Analysis Of Rmb Appreciation Affect On Shenyang Yada Co. And Countermeasure

On 21st July.2005, the People's Bank of China announces that:from July 21.2005, China will reform the exchange rate regime by moving into a managed floating exchange rate regime base on market supply and demand with reference to a basket of currencies. RMB will no longer be pegged to the US dollar and the RMB exchange rate regime will be improved with greater flexibility, the exchange rate of the US dollar against the RMB will be adjusted to 8.11 Yuan per US dollar and it reach to 8 on May 15th,2006. RMB has appreciated constantly during the next years and it becomes 7.40 in the end of Nov. The extent of RMB appreciation exceeds 10% since 21st July.2005. The elasticity of RMB exchange rate is adding with the reformation. Reformation of the exchange rage affects the export companies. RMB appreciation makes total gross profit low and reduces the competitive in the international market.ShenYang YADA E/I Co.(ab. YADA Co.) is a comprehensive foreign trade enterprise combined trading with industry. It is a medium/small-size state enterprise and established in 1992. Its main trade is export textile. YADA Co. established ShenYang AIHUA printing and dyeing factory and ShenYang AIDA knitting factory in 2004 in order to develop better. Most of the productions are exported to other countries.Based on analyzing the effect of RMB rate of exchange appreciation on ShenYang YADA E/I Co. and the conditions of ShenYang YADA E/I Co, this article points out effects during RMB appreciate period, such as the personnel has the negative mentality, export productions competitive become lower, export sum and profit is down and exchange loss. And about these effects, the article offers the correlative settlement, just as envisage RMB appreciation actively, consummate export remit management, add productions profit, use finance tool and make factory or company in other country.