Yiwu has been recognized as the “largest small commodity wholesale market in the world” by the United Nations and the World Bank.
Given the frenetic trading activity, one would assume that the city’s vendors will see a big boost in export orders and reap windfall profits from the renminbi’s recent depreciation. Sadly, that is not the case.
The Chinese currency has depreciated about 3 percent against the US dollar since the start of this year. But the correction has come after years of steady appreciation, during which many foreign merchandisers had turned to Southeast Asian nations like Vietnam and Thailand for cheaper supplies, as Yicai.com noted. Thus, the current depreciation will not help matters much.
Meanwhile, e-commerce has made the pricing mechanism more transparent and competition even tougher.
The profit margin for Christmas goods has fallen to as low as 3 percent. With such a thin cushion, currency fluctuation is making the lives of Yiwu businessmen more difficult, as product-pricing has become harder. Any sharp, adverse renminbi movement can easily wipe out the margin.
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