign trade data. In 2012, Dalian's overall import and export volume maintained slow growth, but as the most important trading partner, Dalian's import and export volume to Japan showed a decline.
03
Now, the yen has embarked on another sharp depreciation since the beginning of the century. Recently, the yen-dollar exchange rate in the foreign exchange market hit a new low in nearly 20 years since 2002, and the yen-yuan exchange rate also hit a new seven-year low since 2015.
Image source: Photo_500148998
Discussing how much and how long this round of depreciation will affect cannot be completely copied from previous experience. At present, the enterprises, localities and macro situations with frequent trade with Japan are already at this time and at another time.
At the corporate level, exchange rate fluctuations have always affected corporate profits.
However, after accumulating many years of experience in international trade, from habitual "naked running" to rational use of tools to avoid risks, more and more enterprises are increasing their awareness of exchange rate risk neutrality.
The person in charge of a perennial trade with Europe told Uncle Cheng that although the company mainly attacked the European market, it set up two settlement methods of euro and DOLLAR, and also set up a financial risk department, "They will measure the risk, which currency is relatively stable for a period of time, and when we sign the order, we choose which currency to settle the foreign exchange." ”
A more professional way to hedge risk is to use financial derivatives. According to data from the State Administration of Foreign Exchange, in 2021, the signing volume of foreign exchange settlement and sale of foreign exchange on behalf of mainland banks on behalf of customers was US$1,050.7 billion, an increase of 67% over 2020, and the foreign exchange hedging rate of enterprises was 21.7%, an increase of 4.6 percentage points over 2020. Eight of the companies engaged in foreign exchange hedging business became small and medium-sized enterprises.
In April this year, the People's Bank of China and the State Administration of Foreign Exchange also issued the Notice on Doing a Good Job in Financial Services for Epidemic Prevention and Control and Economic and Social Development. The next step will be to optimize the handling of foreign exchange and cross-border RMB business, improve the efficiency of capital settlement, and reduce the cost of trade balance and expenditure, so as to stabilize foreign trade and ensure exports.
At the local level, the industrial structure and product structure of trade with Japan are also changing.
The above-mentioned analysis article of the Zhejiang Branch of the State Administration of Foreign Exchange in 2002 pointed out that "if you rely solely on price competition, the impact of exchange rate risk is very large." Therefore, it is necessary to make more efforts in the differentiation of products", such as increasing the technical content of products, enhancing their irreplaceability, forming a strong product brand, etc., and reducing the negative impact of exchange rate fluctuations with the competitive advantage of the difference in the product itself.
In June 2020, the National Development and Reform Commission approved the construction of six Sino-Japanese local development cooperation demonstration zones in Shanghai, Suzhou, Tianjin, Qingdao, Dalian and Chengdu. In the eyes of the outside world, this is the highest level of cooperation carrier related to Sino-Japanese cooperation that has been implemented so far. According to the plan, these demonstration zones will focus on industrial cooperation at a higher energy level, and carry out economic cooperation with Japan in energy conservation and environmental protection industry, health industry, high-end equipment manufacturing and new material industry, new energy industry, intelligent manufacturing industry, and cultural and creative industry.
At the macro level, the diversification of the international market is also a means to avoid exchange rate risks to a certain extent.
Over the past decade, ASEAN has become the mainland's number one import and export trading partner, and by 2021, Japan will rank fourth after ASEAN, the European Union and the United States.
Last year, the total trade in goods between China and Japan reached 2,402 billion yuan, a record high. The entry into force of the RCEP agreement this year will also boost the development of Sino-Japanese trade. However, thanks to the development of diversified emerging markets, the proportion of mainland exports and imports to Japan in the country fell from 7.7% and 12.7% in 2010 to 4.9% and 7.7% respectively.
In fact, the impact of exchange rate fluctuations is not only on simple imports and exports, but also has a certain lag in its impact. From enterprises to localities, it is necessary to face up to risks and actively deal with this "butterfly wing" on the west coast of the Pacific Ocean.
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